Goldilocks Would Approve: Housing Market Calm for Now-BMO Economics
- Home sales essentially flat, but still up 3.3 per cent from a year ago
- Big regional differences remain 'order of the day'
- New mortgage rules will temper the market further
TORONTO, ONTARIO--(Marketwire - Aug. 15, 2012) - According to BMO Economics, Canadian home sales numbers for July from the Canadian Real Estate Association are neither too hot nor too cold - but perhaps just right. Home sales were essentially flat for the month of July, but still up 3.3 per cent year-over-year.
"Despite the high levels of activity seen in Canada's housing market this year, the reality on the ground for both sales and prices is quite calm - at least for now," said Doug Porter, Deputy Chief Economist, BMO Capital Markets. "Average prices fell 2 per cent year-over-year in July, although the reported drop reflects lower sales in Vancouver."
Mr. Porter noted that 19 of the 26 (or 73 per cent) cities reported price increases despite the overall decline, with a median 2.9 per cent year-over-year rise. Furthermore, the new tighter mortgage insurance rules that kicked in last month will chill activity, with sales down month-over-month in 18 of 26 markets.
Regionally, Mr. Porter noted:
- Toronto has left the "too-hot" porridge bowl, with sales dipping 4.4 per cent year-over-year and price increases calming to a "just-right" pace of 3.9 per cent year-over-year.
- Regina is still in the hot zone, as are Calgary sales.
- Vancouver is definitely in the "too cold" bowl, with double-digit declines in both sales and reported prices, although with average prices of $667,000, it is still easily the most expensive in the country. However, note that even the city's figures are skewed by a changing sales mix - a weighted average price is still up 0.6 per cent year-over-year in Vancouver.
Laura Parsons, Mortgage Expert, BMO Bank of Montreal, noted that even in times when the housing market is flat, Canadian homebuyers need to continue to ensure they are not over-stretching themselves when they purchase a home.
"Canadian homebuyers must always look at ways to manage their mortgage debt over the long term," said Ms. Parsons. "Stress-test your mortgage against a higher interest rate to be sure you can handle any increases in interest rates down the road and choose a mortgage with a shorter amortization to help pay down your mortgage sooner. These are two options I would strongly recommend for any prospective homeowner."
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Established in 1817 as Bank of Montreal, BMO Financial Group is a highly-diversified North American financial services organization. With total assets of $525 billion as at April 30, 2012, and more than 46,000 employees, BMO Financial Group provides a broad range of retail banking, wealth management and investment banking products and solutions.
Peter Scott, Toronto
Matt Duffin, Toronto
Valerie Doucet, Montreal
Laurie Grant, Vancouver