The Canadian Real Estate Association (CREA) has updated its forecast for home sales activity and prices for 2014 and 2015.

Little is expected to change on the sales front but nationally average home prices are expected to increase by 5.7% in 2014 but by such 0.7% in 2015.

The CREA report says that an extraordinarily bleak winter resulted in slow start to 2014 national sales activity. As the first quarter ended, sales momentum heading into spring was constrained by a continuing shortage of listings in a number of local markets. However, the rise in newly listed properties in April and May supported an increase in sales activity.

Overall, the deferral of sales and listings reflects a delayed start to the spring home buying season, with combined sales for the period from March to May coming in largely as anticipated and at average levels. These deferrals are now likely to have been largely depleted, which suggests that the strength of sales momentum heading into the summer may be transient.

CREA’s forecast for sales activity in 2014 is largely unchanged from its previous forecast published in March. At that time, interest rates had been expected to start to edge higher in the second half of the year. However, it now appears that interest rates may not begin to rise until closer to the end of the year, which remains supportive for home ownership affordability over the balance of 2014.

Sales are forecast to reach 463,400 units in 2014, representing an increase of 1.2% compared to 2013. This is little changed from CREA’s forecast of 463,700 sales, a rise of 1.3%, published in March.

Activity is still expected to remain in line with its 10 year average and to hold within fairly short reach of 450,000 units for the seventh consecutive year.

British Columbia is forecast to post the largest year on year increase in activity at 8.3% and make the biggest contribution to the increase in national sales activity. B.C.’s projected increase in sales this year largely reflects a slow start to 2013.

Alberta’s annual sales are projected to rise by 3.8% in 2014, while activity in Saskatchewan, Manitoba, and Ontario is expected to be roughly in line with 2013 levels. Sales are forecast to fall by 1.7% in Quebec, by 4.2% in New Brunswick, by 5.1% in Nova Scotia, and by 2.6% in Newfoundland and Labrador.

In 2015, the outlook for the economy, jobs and incomes is one of further improvement, accompanied by a slow and gradual increase in fixed and variable mortgage interest rates.

On balance, these two opposing factors should most benefit housing markets where sales are currently softer but prices remain more affordable. Sales in relatively less affordable housing markets are likely to be more sensitive to higher fixed mortgage rates, whether from the standpoint of higher monthly mortgage payments or qualification for mortgage financing based on the posted five year mortgage interest rate.

As such, provinces east of Ontario are expected to post the largest gains in activity in 2015 in the range of around 2.5% to 5% while sales in provinces from British Columbia to Ontario are forecast to remain little changed.

National activity is now forecast to reach 467,800 units in 2015, representing a further annual increase of 0.9%. This would result in sales staying in line with the 10 year average for the eighth year in a row.

Average prices have remained firm and continue to reflect a rise in the share of national sales among some of Canada’s most active and expensive markets compared to last year. Additionally, prices have been heating up in some markets, particularly in Calgary and Toronto where single family properties remain in short supply.

The national average home price is now projected to rise by 5.7% to $404,300 in 2014, with similar sized gains in British Columbia, Alberta, and Ontario. More modest changes in average prices are forecast for all other provinces this year.

The national average price is forecast to edge up a further 0.7% in 2015 to $407,300. Alberta and Manitoba are forecast to post average price gains of2% in 2015, followed closely by Ontario at 1.2%. Average prices in all other provinces are forecast to remain stable, edging up by less than 1%.

Source: PropertyWire

Recent news that Toronto has caught up to Vancouver with single detached homes averaging more than $1 million raises an interesting question as to why these two cities have such high housing prices relative to the rest of Canada.

High housing prices are surely affected by low mortgage rates, but this is true for all housing markets in Canada. Yet, the most expensive housing markets experience price acceleration that is faster than other cities. According to the Canadian Real Estate Association, for the period March 2013 to March 2014, average house prices have risen 7.3 and 5.6 per cent respectively in Toronto and Vancouver, which is more than the 4.9 and 1.5 per cent in Calgary and Edmonton respectively.

