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.
Friday, December 16, 2011
Thursday, December 1, 2011
Canada’s economy surges ahead
Christine Dobby Nov 30, 2011 – 7:06 PM ET
The Canadian economy was not as bad as first feared in the third quarter. In fact, it was much better than almost anyone had hoped.
Fuelled by record monthly output from the oil-and-gas and mining sectors and overall export strength as temporary headwinds drifted away, third-quarter economic growth shot past expectations.
Statistics Canada said Wednesday that gross domestic product for the period rose by an annualized 3.5%, beating economists’ more moderate average prediction of 3.0% growth and the Bank of Canada’s forecast of 2.0%. In September alone, the economy grew 0.2% from August, falling just short of a 0.3% increase economists predicted.
The growth during the quarter comes as a welcome change after a revised 0.5% contraction in the second quarter.
Net exports staged a decided recovery as external pressures like the fallout from the Japanese natural disasters in March were no longer a factor.
But the devil is in the details as flagging domestic demand and weak business investment lurked beneath the report’s strong headline growth. A close look at the data has economists forecasting only modest growth — in the range of about 2% — in the coming quarters and predicting the Bank of Canada will remain on hold with interest rate hikes.
Here’s what stood out from Wednesday’s report:
EXPORTS
The driving force behind the uptick in GDP for the quarter, exports grew at an annualized rate of 14.4%, up from a pullback of 6.4% in the previous quarter.
Paul Ferley, assistant chief economist at Royal Bank of Canada, said that factors that weighed on Canadian exports in the second quarter — including the Japanese supply-chain disruptions as well as wildfires in Northern Alberta that led to shutdowns of oil sand production facilities — were resolved in Q3 and contributed to the increase.
But, he cautioned, “The boost to third-quarter growth provided by the reversal of these factors is not expected to continue to the same extent into the fourth quarter.”
As the global economy stalls and prospects for a quick turnaround look increasingly grim, economists predict it will could spoil the Canadian export party.
HOUSING
Canada’s unstoppable real estate market was another bright spot during the quarter. Residential construction shot up 10.9% annualized, following on comparatively modest increases of 1.6% in Q2 and 6.7% in Q1.
“After quarters of booming housing starts data, the residential construction bonanza finally translated into the GDP numbers,” said Emanuella Enenajor, economist at CIBC Economics.
The expansion in this sector came from all three major components including fees and transfer costs related to resale transactions, new housing construction and renovation activity.
“Continued strength in new-home sales has elicited more and more new housing construction, particularly in the high-rise condo market,” said David Madani, Canada economist for Capital Economics.
He noted that a reported increase in housing starts bodes well for further strong growth in this category next quarter.
CONSUMER SPENDING
Canadians slowed their spending on goods and services during the quarter, raising red flags for economists concerned about sluggish domestic demand.
Personal expenditures grew at an annualized rate of 1.2%, down from an expansion of 2.1% in the previous quarter.
“A slowing pace of income growth owing to tepid hiring and weaker wage dynamics will likely continue to put downward pressure on consumption activity,” Ms. Enenajor said.
BUSINESS INVESTMENT
Business investment actually contracted during the quarter with a decrease of 3.6% annualized, down from last quarter’s 14.6% increase.
“Weak business investment is a worry, as it has been an important source of growth since early 2010 and replaced personal spending as the main source of domestic growth,” said Charles St. Arnaud, an analyst with Nomura Global Economics.
He noted that this, coupled with the fact that personal spending is likely to remain weak, “Could mean that domestic demand stays weak over the next few quarters, as global uncertainty remains high.”
FINAL DOMESTIC DEMAND
The combined slowdown in consumer spending and business investment was a drag on final domestic demand, which rose only 0.9% in the third quarter, down from a 3.1% gain in Q2. The other component, government expenditures, was flat in the quarter as government stimulus spending continues to slow to a trickle.
