Canadian economists had warned of an “ugly” real-estate market tally for the month of December, and the data did not disappoint. Home sales were down 19 per cent last month compared with December 2018, with the national average sale price sliding almost 5 per cent, the Canadian Real Estate Association (CREA) said on Tuesday.
The year-over-year comparison was made worse by a surge of sales toward the end of 2017, as buyers hurried to close transactions ahead of the stricter, federally-mandated mortgage rules that took effect on Jan. 1 of last year. On a monthly basis, home sales fell by a more modest 2.5 per cent in December 2018 compared to November.
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The price picture also appears a little less bad when looking at CREA’s MLS home price index, which adjusts for distortions caused by changes in the mix of housing types sold from one month to the next. Based on that gauge, prices increased slightly, climbing 1.6 per cent in December compared to the same month last year.
Still, December 2018 capped “the weakest annual sales since 2012” and fourth straight month of declines since September, CREA said. Transactions were down in around 60 per cent of local markets tracked, led by slumping activity in Greater Vancouver, Vancouver Island, Ottawa, London and St. Thomas, and Halifax-Dartmouth.
“After a payback period at the start of the year, sales saw a half-hearted recovery before falling in four consecutive months to end the year,” BMO economist Robert Kavcic said in a note to clients shortly after the release of the report.
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Looking at 2018 as a whole, sales were down 11 per cent, with all provinces west of Quebec experiencing declines, Kavcic wrote. The national average home price, which is skewed by activity in Vancouver and Toronto, fell by around 4 per cent, the first drop since 2008 and the largest since 1995. When looking at the more representative MLS price benchmark, prices “scratched out a modest 2.7 per cent gain,” Kavcic noted.
The ratio of homes sold compared to the number of homes newly available for sales now stands at around 53 per cent, slightly below its 10-year average, CREA said. A ratio around 50 per cent represents a so-called “balanced market,” where neither sellers nor buyers have the upper hand. The national statistic, however, conceals sharp regional differences, with conditions in several local markets now favouring buyers.
“It’s probably not a stretch to think that the Canadian housing market has entered into a prolonged period of relative stagnation, where sales are roughly flat and prices no longer outrun inflation,” Kavcic concluded.
The national average price for homes sold in December was $472,000, down 4.9 per cent compared to December 2017. Excluding Greater Vancouver and the Greater Toronto Area, the average sale price was just under $375,000.
Regional breakdown:
Vancouver and B.C.: Vancouver home sales in December were down a whopping 47 per cent year-over-year and eight per cent compared to November. “Buyers are in control, with the sales-to-new listings ratio sitting below 37 per cent, and prices for both condos and single-detached homes broadly falling,” Kavcic wrote.
Market conditions appear less dire in the rest of the province, with benchmark prices still up in the Fraser Valley, Vancouver Island and Victoria.
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Prairies: It’s a buyers’ market in the Prairies as well. Benchmark home prices were down in year-over-year terms in Calgary (-3 per cent), Edmonton (-2 per cent), Regina (-5 per cent) and Saskatoon (-1 per cent). An oversupply of homes for sale is expected to keep weighing on prices in the region, CREA said.
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Toronto and nearby regions: December home sales in Toronto were down 23 per cent compared to December 2017 but flat compared to November 2018. Benchmark home prices rose 3 per cent in year-ago terms and barely budged from November to December.
On a monthly basis, prices “stood their ground,” in the surrounding area as well, Kavcic noted.
“These markets are no doubt backed by some of the strongest fundamentals in the country — think job growth and demographic demand,” he added. The region is likely in for a period of slow price increases that will roughly keep pace with inflation, he concluded.
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Ottawa and Montreal: The two cities continued to buck the regional trend, with benchmark price gains of 6.9 per cent and 6 per cent year-over-year respectively.
Atlantic Canada: Market conditions were mixed in the region, with sales rising in New Brunswick and Nova Scotia, but falling in Prince Edward Island and Newfoundland and Labrador. P.E.I., however, had the highest ratio of sales compared to new listings (71 per cent) in the country, TD economist Rishi Sondhi noted.
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