It is all about demand and supply. If demand rises faster than supply, housing prices increase, as in many western provinces and Ontario metropolitan cities. If demand is less than supply, housing prices will fall, as in the case of Quebec City and Halifax.

Demand for housing depends on population growth, demographics and investors looking for property investments in Canada.

Calgary (4.3 per cent) and Edmonton (3.8 per cent) have one of the fastest population growth rates among metropolitan areas in the country. Toronto and Vancouver are less at 1.5 and 1.4 per cent respectively, which is more typical for Canada as a whole.

Those cities, with younger populations becoming homeowners for the first time, will also push up demand — Calgary and Edmonton have the youngest populations in Canada. Marriage breakdowns also increase the demand for housing. So will investors who buy houses to rent out, hoping to cash in on higher prices in the future. Rental vacancy rates in 2013 are least in Calgary at one per cent. Vacancy rates are below two per cent in Toronto, Vancouver and Edmonton.

Yet, Toronto and Vancouver prices continue to rise faster than Edmonton and Calgary. Why is that so, since demand factors suggest that prices should be booming most in Calgary? To answer this question, one needs to look at supply conditions for home building.

The cost of new homes will drive up housing prices since new supply will not be forthcoming unless prices are sufficient to cover costs. The 2009-12 Canada Mortgage and Housing Corp. new housing price index has risen fastest in Toronto, while Vancouver’s, Calgary’s and Edmonton’s has been more muted, although Calgary’s new housing prices have risen sharply recently at 4.9 per cent.

An important factor influencing the cost of new homes are land prices, since building costs per square metre don’t differ as much across cities. Toronto and Vancouver have quite high land prices, which is why detached homes are so expensive there.

Land prices are heavily influenced by zoning and urban growth policies. A recently released paper by Calgary’s School of Public Policy provides a comparison of policies adopted in Calgary and Edmonton with those of Vancouver and Toronto. While the authors, Zack Taylor, Marcia Burchfield and Anna Kramer, do not examine the impact of urban growth policies on housing affordability, their analysis provides some important food for thought for urban planning in the future.

In the past two decades, Vancouver has followed intensification strategies, requiring new housing to be built on an existing area of land and greater transit use. Toronto has also pursued intensification in recent years, although some suburban expansion has continued. In contrast, Edmonton has followed an expansionist strategy, although with some densification in the past decade. Calgary’s urban growth has been expansionist, similar to Edmonton, although it has adopted an intensification strategy since 2009.

An intensification strategy provides a number of benefits to communities by making more efficient use of land. The inner city is less hollowed out since the population cannot move further from the centre. Density increases to accommodate new demand and growing cities develop new business centres, not just those at the core. Greater use of transit helps reduce environmental costs related to pollution.

As desirable as it is for urban planning to prevent urban sprawl, intensification has consequences that should not be ignored. Calgary’s younger and migrant families prefer houses with land that are typically more affordable in the suburbs. Without expansion, housing which is desired by new owners will become less accessible, driving up prices for detached homes, like has happened in Toronto and Vancouver in the past decade.

After all, if more people are added to the same available land, it is bound to push up land costs for housing. Only if the city releases existing land in its boundaries for housing development will it be possible to bring on enough supply to keep housing prices sufficiently low. Otherwise, higher housing prices per square metre will force people to live in smaller houses to maintain affordability, or move to surrounding areas beyond the urban border where housing is cheaper.

While accelerating housing prices have not yet occurred in Calgary, which faced an economic recession in 2009, housing affordability may become an issue if insufficient new housing is being built. This could lead to increased demand for low cost housing, which could be partly relieved by relaxing regulations such as those with respect to secondary suites.

Calgary’s policy regime is not built in stone since it is so different from the past. If housing becomes much less affordable in the future, the voters may demand from its mayor and council a new approach that provides better balance between intensification and expansion.

Source: Jack Mintz, Calgary Herald

There are two main options when buying a home: Either you buy new – a completely new build – or you buy used.

If you’re buying a new home, make sure you check out the builder, their track record and speak to people who have bought their home from the same builder.