“Note that the pace of final domestic demand has been consistently slowing since 2010, weakening from around 6% to its current sub-1% pace,” Ms. Enenajor said.
The Canadian economy was not as bad as first feared in the third quarter. In fact, it was much better than almost anyone had hoped.
Fuelled by record monthly output from the oil-and-gas and mining sectors and overall export strength as temporary headwinds drifted away, third-quarter economic growth shot past expectations.
Statistics Canada said Wednesday that gross domestic product for the period rose by an annualized 3.5%, beating economists’ more moderate average prediction of 3.0% growth and the Bank of Canada’s forecast of 2.0%. In September alone, the economy grew 0.2% from August, falling just short of a 0.3% increase economists predicted.
The growth during the quarter comes as a welcome change after a revised 0.5% contraction in the second quarter.
Net exports staged a decided recovery as external pressures like the fallout from the Japanese natural disasters in March were no longer a factor.
But the devil is in the details as flagging domestic demand and weak business investment lurked beneath the report’s strong headline growth. A close look at the data has economists forecasting only modest growth — in the range of about 2% — in the coming quarters and predicting the Bank of Canada will remain on hold with interest rate hikes.
Here’s what stood out from Wednesday’s report:
EXPORTS
The driving force behind the uptick in GDP for the quarter, exports grew at an annualized rate of 14.4%, up from a pullback of 6.4% in the previous quarter.
Paul Ferley, assistant chief economist at Royal Bank of Canada, said that factors that weighed on Canadian exports in the second quarter — including the Japanese supply-chain disruptions as well as wildfires in Northern Alberta that led to shutdowns of oil sand production facilities — were resolved in Q3 and contributed to the increase.
But, he cautioned, “The boost to third-quarter growth provided by the reversal of these factors is not expected to continue to the same extent into the fourth quarter.”
As the global economy stalls and prospects for a quick turnaround look increasingly grim, economists predict it will could spoil the Canadian export party.
HOUSING
Canada’s unstoppable real estate market was another bright spot during the quarter. Residential construction shot up 10.9% annualized, following on comparatively modest increases of 1.6% in Q2 and 6.7% in Q1.
“After quarters of booming housing starts data, the residential construction bonanza finally translated into the GDP numbers,” said Emanuella Enenajor, economist at CIBC Economics.
The expansion in this sector came from all three major components including fees and transfer costs related to resale transactions, new housing construction and renovation activity.
“Continued strength in new-home sales has elicited more and more new housing construction, particularly in the high-rise condo market,” said David Madani, Canada economist for Capital Economics.
He noted that a reported increase in housing starts bodes well for further strong growth in this category next quarter.
CONSUMER SPENDING
Canadians slowed their spending on goods and services during the quarter, raising red flags for economists concerned about sluggish domestic demand.
Personal expenditures grew at an annualized rate of 1.2%, down from an expansion of 2.1% in the previous quarter.
“A slowing pace of income growth owing to tepid hiring and weaker wage dynamics will likely continue to put downward pressure on consumption activity,” Ms. Enenajor said.
BUSINESS INVESTMENT
Business investment actually contracted during the quarter with a decrease of 3.6% annualized, down from last quarter’s 14.6% increase.
“Weak business investment is a worry, as it has been an important source of growth since early 2010 and replaced personal spending as the main source of domestic growth,” said Charles St. Arnaud, an analyst with Nomura Global Economics.
He noted that this, coupled with the fact that personal spending is likely to remain weak, “Could mean that domestic demand stays weak over the next few quarters, as global uncertainty remains high.”
FINAL DOMESTIC DEMAND
The combined slowdown in consumer spending and business investment was a drag on final domestic demand, which rose only 0.9% in the third quarter, down from a 3.1% gain in Q2. The other component, government expenditures, was flat in the quarter as government stimulus spending continues to slow to a trickle.
“Note that the pace of final domestic demand has been consistently slowing since 2010, weakening from around 6% to its current sub-1% pace,” Ms. Enenajor said.
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