Canadian Home Prices Drop 2% in July

Excerpted from The Toronto Star

Canadian home prices drop 2% in July, sales steady: CREA
Published on Wednesday August 15, 2012

Tara Walton/Toronto Star The Canadian Real Estate Association says resale housing activity remained stable last month, with prices above year-ago levels in most markets but off recent peaks in Greater Vancouver and Greater Toronto.

OTTAWA — Resale housing actively remained stable across the country last month, with prices above year-ago levels in most markets but off recent peaks in Greater Vancouver and Greater Toronto, the Canadian Real Estate Association said Wednesday.

Overall, CREA said sales were down just 0.01 per cent in July compared with June, although nonseasonally adjusted sales were up 3.3 per cent last month compared with July 2011.

The number of newly listed homes under CREA’s Multiple Listing Service fell 3.3 per cent from June to July, while the national average home price was two per cent lower than in July 2011.

“Stable sales combined with fewer new listings firmed the national housing market, keeping it in balanced market territory,” CREA said in its monthly report.

It added that the number of local housing markets was roughly evenly split between those that saw month-over-month gains and those that posted monthly declines.

“Recent changes to mortgage regulations were widely expected to temper sales and prices in Greater Toronto and Greater Vancouver, and the data released today confirms that,” CREA president Wayne Moen said.

“Even so, sales and price trends can be very different from one market to the next, and run counter to national trends,” Moen added.

Gregory Klump, CREA’s chief economist, said recent regulator changes mean some first-time home buyers may have difficulty qualifying for mortgage financing due to shortened amortization periods.

“As the linchpin of the housing market, lower first-time buying activity will have knock-on effects over the rest of the market,” he said, adding that it will likely take more time for move-up buyers to sell their current home.”

Meanwhile, the association said that nationally, resale inventories, or the time it would take to sell current inventories at the current sales rate was 6.1 months at the end of July, unchanged from the June reading.

The months of inventory measure has been hovering around six months since the end of 2010.

Average sale prices in July were up from levels of a year ago in about seven of every 10 local markets, but declining sales activity in Greater Vancouver continued to impact the national average price.

The actual (not seasonally adjusted) national average price for homes sold in July 2012 was $353,147, down two per cent from the same month last year.

Excluding Greater Vancouver from the calculation, the national average price was up 1.1 per cent year over year.

Meanwhile, the MLS Home Price Index, which tracks prices in five of Canada’s most active housing markets — Greater Vancouver, the Fraser Valley, Calgary, Greater Toronto, and Montreal — was up 4.5 per cent year-over year in July.

“This was the third time in as many months that the year-over-year gain shrank, and marks the slowest rate of increase in over a year,” with gains moderated in all housing categories, CREA said.

One and two-storey single family homes posted the strongest year-over-year growth in July, with two-storey single family home prices up 5.8 per cent and one-storey single family prices up 5.6 per cent.

Prices for townhouse and apartment units continue to see more modest gains, rising 2.5 per cent and 2.2 per cent respectively.

The HPI posted the largest year-over-year increase in Greater Toronto at 7.1 per cent, followed by Calgary at six per cent. Lower increase were posted in the Fraser Valley (2.5 per cent), Montreal (2.1 per cent), and Greater Vancouver (0.6 per cent).

However, on a month-over-month basis, prices were down everywhere but Calgary and the Fraser Valley, up 0.3 and 0.14 per cent respectively.

Elsewhere, prices were down month over month by 0.46 per cent in Montreal, 0.33 per cent in Greater Toronto and 0.74 per cent in Greater Vancouver.