Were they happy with their new home? Did they have any problems within the first year? Second year? What types of problems were they? Did they require major fixes, like a leaking basement, a problem with the HVAC or electrical issues? How helpful was the builder when it came to fixing the problem?

Just because a house is new doesn’t mean it won’t have issues. I’ve seen brand new homes, not even five years old, with major fixes that nearly bankrupt the homeowner. A new home shouldn’t have major problems, but too many times it does.

If you’re looking at used homes, be careful with ones that were flipped. These homes are especially a problem because they are deliberately made to look good, but aren’t necessarily built or renovated to be good. They take advantage of homebuyers’ lack of knowledge when it comes to picking out shoddy workmanship.

Looks are deceiving. A home that’s been flipped banks on it.

I don’t like flips because most of them are done with one purpose: To make a profit. In most cases, the homeowners don’t care about quality because they won’t be living there. Their top priority is to sell fast to save on mortgage payments. And once it’s sold, any problems in the home become the responsibility of the new owners.

How do you know if it’s a flip? There are some warning signs, but again, it comes down to doing your homework. Most people think you need to be a pro to pick out the warning signs, but a lot of it is just common sense.

For example, if the homeowner tells you that they just finished renovating the kitchen and bathroom, how much do you want to bet that they had enough money to do both renovations right?

A standard kitchen renovation done properly will cost at least $30,000. A bathroom reno can cost close to $20,000. If the only reason for renovating was to sell, I would be cautious on how the work was done. Good work takes time, and it isn’t cheap. Ask the homeowner details about the reno, such as how long it took to find the right contractor, set up the job, choose materials and for the work to be done. If all it took was a few weeks, I would be cautious.

If a home looks like it’s been renovated, do a search for any permits on work completed. If changes were made to the plumbing, electrical or structure, permits needed to be pulled.

Also look for cheap materials, such as MDF for cabinetry or laminate flooring. Keep an eye out for bad trim and sloppy paint jobs — these are red flags for quick and cheap renos. When the trim is off or doesn’t line up, you can bet that the workmanship isn’t top quality. If they fumbled on the finishes, they probably cut corners on the stuff they know most buyers will not see — the stuff behind walls and below flooring.

If windows were replaced, check to make sure that they are at least Energy Star rated. If the home has bad windows, you will pay for them for years in extra energy costs. And the cost of replacing them will run you at least $10,000. So if they need replacing, as a buyer, you need to know.

One last thing home buyers can look into is getting a home-history report on a property. Some home inspectors even include this service as part of their basic home inspection. A home-history report uses municipal, provincial and federal data to gather the most up-to-date property information. It’s an extra tool that helps protect a home buyer, so you know exactly what you’re walking into.

A home-history report can tell you the home’s previous sales price, sale dates, building permit information, information on structure or any previous insurance claims related to the property. You should know if a home you’re looking at had major water damage, flooding, a fire or damage from a natural disaster. Some home-history reports can even tell you if a house was ever used for illicit purposes, like a grow-op or meth lab.

The more information you have on a property, the better. You will know if the electrical or plumbing needs to be looked at by a professional to make sure it’s safe, or if the structure of the home has been modified or undermined. It puts you in a better position to buy the right home and buy it smart.

Source: Mike Holmes, Postmedia News

Signs of weakness are lurking below the surface in Vancouver’s surging housing market, as new home prices dropped by the most in Canada over the past year.

According to data released yesterday by Statistics Canada, new home prices dropped 1.1 per cent year-over-year in Vancouver.

That was the biggest drop among major Canadian cities. Across the country prices were up 1.6 per cent, with Calgary leading the way with a 7.5 per cent year-over-year gain.

For Vancouver, it was the third straight year of decline in the New Housing Price Index. In the same time period, Toronto has shown strong gains, slowly catching up to Vancouver in the million-dollar-home benchmark club.

Meanwhile though, for those buying and selling in Vancouver’s existing home market, it’s still a story of rocketing real estate. The single-family home index was up 6.6 per cent year-over-year in April for Vancouver’s west side, at a stunning $2.2 million. Vancouver’s east side was up 8.8 per cent for the same benchmark year-over-year, to $901,000 for a single-family detached home.

