Market Watch November 2016 — The Bank of Canada is Holding the Benchmark Interest Rate Steady at 0.5%

The Bank of Canada announced recently that it is holding the benchmark interest rate steady at 0.5%. With the Ministry of Finance introducing new mortgage tightening measures to help cool the housing markets, aimed primarily at Vancouver and Toronto, the Bank of Canada believes it can continue its monetary policy of ultra-low rates to control inflation, stimulate other sectors of the economy, and spur our Canadian export market. Given the reduced growth outlook for the economy, it’s possible that the Bank may cut rates to 0.25% at its next announcement on December 7th.

The Central bank has predicted throughout 2016 that it expects oil prices and the Canadian dollar to stay close to the $49 US for a barrel of crude (currently at $51.78), and 77 cents US for the Canadian dollar (currently at 76 cents). Low interest rates help keep the Canadian dollar low which in turn aids our export market, although global demand for our products has stalled.

Interest rates will likely stay low in Canada well into 2020, and the benchmark interest rate can be cut further if the Canadian economy continues to contract.
The recent new mortgage rules went in to effect quickly after being announced, and will make qualifying a mortgage harder for many buyers.

Ontario - October home sales up year-over-year

Toronto, November 3, 2016 – Toronto Real Estate Board (TREB) President Larry Cerqua announced that Greater Toronto Area REALTORS® reported a record 9,768 sales through TREB's Multiple Listing Service® (MLS®) System in October 2016 – up by 11.5% compared to October 2015. For the TREB market area as a whole, the largest annual rate of sales growth was in the condominium apartment market segment. Detached home sales were up by 10% year-over-year, driven predominantly by transactions in the regions surrounding Toronto.

"The record pace of GTA home sales continued in October, with strong growth observed throughout the month. As we move through November and December, we will be watching the sales and listings trends closely, in light of the recent policy changes announced by the Federal Minister of Finance. TREB will once again be conducting consumer survey work, in order to report on home buying intentions for 2017," said Mr. Cerqua.

The MLS® Home Price Index Composite Benchmark was up by 19.7% on a year-over-year. The MLS® Home Price Index Composite Benchmark was up by 19.7% on a year-over-year basis in October 2016. Similarly, the average selling price for all home types combined was $762,975 – up 21.1% over the same time period. Double-digit increases were experienced for all major home types for the TREB Market Area as a whole.
"New listings were up slightly in October compared to last year, but not nearly enough to offset the strong sales growth. This meant that seller's market conditions continued to prevail as buyers of all home types experienced intense competition in the marketplace. Until we experience sustained relief in the supply of listings, the potential for strong annual rates of price growth will persist, especially in the low-rise market segments," said Jason Mercer, TREB's Director of Market Analysis.

OTTAWA, November 3, 2016 – Members of the Ottawa Real Estate Board (OREB) sold 1,214 residential properties in October through the Board’s MLS® System, compared with 1,159 in October 2015, an increase of 4.7%. The five-year average for October sales is 1,130.

“October’s sales continued the record-breaking resale trend for the third straight month,” says Shane Silva, President of the Ottawa Real Estate Board. “While residential sales are identical to that of October 2015, condominium sales have soared – up by 27.2% over last year. Lower inventory levels, combined with adjusting prices, may be creating these higher than normal activity levels in the condo property class.”
 
October’s sales included 257 in the condominium property class, and 957 in the residential property class. The condominium property class includes any property, regardless of style (i.e. detached, semi-detached, apartment, townhouse, etc.), which is registered as a condominium, as well as properties which are co-operatives, life leases, and timeshares. The residential property class includes all other residential properties.
 
“The new mortgage rules announced at the beginning of October have yet to have an effect on the Ottawa market, as the announcement only came two weeks prior to implementation,” says Silva. “It’s too early to tell what kind of impact the new mortgage rules will have on the Ottawa market going forward. We know that right now Ottawa continues to be a desirable city to live and work, and consumer confidence and job growth remain positive.”
 
The average sale price of a residential-class property sold in October in the Ottawa area was $392,579 an increase of 3.3% over October 2015. The average sale price for a condominium-class property was $251,465, an increase of 0.01% over October 2015.

The Board cautions that average sale price information can be useful in establishing trends over time but should not be used as an indicator that specific properties have increased or decreased in value. The average sale price is calculated based on the total dollar volume of all properties sold.
 
“The hottest segments in our market for October continue to be two-storey and bungalow residential homes in the $300,000 to $400,000 price range, followed by one-level and two-storey condos in the $200,000 to $300,000 price range,” says Silva. “In addition to residential and condominium sales, OREB Members have assisted clients with renting over 2,700 properties since the beginning of the year.”

