Theophilos Argitis – Bloomberg

Canadian existing home sales fell in December for a third month as the real estate market ended the year on a soft note after surging for much of 2013.

Comment: But sales always fall after the height of the fall real estate market in September. It happens Every. Single. Year. But December 2013 sales were 12.9% higher than December 2012 sales. And 2013 had more sales than 2012. So there is no real decline here, stats are just being spun to make things look worse than they are.

Sales fell 1.8% in December from the previous month, the Canadian Real Estate Association said today in a statement. In 2013, realtors sold 457,893 units through the Multiple Listing Service, up 0.8% from a year ago with the average sales price in 2013 rising 5.2% to $382,466.

Comment: Okay, wait. December sales were up over last year. Yearly sales were up over 2012. And prices were up as well. How is this any sort of landing at all? Sounds like the market keeps plugging along, rising month after month and year after year. The numbers simply do not say anything different.

The December figures cap a rebound year for a housing market that has defied predictions of a crash, bolstering the argument that home prices will soften gradually without destabilizing the nation’s economy. Canadian real estate will probably produce a similar performance in 2014, with moderate gains in sales and prices, said Doug Porter of Bank of Montreal.

Comment: The market has defied predictions of a crash for a decade now. Anyone who continues to make that same prediction over and over and over again needs to have a serious think about things.

“We look for some calming but not a correction” in 2014, Porter, chief economist at BMO Capital Markets in Toronto, said in a telephone interview.

The Toronto real estate market was among the most buoyant in 2013, with sales up 0.9% last year and prices gaining 5%. Vancouver posted price gains of 5.2 percent and a 14 percent increase in unit sales.

Comment: Um… Toronto sales were actually up almost 2% for 2013, over 2012. Prices were also up 5.2%, not just 5%. Just saying, the numbers here are off by 1% and 0.2%. Doesn’t sound like much, but accuracy matters.

Bank of Canada Governor Stephen Poloz said in an interview last month he expects a “soft landing” in the housing market. In 2012, the central bank singled out household indebtedness as the greatest domestic threat to the economy. It introduced a rate-rise bias in April of that year, making it the only G-7 central bank to hint at higher borrowing costs.

Comment: If by soft landing he means moderate increase in sales and price, then he is right. If he means a slow down or flattening, then nope, that ain’t gonna happen.

Concern Abates

Since then, policy maker concern about an overheating housing market has abated, with the focus turning to tepid economic growth and stagnant inflation.

Comment: Because, OhMyGod, they see that the market just continues along, not doing what they “predict”. There were 457,893 sales across Canada last year – with a buyer and a seller and 2 agents at a minimum involved in each sale – and thus at least 1,831,572 people involved in those sales. They set the tone of the market, not the words of a few economists.

Last year, the housing market shrugged off a slow start by March, posting seven straight months of gains before weakening in the final quarter. Homebuyers rushing to beat potentially higher interest rates contributed to the mid-year surge. The possibility of rising borrowing costs has receded amid signs of persistent economic slack and low inflation.

Comment: Of course, it always heats up in the spring and sometimes into the summer. After the fall, it slows. This is a normal yearly pattern. And the mortgage rate rush theory was proven wrong when sales continued to rise even after the last rate guarantee expired.

“Activity has gradually eased back from stronger than expected levels last summer and is now roughly in line with the ten year monthly average,” Laura Leyser, president of the Canadian Real Estate Association, said in the statement. “We’ll likely continue getting mixed signals in the months ahead.”

Remain Wary

Bankers and policy makers continue to warn against complacency. Toronto-Dominion Bank CEO Ed Clark said at a conference yesterday that bankers should remain wary of the housing market.

Comment: Note his was the only negative opinion, all other bank CEOs disagree with him.

“I don’t think it’s going to collapse, but I do think that if you run a bank, you should be worried,” said Clark, 66. “It’s something we should watch.”

Policy makers also continue taking steps to rein in taxpayer exposure to the sector. Most recently, Canada Mortgage & Housing Corp. began paying a “risk fee” of 3.25% to the federal government on the insurance it writes.

Finance Minister Jim Flaherty last month said he regrets that Canada’s housing agency has grown as large as it has, and has promised to take additional measures if a reduction in the amount of government insurance is needed.

Julie Dickson, Canada’s top financial industry regulator, said in a Nov. 25 speech that policy makers need to continue to monitor closely the nation’s housing market amid warnings that a real estate bubble may be emerging.

Comment: How can a bubble emerge without rapid price increases? Or without speculation? Or without a sudden crash? There is NO evidence at all for a bubble and even talking about one is just plain silly.

Brokers are optimistic for the housing sector this year.

“Absent further mortgage rule changes, sales in 2014 may surpass the annual total for 2013 if demand holds steady,” Gregory Klump, the real estate association’s chief economist, said in today’s statement.

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Contact Laurin Jeffrey for more information – 416-388-1960

Laurin Jeffrey is a Toronto Realtor with Century 21 Regal Realty. He did not
write these articles, he just reproduces them here for people who are
interested in Toronto real estate. He does not work for any builders.
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