Canada’s housing market has been cooling, led by Alberta, but Toronto and Vancouver are surging forward fuelled by lower borrowing costs.
Recent trends have seen a red-hot housing market in Alberta along with the big urban markets of Toronto and Vancouver driving the national-level overvaluation. However, Alberta is now driving the weakness in home sales with other metrics of the national housing market slowly following.
The Canadian Real Estate Association (CREA) reported on Tuesday, Feb. 17, national home sales falling 3.1 percent from December to January. This is the second month in a row sales have declined notably.
“The decline in national sales largely reflects weakened activity in Calgary and Edmonton,” said CREA’s chief economist Gregory Klump.
“If these two markets are removed from national totals, combined sales activity remained 1.9 percent above year-ago levels,” he added. Instead, compared to year-ago levels, national sales were down 2.0 percent for January.
The fall in the price of oil has seen Alberta’s housing market take a sharp turn south. Housing inventory has doubled in the last year in Calgary as a result of new listings rising 37 percent and sales falling 39 percent. Edmonton’s inventory in January 2015 is up 35 percent from December 2014.
As a result, CREA’s measure of inventory has risen to a 6.5 months’ supply, the highest since April 2013. The sales-to-new listings ratio fell to 49.7, which is the first time this ratio has been below 50 since December 2012. It’s still in balanced territory, but the trend is clear.
Prices tend to lag sales and this is evident in that Calgary still shows the largest year-over-year price increase for January, at 7.76 percent, with Greater Toronto (7.47 percent) and Greater Vancouver (5.53 percent) following. CREA notes that while year-over-year price gains in Calgary are shrinking, those in Toronto and Vancouver are picking up, however.
