October 24, 2009
American home resale sales jump 9.4%
Home resales in September clocked the largest monthly increase in 26 years as buyers scrambled to complete their purchases before a tax credit for first-time owners expires. Sales jumped 9.4 per cent to a seasonally adjusted annual rate of 5.57 million last month, from a downwardly revised pace of 5.1 million in August, the National Association of Realtors said Friday.
That pace was the strongest in two years and beat Wall Street forecasts. Sales had been expected to rise to an annual rate of 5.35 million, according to economists surveyed by Thomson Reuters.
“There’s a miniboom going on in the housing market,” said Thomas Popik, who conducts a monthly survey of real estate agents for Campbell Communications.
Nationwide sales are up nearly 24 per cent from their bottom in January, but are still down 23 per cent from four years ago.
But prices continued to drag with foreclosures and short sales, where the mortgage exceeds the sales price. The median price last month was $174,900 (U.S.), down almost 9 per cent from $191,200 a year earlier, and slightly lower than August’s median of $177,300.
The inventory of unsold homes on the market fell about 7 per cent to 3.63 million. That’s less than an eight-month supply at the current sales pace, and the lowest level since March 2007.
Sales rose especially in the west, where they grew 13 per cent from a month earlier. Foreclosure sales are booming in cities like Los Angeles, San Diego and Las Vegas.
First-time homebuyers and investors are snapping up those homes and taking advantage of low mortgage rates. They can also receive a tax credit of 10 per cent of the sales price, up to $8,000, if the sale is completed by the end of November.
The credit is so important to some buyers they are adding a clause to their contracts, allowing them to back out if the sale doesn’t close by Nov. 30. But, economists note that cheap foreclosures and mortgage rates are also adding to the boom.
“We think the housing market has touched bottom and it is now only a matter of time until home prices stabilize – something that we anticipate to occur in late 2010,” wrote Joseph LaVorgna, chief U.S. economist at Deutsche Bank.
Prices could fall further because rising unemployment leads to more foreclosures. The jobless rate, currently at 9.8 per cent, is expected to rise as high as 10.5 per cent next year, causing more people to fall behind on their mortgages.
“There’s more supply that’s going to come into the marketplace,” said Stan Humphries, chief economist at real estate website Zillow.com. “That additional supply will outpace demand.”
With concerns about the housing market still prominent, Congress is considering several proposals to extend the tax credit. Senators Johnny Isakson, R-Ga., and Christopher Dodd, D-Conn., want to extend it through June 30, and expand it to include all home buyers, at an estimated cost of $16.7 billion.
Realtors and homebuilders are loudly in favour, arguing that the tax credit is crucial to get the housing market back on its feet.
“We are not there in terms of removing the consumer fear factor,” said Lawrence Yun, the National Association of Realtors’ chief economist.
One potential roadblock to an extension also emerged this week. There are concerns that some of the 1.5 million applications for the tax credit are fraudulent.
Source: Associated Press
October 19, 2009
Toronto Real Estate Board:
GTA Realtors report mid-October sales and average price stats
In the first two weeks of October, Greater Toronto Realtors reported 3,631 sales – up 34 per cent compared to the first two weeks of October 2008. The average price for these transactions was up 17 per cent year-over-year to $414,479.
“While demand for existing homes has remained strong, it is important to recognize the context of current statistics. We are now making comparisons to the fall of 2008 when we experienced a marked decline in sales and average price,” said TREB President Tom Lebour.
Year-to-date sales, at 69,964 are up six per cent compared to 2008. Average price, at $389,687, is up by two per cent.
“Tight market conditions throughout the GTA will continue to exert upward pressure on home prices in the fourth quarter,” explained Jason Mercer, TREB’s Senior Manager of Market Analysis. “Expect more listings in 2010 as home owners react to the price gains experienced in the second half of 2009.”
See the Toronto Real Estate Board report »
October 15, 2009
MLS home sales growing stronger
Canadian resale housing activity climbed to the highest level of any third quarter on record.
