Defying the Norm

While MLS® home sales in Canada decreased by 2.1 per cent between January and February, sales in Calgary increased more than seven per cent.

There were 1,591 sales in Calgary in January 2013 followed by 1,709 in February. Nationally, not seasonally adjusted activity decreased 15.8 per cent compared to February 2012. According to the Canadian Real Estate Association (CREA) home sales picked up in just under half of all local markets from January to February but small declines in Greater Toronto and Montreal combined with larger declines in the Greater Vancouver and Winnipeg markets tipped the national balance to the downside.

"A rebound in sales in some of Canada's largest and most expensive markets, similar to those we saw following previous mortgage rule changes, has so far remained elusive," said Wayne Moen, CREA president. "That said, the slowdown in many big markets is being offset by activity in many smaller and more affordable markets that were less impacted by last year's mortgage rule changes. This serves as a reminder that all real estate is local. Buyers and sellers should speak to their REALTOR® to understand how the housing market is shaping up where they live or might like to."

In late June, the federal government enacted new rules governing mortgage lending and borrowing in Canada. The maximum amortization period was reduced from 30 years to 25 and the amount Canadians can borrow when refinancing their homes decreased from 85 to 80 per cent of the value of the home.

"February 2012 saw an extra selling day due to the leap year. However, the year-over-year decline between this February and last year is largely a reflection of demand that is well off from 2012," said Gregory Klump, CREA's chief economist. "The cooling off of the housing market resulted from tighter mortgage rules and guidelines coming into force in mid- July last year, with most of the decline in the sales occurring in August."

Klump added, until the summer months arrive, year-over-year comparisons to the first half of 2012 are "predictably" going to be down significantly but aren't a sign of deterioration in the market.

"Rather, year-over-year comparisons will continue to reflect the long shadow cast by higher sales prior to last summer's policy tightening Looking at the monthly trend since then shows that we've been seeing reasonably stable trends for demand and prices," he said.

Also decreasing was the number of newly listed homes in Canada, falling 1.2 per cent month-over-month in February, leaving new listings at their lowest level since November 2010. The largest declines in new listings were reported in Greater Toronto, Greater Vancouver, Montreal and Saskatoon.

In Calgary, there were 2,671 new listings bringing the number of active listings in the city to 3,537 for February 2013. Homes are spending an average of 38 days on the market in the city.

While new listings went down, months of inventory went up with 6.8 months of inventory recorded for Canada at the end of February 2013 compared to 6.6 months of inventory reported for January.

The actual (not seasonally adjusted) average price for homes sold in Canada in February was $368,895, a one per cent decrease compared to February 2012. There were fewer sales compared to the same time last year in Greater Vancouver, which, with its higher prices, continues to exert a strong gravitational pull on national activity. Calgary's average price in February was $457,243, an increase of 7.49 per cent when compared to February 2012's average of $425,382.

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