Canadian Home Sales Beat Expectations in January
Home sales in Canada bounced back this January, leading an economist with one of the nation’s biggest banks to say the performance was “a bit better than expected” before predicting a year of stability for the national market.
The comments appeared in BMO Chief Economist Douglas Porter’s response to the latest monthly sales stats from the Canadian Real Estate Association, which showed existing home sales in January edged up 3.6 percent on a seasonally adjusted month-over-month basis.
The response may sound lukewarm, at least in part, but it does come at a time when some of the biggest markets are struggling. Prairie housing continues to reel from the effects of low — albeit recovering — oil prices, Toronto’s market is “soggy”, and Vancouver remains highly vulnerable to possible fallout from overvalued homes.
“While some fret about an overly weak market — notably the Bank of Canada — the national numbers instead suggest that conditions are calm and unremarkable,” Porter continues, noting sales were still down 4 percent annually nonetheless.
Last month, the benchmark price of a home was $613,500, a decline of about 0.5 percent from December but up approximately 0.8 percent compared to a year ago. However, market performance varied greatly from city to city. In Toronto, the benchmark price remained up 2.7 percent from last year at $761,800, while Vancouver prices were down 4.5 percent, settling at $1,019,600.
The Prairies were predictably soft, with prices down annually by 3.9 percent in Calgary and 2.9 percent in Edmonton. The benchmark price of a Calgary home was $410,200 and for an Edmonton home it was $317,200.
Montreal and Ottawa continued to show strength. The benchmark for Montreal was $349,300, representing an annual increase of 6.3 percent. Meantime, Ottawa prices grew by 7.1 percent, finishing the month at $396,300.
Porter predicts that on a national level, prices, home construction and sales will all likely “hold stable” this year for a few reasons: Interest rates are flattening and may even decline this year, demand-side factors like population growth are boosting the market, and even oil prices are picking up.
“While that may lack drama, a lack of drama may be exactly what the doctor ordered for the housing market at this point.”