Statistics released by the Canadian Real Estate Association (CREA) show home sales recorded over Canadian MLS Systems edged down 0.9 per cent in December 2019.
Activity is currently about 18 per cent above the six-year low reached in February 2019 but ends the year about 7 per cent below the heights recorded in 2016 and 2017.
Actual (not seasonally adjusted) activity was up 22.7 per cent compared to a quiet month of December in 2018.
“Home price growth is picking up in housing markets where listings are in short supply,” said Jason Stephen, president of CREA. “Meanwhile, the mortgage stress-test continues to sideline potential home buyers where supply is ample.”
“The momentum for home price gains picked up as last year came to a close,” said Gregory Klump, CREA’s Chief Economist. “If the recent past is prelude, then price trends in British Columbia, the GTA, Ottawa and Montréal look set to lift the national result this year, despite the continuation of a weak pricing environment among housing markets across the Prairie region.”
The number of newly listed homes slid a further 1.8 per cent in December, leaving new supply close to its lowest level in a decade. December’s decline was driven mainly by fewer new listings in the GTA and Ottawa.
Listings available for purchase are now running at a 12-year low. With new listings having declined by more than sales, the national sales-to-new listings ratio further tightened to 66.9 per cent in December 2019 – the highest reading since the spring of 2004.
The long-term average for this measure of housing market balance is 53.7 per cent. Barring an unforeseen change in recent trends for the balance between the supply and demand for homes, price gains appear poised to accelerate in 2020.
Based on a comparison of the sales-to-new listings ratio with the long-term average, just over half of all local markets were in balanced market territory in December 2019. That list still includes Greater Vancouver (GVA) but no longer includes the GTA, where market balance favours sellers in purchase negotiations.
An oversupply of homes relative to demand across much of Alberta and Saskatchewan means sales negotiations remain tilted in favour of buyers. Meanwhile, an ongoing shortage of homes available for purchase across most of Ontario, Québec and the Maritime provinces means sellers there hold the upper hand in sales negotiations.
There were 4.2 months of inventory on a national basis at the end of December 2019 – the lowest level recorded since the summer of 2007. This measure of market balance has been falling further below its long-term average of 5.3 months.
National measures of market balance continue to mask significant and increasing regional variations. The number of months of inventory has swollen far beyond long-term averages in Prairie provinces and Newfoundland & Labrador.
The measure is running well below long-term averages in Ontario, Québec and Maritime provinces, and is still within balanced market territory in British Columbia.
The Aggregate Composite MLS Home Price Index (MLS HPI) rose 0.8 per cent, marking its seventh consecutive monthly gain. It is now up 4.7 per cent from last year’s lowest point reached in May and has toppled all previous records in each of the past five months.
Home price trends have generally been stabilizing in the Prairies in recent months following lengthy declines but are on the rise again in British Columbia and in Ontario’s the Greater Golden Horseshoe (GGH). Further east, price growth in Ottawa and Montréal has been ongoing for some time and strengthened toward the end of 2019.
Home prices in Greater Vancouver (-3.1 per cent) and the Fraser Valley (-2 per cent) remain below year-ago levels, but declines are shrinking. In British Columbia, home prices logged y-o-y increases in the Okanagan Valley (+4.2 per cent), Victoria (+2.3 per cent) and elsewhere on Vancouver Island (+4.2 per cent).
Calgary, Edmonton and Saskatoon posted y-o-y price declines of around -1 per cent to -2 per cent, while the gap has widened to -4.6 per cent in Regina.
In Ontario, home price growth has re-accelerated well above consumer price inflation across most of the GGH. Meanwhile, price gains in recent years have continued uninterrupted in Ottawa, Montréal and Moncton.
All benchmark home categories tracked by the index accelerated further into positive territory on a y-o-y basis. One-storey single-family home prices posted the biggest increase (3.6 per cent) followed closely by apartment units (3.4 per cent) and two-storey single family homes (3.3 per cent). Townhouse/row unit prices climbed a slightly more modest 2.7 per cent compared to December 2018
The actual (not seasonally adjusted) national average price for homes sold in December 2019 was around $517,000, up 9.6 per cent from the same month the previous year.
The national average price is heavily skewed by sales in the GVA and GTA, two of Canada’s most active and expensive housing markets. Excluding these two markets from calculations cuts more than $117,000 from the national average price, trimming it to around $400,000 and reducing the y-o-y gain to 6.7 per cent.