Actual (not seasonally adjusted) home sales via the Multiple Listing Service® (MLS®) Systems of Canadian real estate boards totalled 135,182 units in the third quarter of 2009, according to statistics released by The Canadian Real Estate Association (CREA). This is the highest level of activity on record for the period from July to September. The number of transactions was up 18 per cent from the third quarter of last year, representing the biggest year-over-year increase since early 2002.
Seasonally adjusted national MLS® home sales numbered 127,941 units in the third quarter, up 12 per cent from the previous quarter. Building on two previous quarterly increases, seasonally adjusted MLS® home sales activity now stands 48 per cent above the low reached in the fourth quarter last year.
“Momentum for sales activity remained strong throughout the third quarter,” said CREA President Dale Ripplinger. “Low interest rates, rebounding consumer confidence and an improving overall sense of economic security continue to draw homebuyers to the housing market.”
Seasonally adjusted sales activity in the third quarter was up from the previous quarter in over 80 per cent of local markets. Quarterly activity increases in Vancouver (34 per cent), Toronto (11 per cent), and Calgary (19 per cent) contributed most to the national increase in activity.
Some 42,958 homes traded hands via the MLS® Systems of real estate boards in Canada in September 2009 on a seasonally adjusted basis. This represents an increase of 1.5 per cent from August, and lifts seasonally adjusted activity 63 per cent above the low in January.
Actual (not seasonally adjusted) MLS® home sales activity remained strong throughout the quarter. Resale activity in September 2009 posted the fourth consecutive increase from year-ago levels, all of which exceeded 15 per cent. Sales numbered 42,497 in September, up 17 per cent year-over-year and a new record for the month. Year-over-year activity increases in Toronto (28 per cent) and Vancouver (124 per cent) were the driving force behind the increase in actual (not seasonally adjusted) national sales activity in September.
Climbing to $327,736, the national MLS® residential average price rose 11 per cent from the same quarter last year. The national average price continues to be skewed upward by a sustained increase in sales activity, including a sharp rebound in activity at the higher end of the price spectrum, in some of Canada’s priciest markets.
The national MLS® residential average price surpassed all previous monthly levels in September 2009, rising 13.6 per cent year-over-year to $331,602. July and August also posted new average price records for their respective months. A number of provinces set new average price records for the month of September, and Ontario posted the highest average price on record.
The price trend is similar but less dramatic for the weighted national MLS® average price, which compensates for changes in provincial sales activity by taking into account provincial proportions of privately owned housing stock. The weighted national MLS® average sale price was up 9.3 per cent year-over-year in September 2009.
On a seasonally adjusted basis, the supply of homes coming onto the MLS® market edged up in the third quarter after four consecutive quarterly declines. Seasonally adjusted MLS® residential new listings were up one per cent from the previous quarter to 199,824 units. The increase reflects a quarterly rise in the number of new listings in British Columbia and Ontario, Prince Edward Island, and Newfoundland & Labrador. New listings remained stable or continued to retreat in other provinces.
While the small rise in seasonally adjusted new listings suggests that the number of homes coming onto the market may soon begin to edge higher, the number of new listings remains well down from year-ago levels. Barring a sudden unforeseen spike in levels, new listings are likely to remain down from year-ago levels for some time.
Actual (not seasonally adjusted) new listings were down 12.5 per cent compared to the third quarter of 2008 after posting year-over-year decreases in each of the previous quarters. Newfoundland & Labrador is the only province in which new listings were up from year-ago levels.
An increase in sales activity and fewer new listings are drawing down inventories compared to year-ago levels. There were 208,215 homes listed for sale on the MLS® Systems of real estate boards in Canada at the end of September 2009, down 16 per cent from a year earlier. This is the fifth consecutive year-over-year decline in active listings, and the largest decline in more than six years.