Regardless, in the big picture the number of Canadians able to buy into a Vancouver housing market that has basically skyrocketed for 15 years, is steadily shrinking.

Since the global credit crisis of 2008, the Canada Mortgage and Housing Corp. has taken baby steps to reduce its massive mortgage insurance balance sheet. The CMHC continues to tighten its mortgage rules, in line with concerns of former Canadian Finance Minister Jim Flaherty. However, for those who qualify for mortgages financing remains cheap, with interest rates at historic lows.

Source: Sam Cooper, The Province

For many years, the Canadian and U.S. housing markets tracked each other fairly closely, but that hasn’t been the case since the U.S. housing bubble burst in the middle years of the last decade.

According to an analysis from BMO chief economist Doug Porter, the difference between the two housing markets has never been greater, with average resale prices in Canada now 66 per cent higher than resale prices in the U.S.

The strength of Canadian home prices has surprised even optimistic observers. The latest data from the country’s real estate boards indicates resale prices (not including new builds) jumped six per cent in the past year, and the average price of an existing home in Canada has now pushed past $400,000.

That compares to an average price of around $250,000 in the U.S.

Comparisons like this are never as telling as they seem, because of differences in how average prices are measured, and because average prices say little about which way a housing market is headed.

And then of course there is the fluctuating exchange rate, but Porter notes that even after adjusting the numbers for exchange rate changes, Canada’s housing market is still about 50 per cent more expensive than the U.S.

“The main takeaway is that, contrary to all expectations, the Canadian housing market has just kept on rolling in 2014 even as the U.S. housing market has paused for breath (after a steep climb out of the dungeon),” Porter wrote in a client note last week.

But will it keep on rolling? The seemingly endless debate continues between those forecasting a Canadian housing bubble burst and those saying the market is healthy.

Yet with recent weakness in housing starts and building permits, some economists — such as BMO’s Sal Guatieri — have started to warn that a housing market correction could cause a recession.

Guatieri noted in a report earlier this month that Canada has become more reliant on real estate-related jobs than it has been in the past, making the economy more vulnerable to a correction.

But overall, the bank sees the odds of a serious housing market bust-out as being low.

All the same, a significant number of international investors have gone bearish on Canada’s housing market, predicting double-digit price collapses. Pimco, the trillion-dollar hedge fund run by billionaire Bill Gross, recently predicted a 30-per-cent collapse in house prices in Canada over the next few years, starting this year.

If Pimco’s prediction were right on the money, and nothing changed in the U.S. market, Canadian average resale prices would still be about a third higher in Canada than in the U.S. — even after the price crash.

Source: Daniel Tencer, Huffington Post Canada

A report released today by Grosvenor’s research team suggests that Canadian cities are the best bet for long-term real estate investment, with Toronto, Vancouver and Calgary taking the first, second and third spots respectively. The research ranks 50 of the world’s top cities according to their resilience: a product of their environmental and social vulnerability and adaptive capacity, which covers community, infrastructure, resources, environmental and climatic factors.

“Toronto is no stranger to the importance of resiliency, having endured natural disasters such as the 1998 ice storm and even Hurricane Hazel, in 1954,” said Richard Barkham, Grosvenor’s Group Research Director. “The investment of city leaders in infrastructure and its commitment to upgrading it over the decades has put Toronto at the top of Grosvenor’s list of the world’s most resilient cities.”

“Canada, as a whole, is doing exceptionally well in developing resiliency. The top three most resilient cities in Grosvenor’s Resiliency index are Toronto, Vancouver and Calgary. For investors in property and real estate, it makes Canada a very sound long-term investment.”

Key findings from the research are:

* The most resilient cities are in Canada, with Toronto, Vancouver and Calgary taking the top three spots respectively.

* American cities are relatively vulnerable, but their capacity to adapt makes them fairly resilient. The lowest ranked cities are also those with the highest population forecast figures.

