The Canadian Real Estate Association released its monthly national sales figures for February 2019, reporting a drop in activity.
In February 2019, home sales fell 9.1% compared to January 2019, which is the largest month-over-month decline in sales since the mortgage stress test came into effect more than a year ago. This is also the lowest level of monthly sales activity since November 2012. On a year-over-year basis, sales were down 4.4%, making it the lowest February since 2009.
“For aspiring homebuyers being kept on the sidelines by the mortgage stress test, it’s a bitter pill to swallow when policy makers say the policy is working as intended,” says Barb Sukkau, President of CREA. “Fewer qualified buyers means sellers are affected too. The impact of tighter mortgage regulations differs by local housing market and a professional REALTOR® remains your best source for information and guidance in negotiating the purchase or sale of a home during these changing times.”
New listings also fell by 3.2% month-over-month, with the Greater Toronto Area leading the way in declines. On a national level, there were 5.7 months of inventory as of the end of last month, which is a three and a half year high and slightly above the long term average of 5.3 months.
That said, it’s important to remember how Canadian housing markets differ across the country. For example, the Prairie provinces and Newfoundland and Labrador are oversupplied, while Ontario is struggling with a lack of supply.
“February home sales declined across a broad swath of large and smaller Canadian cities,” says Gregory Klump, CREA’s Chief Economist. “The housing sector is on track to further reduce waning Canadian economic growth. Only time will tell whether successive changes to mortgage regulations went too far, since the impact of policy decisions becomes apparent only well after the fact. Hopefully policy makers are thinking about how to fine tune regulations to better keep housing affordability within reach while keeping lending risks in check.”
The national average sale price fell 5.2% year-over-year to $468,350. Without Canada’s two most expensive and active markets, Vancouver and Toronto, in the equation, the average sale price falls to just under $371,000.
Apartments had the greatest price growth, increasing 2.4% year-over-year. Townhomes followed with a 1% jump. Price growth for one-storey single-family homes dropped 1.7%, and two-storey single-family homes fell 1%.
In the Greater Golden Horseshoe, price growth increased quite a bit in Guelph, jumping 6.8%. Niagara Region followed closely with a 6.5% increase, and Hamilton-Burlington saw a 5% bump. GTA price growth went up 2.3%, while Oakville-Milton remained practically unchanged. Barrie and District continued its slowdown with a 4.3% decrease in price growth.
The CREA also updated its resale housing market forecast. The economic fundamentals to support housing demand are present, but mortgage policy continues to sideline buyers. You can expect national home sales to drop 1.6% this year to 450,400, which would be the weakest annual sales since 2010.
Following a 4.1% average price drop in 2018 (largest decline in nearly 25 years), CREA expects pricing to stabilize, falling just 0.2% to $487,000. With low supply in the GGH, average Ontario home prices are expected to continue rising.