Market Conditions Improve For Homebuyers

 Vancouver, BC – December 13, 2006. British Columbia Real Estate Association (BCREA) figures indicate the residential sales volume on the Multiple Listing Service® (MLS®) in BC reached $2.54 billion in November, down 5 per cent from November 2005. MLS® sales in the province fell to 6,330 units last month from 7,720 units in November 2005, a decline of 18 per cent. The average home price in BC rose to $400,939 in November, up 16 per cent from the same month last year.  

“November marked the fifth straight month that BC home sales fell short of last year’s record-breaking pace,” noted Cameron Muir, BCREA Chief Economist. “Fewer home sales and a moderate increase in the inventory of residential listings are trending the market toward more balance between buyers and sellers.”  

Last year, homebuyers were beleaguered by stiff competition for the best homes in preferred locations. Today, they are finding a wider choice of homes for sale and have more time to thoroughly investigate the property before making their buying decision.      

“While home sales in BC are less frenetic than a year ago, it’s still very much a seller’s market in most areas,” added Muir. “As a result, there’s still upward pressure on BC home prices. Recent trimming of mortgage interest rates and continuing strong economic fundamentals are positive signals for BC homebuyers heading into 2007.”       

To date in 2006, total dollar volume of MLS® sales volume increased 8.5 per cent to $35.9 billion; however, the increase is due to elevated home prices rather than a rising number of sales. Year-to-date unit sales in the province dipped 8.5 per cent to 91,729 units, compared to the same period last year.

Ottawa – January 18, 2006 — Sales of existing homes in Canada's major markets set new annual records in 2005, according to statistics released by The Canadian Real Estate Association.

Annual sales via the Multiple Listing Service® (MLS®) in Canada's major markets totaled 336,071 units in 2005. Led by Vancouver and Calgary, the number of transactions rose 4.7 per cent over the previous annual record set in 2004. It was also the seventh consecutive year in which major market unit sales surpassed all previous annual records.

New annual sales records were set in a number of major markets in 2005, including Vancouver, Calgary, Edmonton, Winnipeg, Toronto, Hamilton, Kitchener, Montreal, Quebec City, Saint John and St. John's.

Seasonally adjusted home sales via MLS® in Canada's major markets totaled 27,919 units in December 2005, a decline of 2.3 per cent compared to the previous month. By contrast, Montreal posted a significant monthly increase in sales, while seasonally adjusted sales reached the highest level for any month on record in both Calgary and Saint John.

Seasonally adjusted activity was down 2.4 per cent in the fourth quarter of 2005 compared to the highest quarterly level ever, which was set during the third quarter of 2005. Even so, fourth quarter sales reached the third highest quarterly activity level on record. New quarterly records for sales activity were set in Calgary, Edmonton, Hamilton, Kitchener and Saint John.

MLS® residential new listings totaled 534,631 units in 2005 compared to 512,489 in 2004, representing an annual increase of 4.3 per cent. New listings set new annual records in a number of major markets, including Toronto, Ottawa, Windsor, Montreal, and St. John's.

The annual increase in sales activity was slightly larger than the increase in new listings, which resulted in a slightly tighter market in 2005 compared to 2004. In keeping with the tight market conditions, MLS® residential average price set a new annual record at $266,206 – some 9.3 per cent above the previous record set in 2004.

Average residential price hit $272,184 in December 2005, an increase of 8.6 per cent compared to the same month in 2004. While average price remains strong, this was the smallest year-over-year gain posted since May 2005.

“The continuation of low mortgage interest rates, strong job growth and upbeat consumer confidence resulted in strong resale housing activity across Canada in 2005,” said CREA Chief Economist Gregory Klump. “Of those factors, interest rates played the leading role. Rising interest rates is the primary reason why housing activity in 2006 is expected to moderate compared to the record levels posted last year.”

“The Canadian economy expected to grow slightly faster than the estimated non-inflationary rate of 2.9 per cent this year. Given the tightness of Canada's product and labour markets, the Bank of Canada continues to signal its intention to keep hiking its trend-setting Bank rate. It is widely expected that the Bank rate will rise a further one-half of a percentage point between now and spring,” Klump said.

“A rising Bank rate and talk of more rate hikes to come will keep inflation under wraps. A retreat in energy prices since the fall has kept inflation expectations contained,” he added. “Since bonds respond to inflation expectations and mortgage rates track bond yields, we expect the five year conventional mortgage to rise by no more than another one-half of a percentage point in 2006.”

At the end of 2005, the conventional five year conventional mortgage rate stood at 6.3 per cent. Stiff competition among mortgage lenders, however, continues to help borrowers negotiate discounts off the advertised rate. “Higher mortgage rates are expected to gradually cool resale housing activity in 2006,” Klump said.

CREA's November 2005 forecast calls for a 5.4 per cent decline in national MLS® home sales activity and a 5.0 per cent increase in MLS® residential average price in 2006.