* The middle group of cities, ranked 11 to 30, are fairly close to the top 10 in their scores so must be considered resilient. Most European cities fall into this group. London is ranked 18th.

* The weakest 20 cities are in emerging markets and are considerably weaker than the top 30. Eight of these are in the so called BRIC countries. So far, blistering economic growth has not fed through into the quality and long term resilience of these cities.

Source: Marketwired

The Canadian Real Estate Association (CREA) has updated its forecast for home sales and prices, saying it expects transactions and values to increase during the spring months and into 2015.

The national average home price is forecast to rise by 3.8% to $397,000 in 2014, with similar sized gains in British Columbia, Alberta, and Ontario. Modest changes in average prices are forecast for all other provinces this year.

The national average price is forecast to rise a further 1.1% in 2015 to $401,400. Alberta is forecast to post the biggest rise in average price in 2015 at 2.5%, followed closely by Manitoba at 2%. Prices in Saskatchewan, Ontario, and Newfoundland and Labrador are forecast to grow by about 1% in 2015, with other provinces managing gains of close to 0.5%.

National resale housing activity started 2014 at lower levels compared to previous years and CREA explained that this partly reflected stronger levels of activity recorded last summer and autumn when buyers with pre-approved mortgage financing advanced home purchases before their lower pre-approved rates expired.

It also likely reflects the deferral of some activity due to what has been an exceptionally tough winter in many parts of the country. Taking this into consideration, and with mortgage rates having edged lower, home sales are expected to trend higher and be further supported over the second half of 2014 by a widely anticipated pick up in Canadian economic growth.

‘I expect fixed mortgage rates will edge marginally higher in the second half of 2014 as evidence confirms an anticipated pick up in economic growth,’ said Gregory Klump, CREA’s chief economist.

‘Marginally higher mortgage rates are likely to counterbalance the lift provided by stronger economic and continuing job growth, and restrain the momentum for sales activity,’ he added.

He explained that, on balance, the combination of these two opposing factors is expected to most benefit housing markets where sales are currently weak but prices remain more affordable. Sales in relatively less affordable housing markets are likely to be more sensitive to higher fixed mortgage rates, whether from the standpoint of higher monthly mortgage payments or qualification for mortgage financing based on the posted five year rate.

Sales are forecast to reach 463,700 units in 2014, an increase of 1.3% from 2013. This would place sales in line with their 10 year average, and hold national activity to within fairly short reach of the 450,000 mark for the seventh year in a row.

British Columbia is forecast to post the largest year-on-year increase in activity at 8.3% and make the biggest contribution to the increase in national sales activity. The increase in 2014 sales activity reflects slow sales for the province in early 2013 and a replay of that weakness is not expected this year.

Annual changes in activity in other provinces are forecast to range between plus and minus 3% in 2014 with the exception of a slightly larger decline in Nova Scotia.

In 2015, national activity is forecast to edge up a further 1.2% to 469,400 units. Affordability is expected to restrain activity in Canada’s most expensive markets, with annual sales forecast to decline marginally in British Columbia, and hold just below 200,000 units in Ontario for the fourth consecutive year. Alberta is the notable exception, where it is anticipated that strong economic and job growth combined with supportive demographic trends will result in strengthening annual sales activity.

CREA also said that average prices have remained firm and continue to reflect a rise in the share of national sales among some of Canada’s most active and expensive markets compared to last year. Also, prices have been heating up in some markets, particularly in Calgary and Toronto where single family properties are in short supply.

Source: PropertyWire

Maybe it’s the sky-rocketing home prices in key markets, but Canadians are saying sayonara to the traditional way of buying a home and are either going in alone or doubling up with friends or relatives.

A quarter of Canadians who’ve bought a home in the last two years made the significant financial move on their own, while four in ten Canadians believe purchasing a home with friends and family is a great way to access the housing market, according to a survey by TD.

Households comprising of single Canadians make up 27.6 per cent of all homes, according to Statistics Canada. And it looks like young, single women are dominating the solo route in Canadian cities. Women, especially those in their 20s, represent one-third of all condo sales in Montreal and Toronto, according to the Globe and Mail newspaper. Single women are more likely than men to be solo first-time home buyers thanks to changes in income levels and demographic shift, according to RBC’s 19th annual Homeownership Poll.

