OTTAWA - Sales of existing homes held relatively steady in March, but average prices across the country rose a sharp 8.9 per cent year over year, skewed by "a few pricey areas of Greater Vancouver," the Canadian Real Estate Association said Friday.
"A record number of multimillion-dollar property sales in Richmond and Vancouver West are pushing up average prices for Greater Vancouver, British Columbia and nationally," said CREA chief economist Gregory Klump.
"If Vancouver is excluded from the equation, the national average price increase is cut by more than half to 4.3 per cent."
Seasonally adjusted national home sales activity in March was a tenth of a percentage point above levels for the previous month, with stable demand in most large urban centres, CREA said.
The association said national sales activity in each of the first three months of 2011 ran close to five- and 10-year monthly averages. However, that meant that seasonally adjusted activity in the first quarter was up 4.5 per cent from the final quarter of 2010 and at the highest quarterly level in a year.
But most of the increase was due to demand in Vancouver and Toronto, CREA said.
Recent changes to mortgage regulations that shortened the maximum amortization period to 30 years from 35 "may have caused a number of sales in some of Canada's more expensive housing markets to be brought forward into the first quarter that would have otherwise occurred later in the year," CREA explained.
Sellers looking to trade up before changes to mortgage regulations took effect made their move early, resulting in a significant rise in newly listed homes in January and February of this year. With changes to mortgage regulations looming in March, seasonally adjusted new residential listings for the month dropped five per cent month to month.
Take together, the figures indicate the high-flying Canadian housing market is heading for a "soft landing," Douglas Porter, deputy chief economist at BMO Capital Markets, said in a note.
"Canada's housing market appears to be sailing into calmer waters -- with one rather jarring exception -- after the extreme ebbs and flows of the past three years," Porter said.
"Notably, the one market that can in no way be described as calm is Vancouver, where sales were again up almost 30 per cent from a year ago, flying in the face of declines in 21 of the other 24 major markets.
Winnipeg was another relative standout, Porter said, with sales up eight per cent year over year, although only 0.4 per cent month over month, while Halifax saw sales increase 20.9 per cent month over month, although sales are down 1.7 per cent year over year.
Toronto remain locked in a double-digit decline from a year ago, although sales were up 3.5 per cent month over month in March.
Porter noted that the average Canadian house price rose to an all-time high of $366,000 last month, but if Vancouver were excluded the average national price would be 11 per cent lower at $327,000.
"While there is plenty of chatter about the possibility of a severe correction in Canadian housing, the risk looks highly concentrated in geographic terms. The bottom line: Canada's housing market looks to be headed for a soft landing, at least in the vast majority of cities," he said.
CREA noted that the housing market remains relatively balanced between buyers and sellers in most urban centres, with the national sales-to-new-listings ratio at 56.5 per cent in March.
Based on those ratios, "more than half of local markets in Canada could be considered balanced in March, with two-thirds of the remaining markets considered to be as sellers' markets."
Seasonally adjusted unsold inventory on the market stood at 5.6 months at the end of March on a national basis. That was unchanged from the previous month. Almost half of all local markets saw the number of months of inventory shrink compared with the previous month.
"Looking ahead, evidence suggests that the potential rush of sales activity in March before recent changes to mortgage regulations took effect was a story that was largely focused in condo sales activity in Greater Vancouver," Klump said.
"This confirms that the expected (overall) impact on sales activity of recent changes to mortgage regulations will likely be minor over the near term. Interest rates are now widely expected to remain on hold until at least mid-July, which is supportive for resale housing demand, market balance and prices."
