The B.C. government unveiled a foreign-buyer’s tax last summer aimed at tamping down Vancouver’s runaway real estate market and making homes more affordable.

Eight months later, has home affordability actually improved?

Vancouver-area sales, listings and prices all dropped after the measure – a 15-per-cent property transfer tax on foreign national home buyers – went into effect Aug. 2.

But by then, the market was already cooling, Royal Bank of Canada senior economist Robert Hogue said last week in a report.

“The impact of the tax in Metro Vancouver was more evident on housing prices and purchases by foreign nationals than on home resale activity, which had been slowing for several months before the tax was even announced,” he wrote.

Indeed, prices took a step back for several consecutive months.

But while sales and new listings are still sharply lower from a year ago, prices have recently gone back on the upswing and now sit close to record levels. 

Two measures of home affordability suggest the situation in Vancouver has yet to make any significant improvements – and in some instances, might even be worsening.

Detached-home ownership costs still outstrip household income in Greater Vancouver, figures from RBC Economics show.

For the fourth quarter of last year, ownership costs for an average-priced detached home amounted to 121 per cent of median pre-tax household income, a slight improvement from the previous two quarters. But the easing may be short-lived with prices back on the rise. 

RBC’s affordability measure is based on a 25-per-cent down payment with a 25-year mortgage loan at a five-year fixed rate, and ownership costs include mortgage payments, property taxes and utilities.

Greater Vancouver’s aggregate measure was 84.8 per cent, “which clearly indicates that owning a home at current market prices – especially a single-detached home – is still out of reach for a typical area household,” RBC said in a March report. 

Separately, economists at National Bank Financial have tallied the length of time needed to save for a minimum down payment in various Canadian cities.

On this measure, the situation in Vancouver is bleaker than ever.

It would take a median-income household 428 months – or nearly 36 years – to save for a down payment on a non-condo dwelling (detached or row housing), first-quarter figures show. Going back to 1990, this measure has never been higher and compares with a national savings timeline of 40 months. (NBF’s calculation assumes a household saving 10 per cent of its pre-tax income for a median-priced dwelling.) 

VICTORIA — City council is calling on the province to immediately impose a 15 per cent non-resident buyers tax here to cool what has become one of the three hottest real estate markets in the country.

The request comes after what some councillors see as the success of the same foreign buyers tax imposed last fall in Vancouver, and as Ontario Premier Kathleen Wynne announced a 15 per cent foreign buyers levy in the Toronto area.

“We all know that we have a housing crisis and that the cost of home ownership and rent is getting higher and higher and the dream of home ownership is getting further and further away for many of our residents,” said Coun. Jeremy Loveday, who sponsored the resolution with Coun. Ben Isitt.

“This is asking for action to be taken so that our residents can afford homes here.”

Isitt said there’s increased urgency to bring the tax to the Victoria region, given the other two hot areas, Greater Vancouver and Greater Toronto, will have the tax.

This week, Bank of Montreal chief economist Doug Porter said there is no question the Vancouver tax is affecting the Victoria real estate market. Porter noted in a Financial Post article that Victoria is the only city outside of Ontario with a double-digit percentage average price gain in the past year, with the home price index up 20 per cent year over year.

But several councillors worried the non-resident levy will be viewed in the same light as the head tax imposed on Chinese immigrants by the federal government between 1885 and 1923.

Why call it a foreign tax? Why don’t we just call it a Chinese tax?

“I really think we may end up being seen to be on the wrong side of history on this one,” Coun. Geoff Young said, adding that the head tax was a popular measure in its day. “It (the head tax) wasn’t primarily implemented for racial purposes, I don’t think. It was because people felt that new immigrants were presenting competition for jobs. It was an economic impulse,” Young said.

Real estate agent Tony Joe, who in January wrote to Victoria opposing the tax, said it simply is not needed here. “The tax was in (place in) Vancouver in August and it did not cause a spike in foreign interest over here in Victoria.

“The reality is that the people that were doing the speculation or land banking in Vancouver were only looking in Vancouver,” Joe said, adding that Vancouver and Toronto are global cities while Victoria is not.

