By Sunny Freeman, The Canadian Press
TORONTO – Canada’s housing sector is edging closer to a sellers’ market as sales and prices jumped again in November, but the number of listings dropped off.
Home resales rose six per cent last month on a year-over-year basis and jumped 0.5 per cent on a seasonally adjusted basis compared to October levels, the Canadian Real Estate Association said Thursday.
November marked the third straight month that national activity on its Multiple Listing Service was up from the one before.
The national average price increased 4.6 per cent year-over-year to $360,396. And while prices continue to rise, CREA noted that November’s increase was the smallest jump since January. Meanwhile, the number of newly listed homes was down 3.4 per cent from October to November.
“The national housing market remains balanced, but is edging closer to seller’s market territory,” the association said in a release.
A sellers’ market occurs when demand outweighs supply and owners can fetch a higher price for their homes in bidding wars between buyers.
The latest signs pointing toward a market that favours sellers stand in stark contrast to predictions earlier this year that demand would drop off, giving buyers a break from rapidly rising prices.
But a continuation of ultra low interest rates — which have sat at one per cent since September 2010 — due to trouble signs outside Canada’s borders has kept demand strong and buyers competing.
New listings slipped lower in more than two-thirds of Canadian housing markets, with Toronto, the Hamilton-Burlington region, and Calgary falling the most. The national sales-to-new listings ratio a measure of market balance, rose to 55.5 per cent in November — its highest reading since the spring.
Sales activity rose in about 60 per cent of all local markets, CREA said. Record November sales in the Halifax-Dartmouth region offset a dip in sales in the white hot Toronto market.
“The Canadian housing market is proving resilient in the face of ongoing global economic and financial uncertainty, to the benefit of Canadian economic growth,” said Gary Morse, CREA’s President.
And while sales so far this year have been stronger than expected, up 2.1 per cent on a year-to-date basis, they have remained in line with the 10-year average.
However, sales in November were so robust, that they broke that pattern to climb seven per cent above the 10 year average to the fourth highest level on record for the month.
But CREA’s chief economist Gregory Klump noted that the upswing heading into year-end is similar to what happened last year.
“By contrast, national average price also picked up toward the end of last year, whereas this year it has held steady after having peaked in the spring,” he added.
For the first time this year, Klump acknowledged that the hot real estate market — driven in part by a persistent low interest rate environment that is expected to last well into next year — could lead to signs of trouble.
“With interest rates expected to remain low for longer, the housing sector will no doubt be closely watched for signs of excess,” said Klump.
“That said, current trends for resale housing and new home construction suggest that tightened mortgage regulations are working as intended and fostering economic stability in Canada.”
Heavy borrowing activity signals dark clouds on the horizon for some households as debt reaches record levels — as much as 153 per cent of disposable incomes, according to data released earlier this week.
The most over-leveraged Canadians could find themselves unable to cope when interest rates eventually rise, federal Finance Minister Jim Flaherty and Bank of Canada governor Mark Carney have warned.
A total of 432,048 homes have changed hands on CREA’s MLS system so far this year, that’s about 0.7 per cent above the 10-year average.