Canadian home resale price gains quickened last month from the slowest pace in almost four years led by gains in Toronto, Hamilton and Calgary.

Vanessa Lu – Toronto Star

Comment: Why are we calling this a recovery? Sales dropped due to new mortgage rules, not exactly something to be “recovered” from. Prices stayed on the rise the entire time. No real measure of real estate anywhere in the country did anything that it needed to “recover” from.

Canadian home resale prices increased in July, boosted by strong gains in Hamilton and Toronto.

Comment: They also increased for the previous 52 straight months.

According to the Teranet-National Bank Composite House Price Index, which is a weighted index of 11 cities across Canada, prices increased 1.9% last month from a year earlier.

Toronto saw gains of 3.4%, while Hamilton was up 6.7%.

“Hamilton is an up market by any respect,” said National Bank senior economist Marc Pinsonneault. “The only weakness we see in Toronto is that there many unsold new condos, including those on pre-sale and under construction.

Comment: Again, why is that a weakness? The 20% inventory level is historically on-trend, it is not abnormal. Buildings still start construction when at least 70% of units are sold, then complete with around 90% sold. This is way it has been for decades now.

“That’s the only part of the Toronto market that you can say is weak,” he said.

Comment: If you reach…

On a monthly basis, the Teranet-National Bank House Price Index rose only 0.7% in July, weaker than the average increase of 1% seen over the last 12 years.

Comment: So now complain that the increases are not big enough. Since we can’t “predict” a price drop into existence, we will complain about the size of the increases.

On a nation-wide basis, home prices have only increased by 1.9%, in part because of a price correction that began in September 2012 and only ended a few months ago, Pinsonneault said.

Comment: Umm… what price correction?

Although home resale prices are higher than the current rate of inflation, Pinsonneault describes it as “subdued.”

Even if sale prices are lower than usual in August and September, based on the last year’s drop, home price inflation will still rise due to base effects.

However, Pinsonneault anticipates sales are likely to cool in the latter of the half of the year because Canadian banks began to raise interest rates on new mortgages in June, which will have an effect on affordability.

“It will be the worst since the start of the last recession,” he said.

Comment: For the 32nd time, there was no recession. At no pointin 2008 or 2009 did we have 2 consecutive quarters with negative GDP growth. One, yes, but not two. Thus, no recession. Why people continue to say there was one is beyond me. Many other countries had one, but not Canada. And I am sick of hearing about “these tough economic times”. Right, unemployment has fallen more than a full percentage point since 2009, job growth is up, the economy – while not booming – is still growing. Real estate is rising, the TSX is rising. I don’t know anyone without a job… so where is all the bad news?

The federal government also instituted new mortgage rules, which went into effect last July, making it tougher for home buyers, but affordability questions were mitigated by low interest rates.

Buyers holding pre-approved mortgages will able to take advantage of better mortgage rates, so the impact on home sales figures may not be felt until later in the year.

Comment: We shall see, I suppose…

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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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