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Record sales in Canada - 27 April 2007
Housing sales in the first quarter of this year set a record in the country's largest 25 markets, according to new data from the Canadian Real Estate Association...
The Ottawa-based group said sales over the first three months of the year were up 5.5% from the same period a year ago. However, the monthly record was set in January and sales have declined now for two consecutive months, reports the National Post.
Most forecasts continue to say the Canadian housing market is in no danger of replicating the slowdown in the United States, where credit worries and bulging foreclosures
Foreclosures.com said yesterday the number of U.S. homes entering foreclosure in the first quarter doubled from a year earlier as property prices stagnated and owners struggled to refinance mortgages.
"This is a much different market here," said Peter Norman, an economist with Toronto-based Altus Clayton. "First of all, the market is not as bad in the U.S. as it's been made out to be. Secondly, it will turn around there as the market works through some of the housing inventory [that has been built]."
Mr. Norman said the sub prime market in the United States has made it easier to get credit there and has contributed to bankruptcy woes. "We don't really have a sub prime market here," he said.
Borrowing easier
Borrowing in Canada has become easier during this cycle, however. Canadian banks are now willing to provide loans with 40-year amortizations, as long as they come with mortgage insurance. Consumers can also get a loan for more than 100% of the value of their home.
Those types of terms have helped push the Canadian housing market to the point where the CREA is now saying it will update its forecast for the year in May. The association, which represents boards across the country, had called for a 1.6% decline in sales in 2007.
"We are likely going to revise upward," said Gregory Klump, chief economist with CREA. "Sales are easing off after the January record but it's still an extremely strong market."
Prices also continue to reach new heights. The average price of a home sold in the country's top 25 markets last month was $316,572, up 9.5% from a year ago.
Western Canadian markets continue to drive the national price numbers, with double-digit increases the norm in most of the Prairies and British Columbia, while in the rest of the country prices continue to struggle to keep up with inflation.
"It's a study in contrasts," Mr. Klump said. "Toronto is strong but if you are looking for anything dramatic, you have to look west."
’No such thing as a national housing market’
Benjamin Tal, senior economist at CIBC, said the gap between the West and the rest of Canada is so pronounced that there is no such thing as a national housing market.
"Once you take the West out of the picture, you see the leveling off in prices," Mr. Tal said.
Average home prices in Calgary climbed 28.8% in the first quarter from a year ago, while Edmonton house prices were up 50.1% during the same period. In Toronto, prices were up 4.2% in the first quarter from a year ago.
"In Ontario, prices are up 3% to 4%. Factoring in inflation that's a 1% gain; that's not much of a boom," Mr. Tal said.
As for Alberta, he says the current pace of price appreciation is not sustainable. "I doubt you will see that for very long, but they still will have double digit [annual] price increases," Mr. Tal said.