Stefania Moretti
Other
QMI Agency files
Canada’s residential property sector appears to be stabilizing based on separate reports released Monday.
National resale housing activity picked up for the third straight month in October, according to data from the Canadian Real Estate Association.
Existing homes sales via CREA’s Multiple Listing Service climbed 4.6% in the month after similar increases in August and September.
Three-quarters of local markets were higher with Toronto and Vancouver leading the gains.
“The continuation of low interest rates is supporting sales activity, which has been improving over the past few months in a number of major markets including Vancouver,” said CREA President Georges Pahud.
Resale activity is now 13.3% above the market’s July trough.
Canada’s residential property sector set a blistering pace of activity in the second half of 2009 and the beginning of 2010. But with pent up demand exhausted, tighter mortgage lending rules and the introduction of the harmonized sale tax in Ontario and B.C., the national market cooled in the summer months.
CREA said the early fall numbers suggest the ups and downs of the market may be leveling out.
“National sales activity is now running almost halfway between the highs and lows posted between late 2008 and late 2009,” said Gregory Klump, CREA’s chief economist.
“This suggests that the Canadian housing market may be starting to normalize. After the wild rollercoaster ride that many housing markets have been on, normal and stable market conditions are something that many buyers and sellers will likely welcome.”
Average resale house prices inched up less than a full percentage point over a year ago to $343,747 in October.
New listings also rose in October, up 1.3% on a seasonally adjusted basis. New listings however remain 14% below the recent peak reached in April 2010.
Still the supply-demand picture remains roughly balanced, CREA said.
“If you’ve ever wondered what a soft landing in housing looks like, this may well be it,” said TD Economics’ Pascal Gauthier in a note Monday.
Meanwhile the Canadian Mortgage and Housing Corporation said Monday it expects new housing starts will continue to moderate for the remainder of the year setting the scene for more stable growth in 2011 and only slight price increases.
Housing starts are expected to be in the range of 148,000 to 202,300 units in 2011, down from 176,700 to 194,700 units in 2010.
“High employment levels and low mortgage rates will continue to support demand for new homes in 2011. Nevertheless, housing starts will decrease to levels that are more in-line with long-term demographic fundamentals next year,” said CMHC chief economist Bob Dugan.
Based on the market’s recent stability, TD Economics also plans to revise, for the better, its 2011 sales forecast later this week.
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