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Canadian home prices rise 8.8%
But real estate market continued its slowdown in February
The Canadian real estate market continued its slowdown in February, with the number of homes sold declining 1.6 per cent compared to the previous month and dropping 5.9 per cent from a year ago. The sales drop was the smallest year-over-year decline in nine months, the Canadian Real Estate Association said, but it underscores the market returning to a more balanced level from the highs it experienced through the early part of 2010.
"Most local housing markets in Canada are well balanced, but there are still a number of buyers’ and sellers’ markets," CREA president George Pahud said Tuesday.
Price gains, however, are anything but balanced. The national average rose 8.8 per cent year-over-year to $365,192 in February. The average price has been skewed higher nationally and in British Columbia recently by a record number of multimillion-dollar sales in a couple of areas in and around Vancouver, said CREA's senior economist, Gregory Klump.
"When you take Vancouver out of the equation, the year-over-year increase in the national average price drops to 3.4 per cent," Klump said.
Listings rose 1.5 per cent from the previous month, building on the 4.3 per cent gain in January. The rise is consistent with CREA’s expectation that many sellers, who shied away from listing their home last summer when the national housing market softened, would put their homes for sale early in 2011, now that they're confident better prices have returned.
Inventory, a key real estate metric that measures the number of months it would take to sell the entire housing stock at the current sales pace, stood at 5.7 months at the end of February on a national basis. This is little changed from the 5.5 months reported in January, when it reached the lowest level since last April.
New mortgage rules announced by the Finance Department in January and set to begin Friday will make the maximum payback period 30 years — resulting in somewhat higher regular payments than with the 35-year amortization that has been the choice of about 30 per cent of home buyers.
The rule changes will increase the monthly payment on a $300,000 mortgage at four per cent interest by $105, but will also reduce total interest paid by $42,288 over the life of a mortgage because it's repaid five years sooner.
CREA expects the rules will begin to put a lid on prices starting next month, as less buyers will be able to come up with the shorter terms and higher monthly payments they bring.
"National average price gains may recede after tighter mortgage regulations take effect in March," Klump said
March 15, 2011 in Canadian Market Forecast | Permalink
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Comments
I am a Vancouver Realtor and I write similar articles on The Vancouver Real Estate market. Thank you for this article and I will definitely be coming back to read your posts. Many thanks, Russell Sharp, MrSharp.com
Posted by: Russell Sharp | Apr 17, 2012 6:21:51 PM
Prices rise, but market continues to slow down. Doesn't make much sense to me, but i guess that's the way things go.
Posted by: Austin Homes | Apr 11, 2011 12:09:07 PM
I appreciate the interesting work that you have done on this site and article . Thanks for your contributions.
Posted by: Sales Letter | Apr 5, 2011 3:33:31 AM
Great post! Here everything has been described in systematic manner. The recent housing bend has meant buyers are looking for smaller houses. The affordability ratings are part of housing cycle barometer, which calculates the ratio between housing costs for the median-priced existing home and income levels. Thanks for sharing helpful information with us.
Posted by: Virtual Offices Melbourne | Apr 5, 2011 2:43:42 AM
People should look at this as a positive action. Alot of individuals that I know were never in favor of the 35 year amortization to start with. Nobody wants to wait that long to have their "mortgage burning" party.
This may help some buyers remain within their budget for home financing. Less is more.
Very interesting read.
Thank you
Posted by: Mortgage Calculator Canada | Apr 4, 2011 2:08:03 PM
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Posted by: thomascrew | Apr 4, 2011 7:13:07 AM
The market is changing out there, and the latest reports are showing that when it comes to buyers, less is more in some cases. The recent housing slump has meant buyers are looking for smaller houses. The affordability ratings are part of Housing Cycle Barometer, which calculates the ratio between housing costs for the median-priced existing home and income levels. They analyze 26-plus years of history in each metropolitan area, and compare the current ratios to the median ratios in each area. The down payment and mortgage payments are appropriately weighted based on total expenditures over the life of a typical home purchase. This methodology accurately determines which markets are overpriced and under priced, even in an environment with historically low mortgage rates.
Posted by: new home builder virginia | Mar 21, 2011 7:22:23 AM
Lets hope the new mortgage rules don't have to much of a damaging effect on the housing market recovery
OkotoksRealEstate
Posted by: Jason | Mar 19, 2011 7:21:35 PM