“Women are being more cautious than men, weighing cost, affordability and job security before buying a home,” Marcia Moffat, head of home equity financing for RBC, said in a recent release.

But there are those who are less comfortable making the investment without a safety net or financial support. Toronto resident Mike McCann went the non-traditional route, purchasing a property with multiple buyers because of the security it offered.

“For larger properties I would work within a partnership for financial reasons,” McCann says.

If you are buying alone or with a partner, many of the guiding principles that exist for traditional, nuclear families still apply. For instance, you need to know how much you are comfortable spending and what your budget will look like once home-associated costs are accounted for.

“Once homebuyers set their budget and down payment, they can take their prospective monthly mortgage payment for a test-drive and ‘pay’ into a TFSA or savings account,” says Michelle Snow, associate vice president, retail products at TD in a release.

“This two-fold solution allows the homebuyer to see how comfortable the monthly mortgage payment is before locking in, and save for a larger down payment at the same time. For co-purchasers, it opens the line of communication to talk about how these monthly payments will work after the purchase.”

Communication will be key in any alternative purchasing plan, especially when it comes to the purchase price, which is a motivating factor for pooling capital and seeking alternative home buying strategies in the first place.

“I think it is predominantly due to an increase in property prices and tighter lending requirements,” Snow says of the influx of co-purchasers.

For example, 96 per cent of Ontario-based home buyers consider the price of the home the most important factor when purchasing property, according to research from the Real Estate Council of Ontario. The national average purchase price for a single-family home in Canada now sits at $406, 372, which is a 10 per cent increase from the same month year-over-year (February), according to the Canadian Real Estate Association.

From an ownership standpoint, buying a home by yourself or with a group isn’t necessarily better than what has been traditionally observed in the Canadian housing market says Chris Allen a Toronto-based realtor.

Then again “If you have the capital then absolutely go ahead and put it in your name and finance the property yourself or with your friends and family,” says Allen. “The trend with ‘team buying’ is a good thing if you’ve done your due diligence with your friend, you don’t want to get into a business relationship without nailing down all of the facts.”

Consider this before you buy a home with your group of besties: If you are buying a home there should be some legally-binding agreement that protects home buyers from one of the other members leaving the arrangement, cautions certified financial planner Margaret Richards.

“[Traditionally] if you are married there is family law to protect you,” says Richards.

Source: Haaruun Dhubat, Yahoo! Canada Finance

Unlike a lot of first-time home buyers, in 2009 Jesse MacNevin decided to go for a house that was less than the amount he was approved for.

“I started doing the numbers and talked to a few real estate agents,” he says. “Then I went to my credit union for a pre-approval. I realized then that I needed to focus more on what I could actually afford versus how much they would give me.”

While he was given the green light to aim for a $350,000 home, he settled on a condo for just under $260,000 instead. “I didn’t want home ownership at the expense of everything else. I remember looking at my budget at the time and thinking the last thing I wanted was not to be able to travel. It wasn’t exactly what I wanted, but it was cheaper and fulfilled all my needs. In hindsight, it was a good move.”

MacNevin says having a good real estate agent and lawyer helped him determine what he could really afford, where there might be potential problems and the ins and outs of closing the deal. A mortgage broker was also important when it came to the signing process and making sure there was flexibility in his mortgage terms.

Not everyone entering the home buying market is so diligent.

When doing the mortgage math, it’s not enough to plug some numbers into an online estimator, says David Stafford, managing director, real estate secured lending, for Scotiabank in Toronto. “This is probably the largest single financial transaction that most people do in their lives, and it can get very complicated. Online estimators typically won’t give you the full picture.”

He says buyers need to look beyond the actual purchase price and factor in a percentage (typically 1.5 per cent of the purchase price) for closing expenses from the outset. “Land transfer taxes, legal fees, title insurance and other things are all part of the math.” They also need to consider ongoing expenses that will be over and above monthly mortgage payments, such as utilities, property taxes, insurance, maintenance and condo fees.

