Tara Perkins – The Globe and Mail

Canadian home prices ticked back up to a record high in December, thanks entirely to Edmonton, Vancouver and Toronto, according to the Teranet-National Bank house price index.

The 0.1% rise in home prices in December reversed a 0.1% decline in November, and returned the index to its all-time high.

But the majority of the 11 cities that the index tracks have seen prices edge down in recent months. Winnipeg, Calgary, Ottawa-Gatineau, Quebec City, Montreal, Hamilton, Halifax and Vancouver each saw prices decrease from November to December.

December was the sixth month in a row that Montreal failed to see a price increase, and the fifth month in a row in Quebec City, National Bank of Canada economist Marc Pinsonneault said in a research note. Ottawa-Gatineau has seen prices fall for four months in a row and Victoria for three, he added.

But Vancouver, the city that saw the steepest market correction in the past two years, saw its prices rebound to a new high. Toronto’s prices rose 0.4% from November, the first time they’ve risen in four months, and are now almost back up to the peak that they reached last August. Edmonton posted its first price increase in five months, up 0.6%.

Comment: But that is only using the Teranet measure. The raw stats show a 8.9% increase over December 2012 and 2013 was 5.2% higher than 2012 as a whole. Different measures give different results.

All told, national home prices were 3.8% higher in December than they had been a year earlier. That’s an acceleration from the 3.4% year-over-year increase in November, and is stronger than the 3.1% increase in prices during 2012.

But Pinsonneault notes that the improvement from 2012 comes solely from Calgary, Vancouver and Toronto. Excluding those three cities, last year’s price increase would have been 1.2%.

Comment: Doesn’t matter, still an increase. And NOT a decrease, as so many “experts” keep predicting.

Given that higher mortgage rates are eroding housing affordability, Pinsonneault is predicting that house price increases will barely cover CPI inflation during 2014, about 1.5%.

Comment: Maybe, for the country as a whole. But that means price increases have to fall 60% next year. Seeing as there are no obvious causes for that, I see it being unlikely. Certainly not the “high” mortgage rates of 3.59% or below… how about Scotiabank’s variable 2.8% product?

Calgary has seen its prices rise 6.5% in the past year according to this index, Toronto 4.9%, Vancouver 5.5% and Winnipeg 3.4%. The only city that has seen a price decrease over the past year is Victoria, where prices have dropped by 4%. But a number of cities, namely Quebec, Ottawa, Montreal and Halifax, saw prices tick up just a bit.

Many economists say they are surprised by how well Canadian home prices have held up in the wake of the market downturn that impacted much of the country from the summer of 2012 until this past spring. Prices tend to lag sales, and economists expected the slump to translate into more downwards pressure on prices.

Comment: But anyone with a brain knows that the sales slow down was directly attributable to the mortgage changes, and ONLY attributable to that single event. Once people got used it, in about 10 months, then it was business as usual. Now that sales are back up, there is no reason for prices to lag.

“Prices have been much stronger than we anticipated them to be,” Toronto-Dominion Bank real estate economist Diana Petramala said earlier this month.

Comment: Wow, how many times has that happened? A lot, I bet. Without a fundamental understanding of the low supply and high demand, people will never understand why everything keeps rising.

The Canadian Real Estate Association, which represents the bulk of real estate agents in Canada, will release December’s average prices as well as its latest home price index numbers Wednesday (averages tend to be skewed by changes in the size or types or locations of homes that are selling).

Comment: But averages are what we use every day, as there is just no other way to measure the data. We compare averages for specific areas over time, there is just no other way. All stats can be skewed, that is just the nature of numbers.

But the Calgary Real Estate Board recently said that the benchmark price of a single family home in the Calgary area has risen to $472,200, up 8.6% from December of 2012.

The benchmark in Vancouver is $603,400, up 2.1% from a year earlier.

The average price of homes that sold over the Multiple Listing Service in the Toronto area during December was $520,398, up by 8.9% from the average selling price in December, 2012. And the average selling price in Toronto for all of 2013 was $523,036, up 5.2% from the average in 2012.

Comment: Those are for ALL housing types in Toronto, not just single family homes. That includes condos, detached homes, semi-detached, townhouses and condo townhouses. As well as the few and various co-ops and co-ownerships. The standard detached single-family home in Toronto was $864,351 in December.

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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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