Canadian Real Estate Update

By: Virginia Galt

(Source: Globe and Mail)

Canadian home sales dipped slightly in August as the market took a breather after a robust spring and summer, according to statistics released Tuesday by the Canadian Real Estate Association.

Year-over-year, the number of resale homes trading hands was up 18.5 per cent from August, 2008.

“On a seasonally adjusted basis, national …[resale] home sales held steady. At 42,426 units, seasonally adjusted activity came within six-tenths of 1 per cent of levels in the previous month,” CREA said.

“Seasonally adjusted activity in Alberta and Quebec declined, offsetting activity gains in British Columbia.”

Economists had expected that the pace of resale activity might ease a bit between July and August “following a 61 per cent blast-off in the prior six months,” Douglas Porter, deputy chief economist of the Bank of Montreal, said in his morning research note.

The market, however, remains buoyant, “led by a powerhouse performance in Vancouver, up a cool 117 per cent year over year,” Mr. Porter said.

Dale Ripplinger, president of the national real estate association, said national sales activity in the third quarter “is on track for a significant increase compared to the second quarter.

“Low interest rates and affordability continue to attract home buyers to the housing market. Consumer confidence continues to rise, which bodes well for activity in the coming months.”

Demand continues to improve in Canada’s more expensive housing markets, which has pulled the average price to $324,779, up 11 per cent from the average price a year earlier. “This is the highest national average price for the month of August,” CREA said.

Toronto-Dominion Bank economist Millan Mulraine said “the modest down-shift in sales in August should not be seen as anything other than a brief respite in what has been a remarkable recovery in the sector.”

However, his outlook was more reserved than CREA’s.

“We believe that Canadian housing market activity in the coming months will be relatively tepid as the sector consolidates the gains made since January,” Mr. Mulraine said.

B.C., where sales rose 4.7 per cent month over month, was the only province to post any “meaningful growth” in August resale activity, Mr. Mulraine noted. Sales were up 0.5 per cent month over month in Ontario.

Elsewhere, the number of homes changing hands declined between July and August: down 5.3 per cent in Alberta, down 4.1 per cent in Quebec, down 3.9 per cent in Saskatchewan, and down 1.5 per cent in Manitoba.

Mr. Porter said the number of new listings continues to drop, down 8.9 per cent year over year. “Accordingly, houses continue to forge higher.”

Although the price picture is skewed by sales in Canada’s most expensive real estate markets, prices are still “quite healthy,” Mr. Porter said, noting that 20 of Canada’s 25 largest markets reported price increases from year-ago levels in August.

“The only cities in the red are Windsor (autos trauma), Sudbury (nickel shutdowns), Kitchener (auto parts reeling), Calgary and Edmonton (gas prices),” Mr. Porter wrote.

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