Sometimes there are additional surprises that come into play in the initial stages of home ownership, such as reimbursement fees if the former owner has prepaid their property taxes and moving costs, says Toronto-based Richard Desrocher, a general legal practitioner and former real estate broker.

The immediate financial aspects are only part of the process, which is why a home inspection is a good idea, he says. “You won’t know what’s going on behind the walls and on the roof. It’s pretty scary after you close a deal to have to deal with drain problems.”

There are also ways people can reduce their costs if they talk to the right people, Desrocher says. “A lot don’t realize that many financial institutions are willing to negotiate down from their published rates. A mortgage broker is much better informed about where the best deals are and can shop the market for you.”

Source: Denise Deveau, Postmedia News

Property prices in Canada increased by 10.1% compared with a year earlier, taking the national average price for homes sold in February to $406,372, according to the latest figures from the Canadian Real Estate Association.

CREA says that the size of year on year average price gains continues to reflect the decline in sales activity in February of last year among some of Canada’s most active and expensive markets, which dropped the national average at that time. This phenomenon was particularly clear this month, with Greater Vancouver having posted the biggest year on year increase in activity by a large margin.

The MLS Home Price Index, regarded as providing a better gauge of price trends because it is not affected by changes in the mix of sales activity the way that average price is, rose 5.05% on a year on year basis in February, up from a 4.83% gain in January. Year on year price growth picked up among all property types tracked by the index.

Price increases were led by two storey single family homes with growth of 5.84% and one storey single family homes at 5.4%. This was closely followed by price increases for town house and terraced units up 4.05% and apartment units up 3.74%.

The biggest gains were recorded in Calgary where prices jumped 9.1% and Greater Toronto with growth of 7.28%. Greater Vancouver’s recorded a fourth consecutive year on year increase of 3.17% while prices in Victoria remained lower than year ago levels, down 1.01%, the smallest in more than three years.

Sales were largely unchanged with an increase of just 0.3% compared to January but the slight rise follows five straight monthly declines and means that transactions are 9.3% below the peak reached in August 2013.

The number of local housing markets where February sales were up ran roughly even with the number of markets where sales declined, with little change in activity among most of Canada’s large urban markets.

‘Sales in February rebounded in some of the smaller local markets where activity was impacted by harsh winter weather in January. The strength of sales activity during the crucial spring market period will be influenced by the availability of listings, which varies considerably from market to market,’ said CREA president Laura Leyser.

Sales activity this spring will be supported by the recent decline in the benchmark five year conventional mortgage rate, according to Gregory Klump, CREA’s chief economist.

‘That’s because buyers needing mortgage default insurance who opt for a term of less than five years must qualify for mortgage financing based on that rate, and not a discounted rate that their lender may be offering. The support will be of particular importance in some of Canada’s larger urban markets where home prices are higher than those in smaller markets,’ he added.

The number of newly listed homes was also little changed in February, having edged up 0.6% on a month on month basis. As with sales activity, there was a roughly even split between the number of local markets where new listings were up from the previous month and those where they were down.

The number of new listings nationally would have declined had it not been for a 7.8% increase in Greater Toronto, where new listings in January had dropped to the lowest level in more than three years. The rise in new listings in Greater Toronto was offset by monthly declines in new listings in Greater Vancouver and Edmonton.

With sales and new listings having both edged slightly higher in February, the national sales to new listings ratio was 52.1%, virtually unchanged from 52.3% in January. Since early 2010, the ratio has remained firmly entrenched within the range from 40 to 60% that marks balanced territory. Just under two thirds of all local markets posted a sales to new listings ratio in this range in February.

The number of months of inventory is another important measure of balance between housing supply and demand. It represents the number of months it would take to completely liquidate current inventories at the current rate of sales activity.

There were 6.4 months of inventory at the national level at the end of February 2014, down slightly from 6.5 months at the end of January. As with the sales to new listings ratio, the months of inventory measure continues to point to a well balanced housing market at the national level.

Source: Property Wire