Nationally, the number of months of inventory was 4.9 months in September 2009. This is down slightly compared to August, and remains well down from the recessionary peak of 12.8 months in January 2009. The number of months of inventory is the number of months it would take to sell current inventories at the current rate of sales activity.
The seasonally adjusted residential dollar volume for MLS® home sales increased 20 per cent on a quarter-overquarter basis to $42.1 billion in the third quarter of 2009, the highest level on record. New provincial records were also set in British Columbia and Ontario, which propelled the national figure to a new high.
“Monthly sales activity remained on a strong upward trajectory throughout the third quarter in British Columbia, while showing signs that it may be topping out in other provinces,” said CREA Chief Economist Gregory Klump. “On balance, this suggests that sales activity may be starting to plateau after having climbed rapidly earlier this year.”
“Average price increases over the rest of the year are expected to prompt sellers to return to the market after having retreated to the sidelines late last year and earlier this year,” he added. “An increase in new listings will help keep a lid on price increases. Price increases over the rest of 2009 and early next year are likely to reflect declining average prices late last year and earlier this year.”
Source: The Canadian Real Estate Association
October 9, 2009
Royal LePage House Price Survey
Lag in seasonal sales cycle brought on by the recession, coupled with undersupply, creates illusion that market is booming
Canada’s housing market is on the road to recovery but is experiencing a pronounced undersupply of homes for sale in southern Ontario and other regions of the country, according to the Royal LePage House Price Survey. With the recession retreating, the report found that home prices are stabilizing and unit sales are increasingly driven by improved affordability.
The market’s strong showing in the third quarter has led some commentators to refer to the current conditions as the beginning of a real estate boom. Royal LePage cautions that the increase in sales activity and firming of house prices are the product of a normal market correction and not the beginning of another aggressive expansionary cycle.
“The 2009 real estate market has seen sales activity lagging approximately one month behind the typical seasonal patterns,” said Phil Soper, president and chief executive, Royal LePage Real Estate Services. “The economic recession halted the flow of the real estate cycle from the fourth quarter of 2008 through the first quarter of 2009, but it is essentially now back on track albeit delayed. Once housing supply returns to normal levels, we believe the economy will support modest pricing growth into 2010.”
While the Atlantic provinces saw a strong recovery in home prices with double-digit percentage increases year-over-year in some markets in the third quarter of 2009, western provinces have been slower to recover from the significant price corrections that occurred in 2008, particularly in British Columbia and Alberta. Meanwhile, Ontario and Quebec saw home prices stabilize or gain slightly year-over-year with much of the recovery occurring throughout the strong third quarter.
Royal LePage’s third quarter report shows that the average price of a two storey home in Canada was comparable to a year ago (up 0.1 per cent) at $409,335. Average bungalow values increased 0.06 per cent year-over-year to $341,146, while the price of an average condominium increased 0.09 per cent to $243,748.
After the economic crisis created a drought of home sales and declining prices from the fourth quarter of 2008 through the first quarter of 2009, the market began to recover in the spring due to pent up demand and improved affordability. “It appears the market recovered unevenly,” Soper commented. “In the first quarter of 2009 we saw the return of first time buyers, then cautious move-up buyers. In the third quarter, the sales activity of the higher priced regions of the country and higher priced property types picked up momentum and caught up to the lower priced segments.”
A shortage in housing supply is leading to bidding wars in several cities, including Toronto, Richmond Hill, Markham, Montreal, St. John’s (NF), St. John (NB), Moncton, Edmonton, Calgary, North and West Vancouver, and Victoria. Improved affordability is the biggest driver of current real estate activity levels, Soper added. “With the widespread availability of affordable mortgage financing, and only modest increases in home prices, affordability is better now than it has been in a number of years. We expect house prices and interest rates to remain relatively stable into next spring which would keep affordability levels intact.”
