Tara Perkins – The Globe and Mail

Sales of existing homes rose for the sixth month in a row in July, hitting their highest level since March 2010, as some of the country’s softer real estate markets sprung to life.

Cities such as Montreal, Ottawa, Victoria, Winnipeg and Halifax received a sales boost from June on a seasonally adjusted basis, even as activity softened in Toronto, Calgary and Vancouver.

Comment: Say what now? Activity did NOT soften in Toronto. Sales were up 7.6% and prices up 9.4% as of mid-August. How can anyone say that is soft? Check the stats for yourself.

“This latest crop of statistics on Canada’s housing market indicates that upward momentum is being sustained at this point, and that any slowing in activity will have to wait a little longer,” Royal Bank of Canada economist Robert Hogue wrote in a research note Friday.

Comment: So TREB and RBC say there is no softening, why did you? Smacks of deceit to me…

Overall, the number of existing homes that changed hands in Canada last month was up 7.2% from a year earlier, according to the Canadian Real Estate Association, which represents realtors. Sales activity so far this year is now 4.7% higher than during the same period last year, and in line with the average level for the past decade.

The sales numbers come after Canada Mortgage and Housing Corp. ratcheted up its outlook for Canadian home sales, prices and construction earlier this week, with economists saying that lower-than-expected mortgage rates are fuelling the market.

Comment: The rates are only lower than the “experts” expected. No one else was surprised. And records were set in 2007 when rates were double what they are today. It is not just low interest rates… that is helping prices to rise, but there are 10 other factors influencing the real estate market.

The data prompted Mr. Hogue to bolster his outlook, saying he now expects sales to rise 2.1% this year and prices to rise 4.3% (he previously forecast gains of 0.8% and 3.4% respectively). “The national market’s performance has been stronger than we expected so far this year,” he wrote. “We still project home resales to decline slightly in 2015 nationwide [by 0.9%], and prices to decelerate substantially [to a gain of 1.1%]. Outright price declines are likely to occur after 2015, when we expect higher levels of condo completions to match up against cooler homebuyer demand.”

Comment: This is what happens every year. Experts predict lower numbers, then the data proves them wrong. So they “revise” their prediction higher, with the caveat that “nex year it will drop”. Then it doesn’t. Again.

The average sales price in July was 5% higher than a year earlier, at $401,585. Excluding Vancouver and Toronto from the mix, average prices rose 4% to $327,988.

Comment: Excluding Winnipeg and St. Johns the average price rose 6% to almost $500,000. What’s your point? Take out the high values and the average drops. Take out the low values and it rises. All it shows is that you can manipulate the data.

The MLS Home Price Index, which tries to measure prices while removing factors that can distort the average – such as higher sales in more expensive markets – was up by about the same amount as the average, posting a 5.3% gain.

Comment: So there you go. The average was 5%, even with the higher values of Toronto and Vancouver. Using a different measures that accounts for price variations and the increase is still 5.3%. Kinda proves that the number is valid.

Price growth had been 5.4% in June. It picked up in July for detached homes and townhouses, and was a bit slower for apartments or condos. Calgary, Toronto and Vancouver continued to show the strongest annual price increases.

Toronto-Dominion Bank economist Leslie Preston noted that price growth were uneven. Only Calgary and Toronto, with year-over-year gains of 10.5% and 7.9% respectively, saw prices rise more than average, Ms. Preston wrote in a research note. Prices in Vancouver were up 4.4%. “Elsewhere, price trends in Regina [-1.6%], Ottawa [0%], Montreal [+0.5%], the Fraser Valley [+1.3%] and Saskatoon [+1.3%] are all below the rate of inflation,” she wrote.

“However, existing home prices [average and on a quality-adjusted basis] are on track to outstrip income growth for a second straight year in 2014, which adds to concerns about an already-overpriced market,” she added. “Affordability, even at low interest rates, has become an obstacle in many markets. This contributes to our view the Canadian housing market will cool later this year and into 2015 as interest rates are likely to nudge higher.”

Comment: But this year has proven time and again that income-to-price ratios are invalid. When comparing monthly incomes to monthly mortgage payments, we see that amounts are actually the same or LOWER than they were 30 years ago. Which shows that monthly income and monthly mortgage payments are all plugging along and pretty much the rate of inflation. And the two values are increasing at much the same rate, as they have stayed steady for a generation now.

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

Laurin Jeffrey is a Toronto real estate agent 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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