Home sales, price data for May will provide portrait of housing market health | iNFOnews | Thompson-Okanagan's News Source

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Home sales, price data for May will provide portrait of housing market health

TORONTO - The latest data on Canadian homes sales and what the average home was worth in May will be released later this morning, providing a clearer picture on the health of the country's important real estate market during the busy spring season.

Trends in recent months have suggested sales remain robust and prices continue to shoot higher, although the pace of growth is slowing slightly.

In April, the average home price in Canada was up 0.9 per cent from a year ago at $375,810, while sales on a year-over-year basis were 49,480, up 11.5 per cent from last April, the Canadian Real Estate Association reported.

One of the biggest stories has been the vastly different performances in two of Canada's largest markets — with slowing sales and falling prices in Vancouver dragging, and soaring sales and prices in Toronto.

The average selling price in Vancouver was down 9.8 per cent in April compared with a year ago at $735,315, while the average price in Toronto was up 8.4 per cent at $517,556. April sales in Vancouver slid 13.2 per cent while Toronto sales picked up 14.5 per cent.

Continued overall strength in the housing market, largely due to the staying power of low interest rates, has led some economists to warn the market is overvalued.

That could make homeowners vulnerable to a downturn, especially those who have used low interest rates to borrow more than they could otherwise afford.

The Bank of Canada and federal Finance Minister Jim Flaherty have cautioned Canadians repeatedly to moderate borrowing on real estate, declaring household debt to be the domestic economy's number one enemy.

The central bank warned Thursday that households here may be in a worse position for another shock now than they were in 2008, when the collapse of a prominent U.S. investment banker sparked a cash crunch and recession.

Since that time, the report said, consumers have taken on significant amounts of new debt and real estate prices are also at record highs.

The bank noted certain segments of the housing market that have a persistent oversupply — such as condos in Toronto — face a higher risk of a price correction.

A report released this week by the Toronto-Dominion banking group projected Vancouver and Toronto home prices will probably experience a downturn of about 15 per cent in two to three years, but not the dramatic drop that hit the United States a few years ago.

The Canada Mortgage and Housing Corp. raised its expectations for new housing construction this year on Thursday, but said it expects both new and existing home markets to moderate in coming months after getting off to a strong start early in the year.

It forecasts that the number of existing home sales will be in the range of 431,200 to 516,100 units this year and the 2013 range will be about the same at between 431,300 and 522,400 units.

The outlook suggests the average Multiple Listing Service price will range between $341,100 and $406,700 this year and between $346,000 and $419,900 next year.

A Scotiabank report released earlier this week said Canadian housing market conditions have cooled slightly, with prices down nearly two per cent in the first-quarter, but added that the country continues to outperform other developed nations.

News from © The Canadian Press, 2012
The Canadian Press

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