British Columbia – Home sale and listing activity dip below historical averages in October

Residential property sales in the region totalled 2,233 in October 2016, a 38.8% decrease from the 3,646 sales recorded in October 2015 and a 0.9% decrease compared to September 2016 when 2,253 homes sold. Last month’s sales were 15% below the 10-year October sales average.

“Changing market conditions compounded by a series of government interventions this year have put home buyers and sellers in a holding pattern,” Dan Morrison, Real Estate Board of Greater Vancouver (REBGV) President said. “Potential buyers and sellers are taking a wait-and-see approach to try and better understand what these changes mean for them.”

New listings for detached, attached and apartment properties in Metro Vancouver totalled 3,981 in October 2016. This represents a decrease of 3.5% compared to the 4,126 units listed in October 2015 and a 17% decrease compared to September 2016 when 4,799 properties were listed.

Last month’s new listing count was 9.5% below the region’s 10-year new listing average for the month.

The total number of properties currently listed for sale on the MLS® system in Metro Vancouver is 9,143, a 4.5% decrease compared to October 2015 (9,569) and a 2.3% decrease compared to September 2016 (9,354).

The sales-to-active listings ratio for October 2016 is 24.4%. Generally, analysts say that downward pressure on home prices occurs when the ratio dips below the 12% mark for a sustained period, while home prices often experience upward pressure when it surpasses 20% over several months.

“While sales are down across the different property types, it’s the detached market that’s seen the largest reduction in home buyer demand in recent months,” Morrison said. “It’s important to work with your local REALTOR® to help you navigate today’s changing trends.”

The MLS® Home Price Index composite benchmark price for all residential properties in Metro Vancouver is currently $919,300. This represents a 24.8% increase compared to October 2015 and a 0.8% decline compared to September 2016.

Sales of detached properties in October 2016 reached 652, a decrease of 54.6% from the 1,437 detached sales recorded in October 2015. The benchmark price for detached properties is $1,545,800. This represents a 28.9% increase compared to October 2015 and a 1.4% decrease compared to September 2016.

Sales of apartment properties reached 1,178 in October 2016, a decrease of 23.7% compared to the 1,543 sales in October 2015. The benchmark price of an apartment property is $512,300. This represents a 20.5% increase compared to October 2015 and a 0.3% increase compared to September 2016.

Attached property sales in October 2016 totalled 403, a decrease of 39.5% compared to the 666 sales in October 2015. The benchmark price of an attached unit is $669,200. This represents a 25.7 per cent increase compared to October 2015 and a 1.1% decrease compared to September 2016.

Alberta - Year-over-year sales up and prices holding for October


Edmonton, November 2, 2016 – Edmonton’s housing market remains constant for another month with residential unit sales increasing in October by 5.5% year-over-year. Single family unit sales increased by 7.1% year-over-year, condominium unit sales were down 3.9% year-over-year, and duplex/rowhouse unit sales climbed 17.4% over reported unit sales in October of 2015.

“The housing market in Edmonton continues to experience relative stability, with increased sales and steady prices year-over-year for October,” said Steve Sedgwick, Chair of the REALTORS® Association of Edmonton. “We typically see the market slow during the colder months, so it is encouraging to see us moving into late fall with strong numbers.”

A single family home in the Edmonton Census Metropolitan Area (CMA) sold for an average of $423,755, which is down 1.6% from September and down 1.75% year-over-year. Condominium prices were up year-over-year by 0.5% and down by 2.3% month-over-month. Duplex/rowhouse average prices also decreased 7.7% from the previous month and 6.9% from October 2015. However, all residential property prices were mostly unchanged in October, only down 0.64% compared to 2015.

“We’re seeing buyers who are confident in the future of the Alberta economy, and we are heading towards a solid finish to 2016,” Sedgwick said. “Residential unit sales across all categories are down 6.0% year-to-date compared to last year, however, our prices remain stable.”

The average days on market increased in October, which is typical for this time of year. In total, 1,265 units sold in October, with the average residence in the Edmonton CMA needing only 61 days to sell. Single family detached homes sold on average in 57 days, 3 days longer than September, and condominiums sold in 65 days, which was unchanged from the previous month. Duplexes/rowhouses needed an extra week, selling on average within 67 days in October compared to 60 in September. In October, there were 2,147 new listings available in the Edmonton area, down from 2,272 listings that came on the market in October 2015. With sales up over last year for October, the reported sales to listing ratio moved from 53% to 59%, indicating balance in the market.