The Canadian Real Estate Association (CREA) released their monthly statistics for August 2013, revealing that while the Canadian housing market has tightened, it’s still in balanced territory.
Actual activity (not seasonally adjusted) was over 11% above August 2012, which is basically inline with the 10-year average and again, sales were up on a year-over-year basis in many markets, led by double-digit gains in Vancouver Island, Victoria, Greater Vancouver, the Fraser Valley, Calgary, Edmonton, and Greater Toronto.
“Sales activity dropped sharply around this time last year in the wake of tightened mortgage rules and has improved since then, so a sizeable year-over-year increase this August was expected,” said Gregory Klump, CREA’s Chief Economist. “Buyers who put off purchase decisions or who were otherwise sidelined by tighter mortgage rules and lending guidelines implemented last year were anticipated to return to the housing market. That said, the upward trend and levels for activity in recent months has been steeper than expected, but that may not last.”
“Recent increases to fixed mortgage rates caused sales to be pulled forward as buyers with pre-approved financing at lower rates jumped into the market sooner than they might have otherwise,” Klump added. “That pool of homebuyers has largely evaporated so demand may soften over the fourth quarter. The outsized year-over-year gains may persist, however, due to weak sales toward the end of last year.”
National home sales across Canada rose almost 3% on a month over month basis from July to August. While specific local sales experienced both increases and decreases, the major urban centres and surrounding areas like the lower mainland tipped the balance to contribute to this more positive outlook. Additionally, the MLS® Home Price Index (HPI) rose almost 3% year-over-year in August.
“All real estate is truly local, but sometimes sales trends can change similarly in a large number of markets at the same time due to factors that can affect all markets across Canada,” said CREA President Laura Leyser. “The recent hike in fixed mortgage rates is one example of an influence that affects all markets, but it’s just one of many things that shape housing market trends. Your local REALTOR® remains the best resource for understanding what’s driving the housing market where you live or might like to.”
The national price for homes in August 2013 averaged at $378,369, which is an increase of over 8% from August 2012. These gains reflect last year’s declines in higher priced markets like Vancouver and Toronto. Vancouver’s long-term average proportion of national activity is 7.4% on an unadjusted basis, but fell to 4.6% last year; however since then, it has rebounded and now sits at 6.3%, which is its second highest level in the past year.