Briefing highlights
- Potential home sellers hold back
- A Wynne-Ford debate I’d love to see
- Markets at a glance
- Canada to cover Kinder Morgan losses
- Canada’s manufacturing sales rise
New listings tumble
Many Canadians don’t like the prices their homes will fetch, refusing to test the waters in this weakening market.
The latest numbers from the Canadian Real Estate Association show new listings across the country fell 4.8 per cent in April from March, on a seasonally-adjusted basis.
That, said Bank of Montreal chief economist Douglas Porter, shows “potential sellers are unimpressed with the prices on offer.”
Sales and prices have tumbled amid government and regulatory measures aimed at cooling overheated housing markets and curbing the borrowing habits of Canadians, whose household debt burden is high compared with that of many other countries.
While provincial governments have brought in a series of measures, notably a tax on foreign buyers, new mortgage-qualification rules from the commercial bank regulator have had a huge impact.
All you have to do is look at the market since the Office of the Superintendent of Financial Institutions brought in what are known as the B-20 guidelines at the start of the year. This chart says it all:
To recap, as The Globe and Mail’s Janet McFarland reports, the latest CREA report shows home sales fell 2.9 per cent in April from a month earlier, and 13.9 per cent from a year earlier.
Given the nature of Canada’s housing markets, the Toronto and Vancouver areas skew the national picture, down 33 per cent and 27 per cent, respectively, from April, 2017.
The average sale price fell 11.3 per cent from a year earlier, to about $495,000, while the rise in the MLS home price index, which is considered a better measure, slowed to 1.5 per cent. That average price, however, isn’t representative of costs in select cities.
But look at what’s happening with new listings, which are now down to a nine-year low for the month of April.
Among major areas, the biggest drops in new listings came in Quebec City, at 26 per cent, seasonally adjusted, Montreal, at about 12 per cent, Toronto, at more than 8.5 per cent, Ottawa, at 7.5 per cent, Regina at 6 per cent, and Edmonton at 4 per cent.
Vancouver notched up a gain of 2.8 per cent.
New listings across the country are now 10 per cent below their 10-year monthly moving average, CREA said.
They actually had regained some ground in February and March, but nowhere near making up for the steep drop in January, when the B-20 rules came into effect.
Another measure worth looking at is the ratio of sales to new listings which CREA said “firmed slightly” in March to 53.7 per cent from 52.6 per cent in March.
A ratio of between 40 and 60 per cent is said to suggest a balanced market. Below that mark indicates a buyers’ market, and those above a market for sellers.
“But there is a huge spread from top to bottom,” said BMO’s Mr. Porter, noting that Calgary and Saskatoon, for example, are below that 40 mark.
“At the other end of the spectrum, Ottawa, Montreal, Victoria and Southwestern Ontario remain strong at well above 60 per cent,” he added.
“Meantime, both Vancouver and Toronto are in the lower end of the normal band, after previously flaring far above the top end in recent years.”
On a provincial basis, added Toronto-Dominion Bank economist Rishi Sondhi, the ratios are lowest in Newfoundland and Labrador, at just 25.6, Alberta at 42 and Saskatchewan at 40.4.
“Conversely, markets were relatively tight in Quebec (62.6, Nova Scotia (60.1) and P.E.I (84.6).”
Of course, the type of home you’re selling also makes a difference. Consider that in Vancouver, for example, the sales-to-listing ratio is 14.1 per cent for detached homes, but 36.1 per cent for townhomes and 46.7 per cent for condos, according to the local real estate board.
When you add it all up, said Royal Bank of Canada senior economist Nathan Janzen, “only about 14 per cent of markets covered by CREA were sellers’ markets by our count in April, with the rest roughly split between ‘balanced’ and ‘tight.’”
Look, too, at the months of housing inventory, a measure of how long it takes to sell off the lot based how current sales are faring.
That stood at 5.6 months in April, CREA said, above the long-term average of 5.2 months and the highest since September, 2015.
As RBC’s Mr. Janzen sees it, Canada’s housing market is “still cooling but manageable” as sales fall, but at nowhere near the pace of the first two months of the year.
Remember, too, that mortgage rates have moved up, and more interest rate increases are in the pipeline.
“We don’t expect outsized price growth in recent years to be repeated but we also aren’t assuming big declines,” said Mr. Janzen, who projects home sales will end the year with a drop of 4.3 per cent.
Read more
- Janet McFarland: Home sales drop as weaker markets ‘destabilized’ by new stress tests: CREA
- Vancouver house sales hit 17-year low for April as government measures spook buyers
- Toronto home prices tumble, but market shows signs of stability
- Toronto, Vancouver tumble in global price ranking of prime real estate
- Remember halcyon days and times a-changin’? Canadian baby boomers now face a housing crisis
A Wynne-Ford debate I’d love to see
Ontario Conservative Leader Doug Ford and Liberal Leader Kathleen Wynne
“Have you seen Hydro One’s stock price? Every day, I thank God I didn’t invest.”
“Wait a minute, let’s do the math. We own 47 per cent of a stock that, okay, is down almost 13 per cent this year. And we’re paying the CEO $6.2-million. But, they also raised their dividend ... to 23 cents. Isn’t that a deal, folks?”
“I distinctly remember your Liberal government saying you opposed the CEO’s pay plan.”
“Well, yeah. But then the chair said he’d seek input from shareholders.”
“Oh, and what happens if someone other than you has some input on June 8?”
Read more
- Andrew Willis, Tim Kiladze: Shareholders approve Hydro One executive pay plan despite outcry
- Marcus Gee: When it comes to proposed Hydro One solutions, voters must choose between three poor options
Markets at a glance
Read more
Canada to cover Kinder Morgan losses
The Trudeau government will cover financial losses suffered by Kinder Morgan if it proceeds with the Trans Mountain expansion pipeline project and is obstructed or delayed by B.C. government, Finance Minister Bill Morneau announced today.
This guarantee only covers problems caused by B.C. NDP Premier John Horgan’s government but not by other forces such as protesters, The Globe and Mail’s Steven Chase reports.
Read more
Factory sales rise
Canada’s manufacturers are celebrating a solid jump in sales in March.
Shipments rose 1.4 per cent, gaining in 13 of 21 industries that accounted for 72 per cent of the sector, Statistics Canada said today.
In volume terms, though, sales were up only 0.6 per cent, the agency said.
“Home sales are slumping and shoppers are getting more wary, but could a revived factory sector ride to the rescue of Canada’s economy?” said CIBC World Markets chief economist Avery Shenfeld.
“The fly in the ointment is that capacity use in the sector has been running quite high, so for this to continue we’re going to need more evidence of capital spending on plant expansions,” he added.
“Still, a healthy gain in factory output points to a decent March GDP print, which won’t push Q1 past our 1.7-per-cent call, but sets up momentum for Q2 that will justify a Bank of Canada rate hike come July.”
Inventory levels rose 0.7 per cent, and the inventory-to-sales ratio dipped to 1.39 from February’s 1.4.
Unfilled orders climbed 1.5 per cent, while new orders dropped 0.7 per cent after February’s hefty gain.