Canadian Home Sales Fell For Fourth Consecutive Month in August

Diane Buchanan • September 15, 2016

This morning, The Canadian Real Estate Board (CREA) released their national real estate statistics for August, which showed a further slide in home sales as new listings resumed their decline and home prices increased once again. For Canada as a whole, the number of homes trading on the MLS Systems fell 3.1% month-over-month in August–the largest monthly decline since December 2014. Combined with the plunge in home sales in the prior three months, the August slide places national home sales activity 6.9% below the record set in April of this year. 

Sales activity fell in almost 60% of all markets in August, led by the steep decline in Greater Vancouver following the August 2nd introduction of the new property transfer tax on homes purchased by foreign buyers. According to the CREA, activity also declined in the Fraser Valley and August marked the sixth consecutive monthly decline in the Lower Mainland. 

“The sudden introduction of the new property transfer tax on homes purchased by foreign buyers in Metro Vancouver has created a cloud of uncertainty among home buyers and sellers,” said CREA President Cliff Iverson. “That the tax applies to sales that had not yet closed shows how the details for a new tax policy can unnecessarily destabilize housing markets.”

“Single family homes sales were already cooling before the new land transfer tax on foreign home buyers in Metro Vancouver came into effect,” said Gregory Klump, CREA’s Chief Economist. “The surprise announcement of the new tax caused sales to brake hard.”

In direct contrast, activity in Greater Toronto continued strong, further evidence that the new tax on purchases by foreigners in Vancouver did have a meaningful impact. On a not seasonally-adjusted basis, actual sales activity for the country as a whole was up 10.2% y-o-y in August. Sales were up from year-ago levels in about three-quarters of all Canadian markets, led by Greater Toronto. Greater Vancouver posted the largest y-o-y sales decline. 

Listings Fall Again

The number of new listings resumed their decline in August, falling 2.7% from July–down in four-out-of-five of the previous months. Declines in new listings in the Lower Mainland, Greater Toronto and Montreal more than offset gains in less active markets.

Many potential home sellers have been reluctant to put their properties on the market. With the continued rise in prices, sellers have been waiting to garner additional gains in value. In addition, many have been priced out of alternative housing options. Clearly, a sustained softening in home prices in Vancouver, Toronto and Montreal could trigger a deluge of new listings, which would further soften prices. This would be a dramatic and long-awaited reversal of the pattern we have been experiencing for many months now. 

Sales-to-New-Listings Ratio 

With sales and new listings both down by similar magnitudes in August, the national sales-to-new listings ratio was little changed at 61.6%–down from the high of 65.3% posted in May. A ratio in the range of  40%-to-60% is considered generally consistent with balanced housing market conditions. Above 60% is considered a sellers’ market and below 40%, a buyers’ market. 

The sales-to-new-listings ratio was above 60% in almost half of all local housing markets in August–virtually all of which continued to be in British Columbia, in and around the Greater Toronto Area and across Southwestern Ontario. Quite importantly, the ratio moved down to the mid-50% range in Greater Vancouver in August, reflecting the outsized plunge in sales, after having begun the year at a whopping 90%.

Number of Months of Inventory

The number of months of inventory is another important measure of the balance between housing supply and demand. It represents the number of months it would take to completely liquidate current inventories at the current rate of sales activity. 

There were 4.8 months of inventory on a national basis at the end of August 2016. This was up from 4.6 months in the previous three months and marked the first increase in almost a year.

The number of months of inventory had been trending lower since early 2015, reflecting increasingly tighter housing markets in Ontario – and, until recently, in B.C. It nonetheless remains below two months in Victoria and virtually everywhere within the Greater Golden Horseshoe region, including Greater Toronto, Hamilton-Burlington, Oakville-Milton, Guelph, Kitchener-Waterloo, Cambridge, Brantford, the Niagara Region, Barrie and Woodstock-Ingersoll. Indeed, major areas within the GTA have less than one month of inventory.

Prices Continue to Rise

The Aggregate Composite MLS House Price Index (HPI) rose 14.7% y-o-y last month, the largest gain in nearly ten years. This price index, unlike those provided by local real estate boards and other data sources, provides the best gauge of price trends because it corrects for changes in the mix of sales activity (between types and sizes of housing) from one month to the next. 

For the seventh consecutive month, y-o-y price growth accelerated for all types of property. Two-storey single family home prices continued to rise the most (16.3%), followed by one-storey single family homes (14.4%), while apartment unit prices rose 11.7% y-o-y.

Greater Vancouver (+31.4 percent) and the Fraser Valley (+38.3 percent) posted the largest y-o-y gains by a wide margin. Smaller double-digit y-o-y percentage price gains were also recorded by Greater Toronto (+17.2 percent), Victoria (+18.9 percent) and Vancouver Island (+13.1 percent).

By contrast, prices were down -4.1 percent y-o-y in Calgary in August. Although prices there have held steady since May 2016, they have remained down from year-ago levels since September 2015 and are 4.7 percent below the peak reached in January 2015.

Additionally, prices were down by -0.9 percent y-o-y in Saskatoon in August. While prices have remained below year-ago levels since August 2015, they are on track to begin rebounding before year-end should current trends persist.

Meanwhile, home prices posted additional y-o-y gains in Greater Moncton (+6.6 percent), Regina (+3.7 percent), Greater Montreal (+2.5 percent) and Ottawa (+1.7 percent).

