Apartment units continued to lead year-over-year price gains in October, the Canadian Real Estate Association (CREA) reported last week. Apartment units saw their prices surge 20 per cent above October 2016 levels, compared to the 13.2-per-cent increase observed for townhouse/row units and the 6.3-per-cent and 5.8-per-cent increases observed for one-storey single-family homes and two-storey single-family homes, respectively.
The MLS® Home Price Index, which controls for month-to-month shifts in the mix of the types of homes sold, was up 9.7 per cent in October, continuing a year-over-year deceleration in gains that began in April. CREA pointed to housing markets in the Greater Golden Horseshoe as the main culprit behind the deceleration in gains, citing the softening price trends there.
The slowdown in price gains persisted as national home sales inched up close to one per cent month over month in October, which built on August and September’s month-over-month increases. At the same time, national home sales dipped 4.3 per cent year over year in October, marking the seventh straight month of actual activity to fall short of 2016 levels. October home sales in the GTA reflected both of these national trends, recording a month-over-month uptick while activity remained below 2016 levels.
“National sales momentum is positive heading toward year-end,” said Gregory Klump, chief economist at CREA. “It remains to be seen whether that momentum can continue once the recently announced stress test takes effect beginning on New Year’s Day.”
“The stress test is designed to curtail growth in mortgage debt,” Klump explained. “If it works as intended, Canadian economic growth may slow by more than currently expected.”
Calgary, Greater Vancouver and London-St. Thomas, which saw their new listings pull back last month, put a drag on national new listings, which, after rising more than five per cent in September, posted a 0.8-per-cent uptick in October.
The slight increase in activity and slowdown in supply nudged the national sales-to-new listings ratio closer to sellers’ market territory, up to 56.7 per cent in October from 55.7 per cent in September. The ratio remained within the 40 to 60-per-cent range generally deemed to represent a balanced housing market, but only 60 per cent of local markets could claim this condition upon measuring the sales-to-new listings ratio against their long-term average.
National inventory has stayed static since August, hovering near the long-term average, with five months’ worth in October. Although the Greater Golden Horseshoe has yet to return to its long-term average of 3.1 months of inventory, the region has rebounded from a record low of 0.8 months of inventory in February and March to 2.5 months of inventory in October.
Most of the 13 markets captured in the MLS® Home Price Index saw their benchmark home prices rise year over year last month. Benchmark home prices were up 12.4 per cent year over year in October in Greater Vancouver and 17. 3 per cent in Fraser Valley. At the same time, Greater Toronto, Oakville-Milton and Guelph posted year-over-year price gains of 9.7 per cent, 8.3 per cent and 13.2 per cent, respectively.
The actual national average home price rose five per cent year over year in October, surpassing the half-a-million-dollar mark at $506,000. But that figure is distorted to the tune of more than $120,000 by Canada’s two hottest housing markets. When Greater Toronto and Greater Vancouver are excluded, the national average home price drops to $383,000.