Housing News Flash
MLS Home Sales — June 2011
Canadian housing activity remains resilient in the face of mounting global economic uncertainty and the squeeze on household budgets from high food and gas prices. Seasonally adjusted national home sales have risen to 2.6% m/m in June. The pickup follows several months of moderating activity following the implementation of more restrictive insured mortgage rules in mid-March, which likely brought forward some sales to the early part of the year. Overall, sales volumes are in line with the average of the past decade.
Steady job growth is a major factor supporting housing demand. The economy has generated an average of 32,000 new jobs a month this year, mostly full-time. Equally important, variable and fixed mortgage rates have remained at historically low levels, helping to maintain affordability despite near record home prices.
Sales are being matched by a reasonable supply of new listings in most markets, leading to fairly balanced conditions between buyers and sellers. The national ratio of new listings to sales stood at 1.90 in June, while the months’ supply of active listings was 6.0. This in turn has moderated price increases. The national average home price declined marginally on a month-to-month basis in each of the past three months, but this comes on the heels of a spike in prices in January and February. The early-year run-up was likely inflated by a rush to beat the regulatory changes as well as by a surge in high-end property transactions in Vancouver.
Higher interest rates and a slowing pace of job creation as public sector restraint measures take hold will likely cool housing demand next year. However, given expectations of moderate economic growth and only a gradual rise in interest rates, combined with limited high-risk mortgages, we maintain that the most likely outcome for Canada’s housing market over the next few years is not an abrupt downward correction but rather a period of relatively flat sales and pricing that eventually restores a better affordability balance.
This Report is prepared by Scotia Economics as a resource for the clients of Scotiabank and Scotia Capital. While the information is from sources believed reliable, neither the information nor the forecast shall be taken as a representation for which The Bank of Nova Scotia or Scotia Capital Inc. or any of their employees incur any responsibility.
Courtesy of your Scotiabank Mortgage Specialist
Mortgage Development Manager
London & Surrounding
Broker, ACCI, FCCI, CRES, CMOC
Broker, CPM, FRI, CMOC, CRP, ACCI, FCCI