 

This article was written by Dr. Sherry Cooper, Chief Economist with Dominion Lending Centres. It was originally published  here.

DIANE BUCHANAN
 Mortgage Broker

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Bank of Canada Rate Announcement Jun 4th, 2025

By Diane Buchanan • June 4, 2025
Bank of Canada holds policy rate at 2¾%. FOR IMMEDIATE RELEASE Media Relations Ottawa, Ontario June 4, 2025 The Bank of Canada today maintained its target for the overnight rate at 2.75%, with the Bank Rate at 3% and the deposit rate at 2.70%. Since the April Monetary Policy Report, the US administration has continued to increase and decrease various tariffs. China and the United States have stepped back from extremely high tariffs and bilateral trade negotiations have begun with a number of countries. However, the outcomes of these negotiations are highly uncertain, tariff rates are well above their levels at the beginning of 2025, and new trade actions are still being threatened. Uncertainty remains high. While the global economy has shown resilience in recent months, this partly reflects a temporary surge in activity to get ahead of tariffs. In the United States, domestic demand remained relatively strong but higher imports pulled down first-quarter GDP. US inflation has ticked down but remains above 2%, with the price effects of tariffs still to come. In Europe, economic growth has been supported by exports, while defence spending is set to increase. China’s economy has slowed as the effects of past fiscal support fade. More recently, high tariffs have begun to curtail Chinese exports to the US. Since the financial market turmoil in April, risk assets have largely recovered and volatility has diminished, although markets remain sensitive to US policy announcements. Oil prices have fluctuated but remain close to their levels at the time of the April MPR. In Canada, economic growth in the first quarter came in at 2.2%, slightly stronger than the Bank had forecast, while the composition of GDP growth was largely as expected. The pull-forward of exports to the United States and inventory accumulation boosted activity, with final domestic demand roughly flat. Strong spending on machinery and equipment held up growth in business investment by more than expected. Consumption slowed from its very strong fourth-quarter pace, but continued to grow despite a large drop in consumer confidence. Housing activity was down, driven by a sharp contraction in resales. Government spending also declined. The labour market has weakened, particularly in trade-intensive sectors, and unemployment has risen to 6.9%. The economy is expected to be considerably weaker in the second quarter, with the strength in exports and inventories reversing and final domestic demand remaining subdued. CPI inflation eased to 1.7% in April, as the elimination of the federal consumer carbon tax reduced inflation by 0.6 percentage points. Excluding taxes, inflation rose 2.3% in April, slightly stronger than the Bank had expected. The Bank’s preferred measures of core inflation, as well as other measures of underlying inflation, moved up. Recent surveys indicate that households continue to expect that tariffs will raise prices and many businesses say they intend to pass on the costs of higher tariffs. The Bank will be watching all these indicators closely to gauge how inflationary pressures are evolving. With uncertainty about US tariffs still high, the Canadian economy softer but not sharply weaker, and some unexpected firmness in recent inflation data, Governing Council decided to hold the policy rate as we gain more information on US trade policy and its impacts. We will continue to assess the timing and strength of both the downward pressures on inflation from a weaker economy and the upward pressures on inflation from higher costs. Governing Council is proceeding carefully, with particular attention to the risks and uncertainties facing the Canadian economy. These include: the extent to which higher US tariffs reduce demand for Canadian exports; how much this spills over into business investment, employment and household spending; how much and how quickly cost increases are passed on to consumer prices; and how inflation expectations evolve. We are focused on ensuring that Canadians continue to have confidence in price stability through this period of global upheaval. We will support economic growth while ensuring inflation remains well controlled. Information note The next scheduled date for announcing the overnight rate target is July 30, 2025. The Bank will publish its next MPR at the same time.

Get Protection From A Pre-Approval

By Diane Buchanan • May 28, 2025
There is no doubt about it, buying a home can be an emotional experience. Especially in a competitive housing market where you feel compelled to bid over the asking price to have a shot at getting into the market. Buying a home is a game of balancing needs and wants while being honest with yourself about those very needs and wants. It’s hard to get it right, figuring out what’s negotiable and what isn’t, what you can live with and what you can’t live without. Finding that balance between what makes sense in your head and what feels right in your heart is challenging. And the further you are in the process, the more desperate you may feel. One of the biggest mistakes you can make when shopping for a property is to fall in love with something you can’t afford. Doing this almost certainly guarantees that nothing else will compare, and you will inevitably find yourself “settling” for something that is actually quite nice. Something that would have been perfect had you not already fallen in love with something out of your price range. So before you ever look at a property, you should know exactly what you can qualify for so that you can shop within a set price range and you won’t be disappointed. Protect yourself with a mortgage pre-approval. A pre-approval does a few things It will outline your buying power. You will be able to shop with confidence, knowing exactly how much you can spend. It will uncover any issues that might arise in qualifying for a mortgage, for example, mistakes on your credit bureau. It will outline the necessary supporting documentation required to get a mortgage so you can be prepared. It will secure a rate for 30 to 120 days, depending on your mortgage product. It will save your heart from the pain of falling in love with something you can’t afford. Obviously, there is nothing wrong with looking at all types of property and getting a good handle on the market; however, a pre-approval will protect you from believing you can qualify for more than you can actually afford. Get a pre-approval before you start shopping; your heart will thank you. If you’d like to walk through your financial situation and get pre-approved for a mortgage, let’s talk. It would be a pleasure to work with you!