Regional House Price Data
Royal LePage’s latest quarterly House Price Survey shows the strongest growth in year-over-year increases in St. John’s, Newfoundland, where standard two storey homes were up 13.3 per cent over 2008, to $296,667, with bungalows and standard condominiums showing similar price gains. Most other major centres in Atlantic Canada experienced modest growth, with the exception of Saint John, New Brunswick, where detached home prices continued to fall year-over-year and quarter-over-quarter in Q3.
In Toronto and the Greater Toronto Area, the real estate market saw a distinct pause earlier this year. House prices, however, did not fall dramatically due to a reduction in the number of listings on the market. Currently, single family and semi-detached home prices are outperforming other categories. Detached bungalows are up 0.8 per cent and standard two storey homes are up 1 per cent year-over-year, while standard condominium prices fell 3 per cent over the same period. All three categories have shown price increases compared to second quarter numbers.
Diversified economies in Ottawa, Montreal and Winnipeg contributed to modest home price appreciation in those cities in the third quarter. Canada’s capital saw standard two storey homes increase 3.3 per cent year-over-year, to $327,833, while similar homes in Winnipeg increased 5 per cent to $265,938. Montreal home prices also continued to improve, with a year-over-year increase of 2.1 per cent for standard two storey homes, at $343,480, and a 4.4 per cent improvement in standard condominium prices, to $213,278.
“Markets in Quebec, eastern Ontario and Manitoba had fewer of the price spikes we saw elsewhere, the corollary being that housing markets in these regions fared better during the recession,” said Soper. “These regions have not been recession proof from a real estate perspective, but certainly have proven recession resistant, helped by balanced economies with diverse employment bases across manufacturing, resources, government, and services.”
Meanwhile, in the traditional boom-bust, resource dependent economies in western Canada, home prices that corrected sharply downwards in 2008 have been slower to recover. In almost all regional markets across the prairies and British Columbia, year-over-year home values continued to be flat or declined in Q3 2009. In Saskatchewan, home prices dropped between 0.6 per cent and 5.6 per cent with a standard two storey home in Regina averaging $251,500. Alberta values declined year-over-year between 1.6 and 9.3 per cent. Although house prices remain below last year’s levels in Calgary and Edmonton, they are starting to improve. Calgary saw two storey homes recover slightly to $414,556 while the average price for a two storey home in Edmonton remained flat at $327,429 from last quarter.
In B.C., where market activity picked up considerably in the third quarter, detached home prices in Vancouver were still down between 1.8 and 2.3 per cent year-over-year, however values improved during the third quarter with standard two storey homes selling for an average of $904,750.
“It is a modest recovery but a recovery nonetheless and that change is reflected in the housing market,” said Soper. Although key economic indicators are showing signs of improvement, fears over job security and economic instability will keep many Canadians in their current homes. “Fewer people are willing to move, because they’re still concerned about the economy. Until they are convinced things are back to normal, some people will not put their homes up for sale and we’ll continue to have constrained supply.”
Royal LePage’s Q3 House Price Survey shows the annual change of prices for key housing segments in select national markets. Click here to view the chart (.PDF).
Source: Royal LePage Real Estate Services
October 5, 2009
Toronto Real Estate Board reports:
GTA Housing Market Rebound Continues in September
In September 2009, Greater Toronto Realtors reported 8,196 sales, up 28 per cent from September 2008. The average price for September transactions was $406,877 – up by 10 per cent compared to the same month last year.
“We have experienced an increasing rate of existing home price growth in the GTA as sales have continued outpace 2008 results,” said TREB President Tom Lebour. “Consumers have remained confident in ownership housing as a long-term investment.” Year-to-date sales, at 66,437 were up 4.5 per cent compared to the first nine months of 2008. Average price, at $388,417 was up by almost 1.5 per cent.
“Existing home sales will finish strong this year, pushing through the 80,000 mark and moving in line with some of the best years on record under the current TREB market area,” according to Jason Mercer, TREB’s Senior Manager of Market Analysis.
Median Price
In September, the median price was $347,000, up from the $322,000 recorded during September of 2008.
Source: Toronto Real Estate Board – Market Watch Report »