Building Magazine


Worries about a hard landing for Canadian housing market a faint memory: BMO Economics

According to BMO Senior Economist Robert Kavcic, the latest data from the Canadian Real Estate Association show that the underlying conditions in Canadian housing market remain balanced. Existing home sales saw a seasonally-adjusted gain of 0.8 per cent from the prior month and a jump of 18.2 per cent from a year ago.

“Any worry about a hard landing in Canadian housing has quickly become a faint memory, and underlying conditions are more balanced than the flashy headline results suggest,” said Kavcic.

“Anyone ringing alarm bells because of the year-over-year gain should consider a few qualifiers,” says Kavcic.  “First, the year-ago comparison must take into account the slump in sales in September 2012 in the wake of stricter mortgage rules. Second, the rise in sales over the past month is cooler than the 2.6 per cent-per-month pace seen over the prior 4 months; and we suspect that much of the strength over that period was in response to higher mortgage rates with buyers jumping in before lower-rate approvals expired, and that activity should fade later in the year.”

Kavcic noted that in addition, the level of sales is only about 5 per cent above the 10-year average, and the reported average prices are being skewed higher by a surge in pricy Vancouver sales. “Otherwise, the data shows a balanced overall market with the sales-to-new listings ratio was very close to historical norms,” said Kavcic

Regional Highlights

  • Regionally, Kavcic said that the big story continues to be the snap-back in Vancouver.  “Sales were up 64.3 per cent year over year in September. That, combined with a 5.6 per cent year-over-year drop in new listings has all but eliminated the buyers’ market that prevailed for much of the past year.” 
  • Meanwhile, Calgary showed itself to be among the best performers, with sales up 20.5 per cent. Sales fell month-over-month, outpacing a drop in new listings, but sellers still have a slight upper hand in the city.
  • Toronto’s market balance is right in-line with the decade average, despite a strong 26.1 per cent year-over-year jump in sales.
  • Finally, Montreal is not seeing the same sales rebound as most other major cities, and prices have underperformed over the past 6 months; a stagnant Quebec economy might be one factor.

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