– Home sales up 3.3% in June, 6.4% over previous quarter

– Prices up in 80% of major markets; Vancouver continues to show signs of an impressive rebound

– BMO recommends prospective buyers stress-test their mortgage at a higher interest rate to ensure sustained mortgage affordability

TORONTO, ONTARIO–(Marketwired – July 15, 2013) – According to BMO Senior Economist Robert Kavcic, the latest data from the Canadian Real Estate Association show that the Canadian housing market remains balanced and well-behaved. Existing home sales rose for the fourth month in a row in June, posting a 3.3% seasonally adjusted gain from the prior month and down just 0.6% from the readings of a year ago.

Comment: A far far cry from when we were seeing sales dropping close to 20% in the months following the mortgage rule changes. Especially as we got into winter, the weather was bad, the holidays… In Toronto we are now seeing sales UP from last July – the tide has turned and we are back into positive territory.

“These figures represent another body blow to the Canadian housing bears,” said Mr. Kavcic. “The June report leaves the second-quarter tally at an impressive 6.4% above the previous quarter – the strongest performance since 2010. In fact, sales are now back to levels seen before the latest round of mortgage rule tightening took effect in early July, helped by very low mortgage rates through much of the spring.”

Comment: But as with many others with solid biases and pre-conceived notions, you cannot change their mind. The truth, data, it does not get in the way of a baseless opinion.

Mr. Kavcic noted that the recent rise in 5-year fixed rates – now in the neighbourhood of 3.5% versus sub-3% just over a month ago – might have actually stoked sales activity in June, with buyers making their move before their lower rate contracts expired. “That could set the stage for another cooling off period this summer. At any rate, measures of market balance are clearly tightening, with the sales-to-new listings ratio again slightly above historical norms and the months’ supply down for the third time in the past 4 months.”

Comment: The summer is generally a slower time of the year, always has been. If July and August are down, that is just a normal yearly cycle. There are still mortgage brokers offering as low as 2.79%, so rates are not yet a problem. Remember, in 2007, the highest record year yet, interest rates were in the 5% to 5.49% range.

Regionally, most markets have tightened up in recent months, including an impressive turnabout in Vancouver – sales are now 52% of new listings, up from a low of 36.6% late last year. Toronto is firmly balanced, while Calgary is again seeing a sellers’ market.

Mr. Kavcic also said that firmer sales and lower inventories have all but erased any threat of an imminent melt in prices. “Average prices were 4.8% above year-ago levels in June, with fully 80% of the major markets surveyed reporting prices up from last year. Vancouver and Regina are both still seeing prices below year-ago levels by this measure, though Vancouver has bottomed in recent months. Calgary is the clear outperformer, up a strong 6.7% year over year, and now less than 3% from peak 2007 levels.”

“It’s essential that home buyers stress-test their mortgage against a higher interest rate to ensure they could handle any potential increases in interest rates down the road,” said Laura Parsons, Mortgage Expert, BMO Bank of Montreal. “It’s also wise to choose a mortgage with a shorter amortization, which can help homeowners become mortgage-free sooner.”

Ms. Parsons added that those who are ready to enter the marketplace can get a head start on planning by getting pre-approved for a mortgage before setting out to lock down the perfect home.

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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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