National housing market is recovering from last year’s changes to mortgage rules


The national housing market has recovered from last year’s changes to mortgage rules announced by federal Finance Minister Jim Flaherty, according to the Canadian Real Estate Association (CREA).
The evidence is an 18.2 per cent jump in year-over-year sales. This reflects the depth of the weakened sales activity following the mortgage changes announced last July, according to CREA.
“Year-over-year increases in the sales over the past couple of months highlights how activity softened across much of the country following the introduction of tighter mortgage rules last summer,” said Gregory Klump, CREA’s chief economist.
“While the momentum for sales activity began improving a few months ago, it may be losing steam after having only just climbed back in line with an average of the past 10 years. 
“Even so, one can see large year-on-year changes when comparing activity to a month like September 2012, when sales dropped to the lowest level for that month in more than a decade,” he added.
The number of home sales processed through the MLS® systems of Canadian real estate boards and associations and other co-operative listing systems edged up a modest eight-10ths of one per cent on a month-over-month basis in September. Despite the slight increase, it does represents the seventh consecutive month-to-month gain.
Home buyers were also entering the housing market in anticipation of higher mortgage rates down the road.
Actually, mortgage rates have been on the rise since the spring, although at a modest rate. Still, it has provided an incentive to home buyers to now lock in a mortgage rate for a five-year period.
Sales improved on a month-over-month basis in just over half of all local markets, with gains in Greater Vancouver and Greater Toronto offsetting declines in Calgary and Montreal.
Actual activity remained roughly on par with the 10-year average in September. 
Sales were up on a year-over-year basis in about 75 per cent of local markets, led by gains in Greater Vancouver, Calgary, Edmonton, and Greater Toronto.
In Winnipeg, sales activity increased by eight per cent when compared to September 2012.
The local September sales were also three per cent over the 10-year average for transactions during the month. 
Some 340,980 homes have traded hands across the country so far this year, which is 1.8 per cent below levels recorded in the first three-quarters of 2012.
While the national housing market has firmed in recent months, according to CREA, it remains in balanced market territory where it has been since early 2010. 
Based on a sales-to-new listings ratio of between 40 to 60 per cent, about three of every five local markets were in balanced market territory in September.
“Sales activity across much of the country has improved in recent months following a slow start to the year and new listings in some areas have not kept pace,” said CREA president Laura Leyser. “Depending on where they are, there may be a bit more competition among buyers for limited inventory in the months ahead. 
“Because all real estate is local, your REALTOR® remains your best resource for understanding how the housing market is shaping up either where you live or might like to,” she added.
The actual national average price for homes sold in September 2013 was $385,906, an increase of 8.8 per cent from the same month last year. 
Year-over-year average price gains in recent months reflect the decline in sales activity recorded last year in some of Canada’s larger and more expensive markets which caused the national average price to drop.
If Greater Toronto, Greater Vancouver and Calgary are removed from the national average price calculation, the year-over-year increase is 4.3 per cent.
“It is important to note that we are not seeing many signs indicating that owning a house — of any type — is out of reach for households in the other local markets,” said Craig Wright, the chief economist at the Royal Bank of Canada, in a recent RBC report.