The vast majority of people buying properties in Victoria are not holding them vacant but are moving here, he said. He said the tax is not unlike the head tax. “Why call it a foreign tax? Why don’t we just call it a Chinese tax?” he said.

Mayor Lisa Helps said the non-resident tax should not be seen as anti-immigrant or racist but rather as a “speculative tax.”

The B.C. government announced in January that the tax does not apply to people with work permits, Helps noted. “This does not apply to people who are becoming residents of British Columbia — who are becoming residents of our communities.”

Young said the idea that a tax can be limited to speculators is a faint hope. “Basically, anybody who buys a property is speculating.”

Coun. Marianne Alto said she agreed with the intent of the tax and efforts to try to solve “an extraordinary extreme crisis.” But, she said: “I have to say that the identification of foreigners in this case makes me very uncomfortable.”

Coun. Margaret Lucas said she doesn’t believe “there’s a lot of evidence yet to tell us that this has been the solution.”

Last week, Capital Regional District directors postponed a decision on whether to ask for the tax to be imposed until their municipal councils weigh in. Several directors argued that municipalities such as Langford, Sooke and Metchosin aren’t facing the same affordability issues and escalation in housing prices that Victoria has.

Victoria’s resolution, passed Thursday, asks the province to immediately impose the 15 per cent tax to curb speculative property purchases by non-residents in either the entire capital region or in just the city of Victoria, whichever is more expedient.

Bill Cleverley

The rental market is an important housing option for approximately 30% of Canadians. Effective May 15, CMHC will introduce enhancements to its multi-unit mortgage loan insurance that will address the rental needs of Canadians while supporting efforts to expand and preserve the supply of affordable rental housing.

“CMHC’s products and services facilitate access to housing for all Canadians, not just homebuyers” said Steve Mennill, Senior Vice-President, Insurance. “The enhancements to our multi-unit mortgage loan insurance products and policies are designed to expand our participation in key market segments while stimulating the creation and preservation of affordable rental housing.”

CMHC is Canada’s only mortgage loan insurer for multi-unit residential properties. CMHC also offers incentives, including access to higher loan-to-value ratios and reduced premiums, to support affordable rental housing projects.

As Canada’s authority on housing, CMHC contributes to the stability of the housing market and financial system, provides support for Canadians in housing need and offers objective housing research and information to Canadian governments, consumers and the housing industry.

Backgrounder

• Multi-unit mortgage loan insurance provides access to preferred mortgage rates helping to lower the cost of financing for the construction, purchase and refinancing of rental properties and facilitates renewals throughout the life of the mortgage.

• As at September 30, 2016, CMHC multi-unit mortgage loan insurance accounted for approximately 12% of its overall insurance-in-force.

• The changes apply to CMHC insured loans for 5 or more unit residential properties including standard apartments, student housing, single room occupancy (SRO) projects, retirement homes, and supportive housing projects.

Effective May 15, CMHC will be:

• Extending its affordable housing flexibilities to existing rental properties, including Social Housing projects with up to 5 years remaining in the Operating Agreement, to support the preservation of existing affordable housing. Previously, affordable housing flexibilities were only available for new rental properties.
• Expanding its definition of affordability to recognize federal, provincial, territorial or municipal housing objectives. The new affordability criteria also aligns with other CMHC initiatives and is intended to incent housing developers into the affordable rental housing market.
• Introducing greater underwriting flexibilities to better support key multi-unit market segments that address the rental housing needs of Canadians including standard apartments, student housing, single room occupancy (SRO) projects, retirement homes, and supportive housing projects. Greater underwriting flexibility is provided surrounding non-residential space, furnished suites and bulk leases, amortization periods, off-campus student housing, second mortgages, non-recourse lending and personal guarantee requirements.
• Introducing a revised premium schedule aligned with CMHC’s continued participation in market segments that address the rental needs of Canadians, and is reflective of the risks associated with those segments. The revised premium schedule also supports the expansion and preservation of affordable housing units. Premium surcharges will no longer be collected for construction advances, release of rental achievement holdback, student housing or retirement homes.

Jonathan Rotondo
Canada Mortgage and Housing Corporation

Vancouver’s presale condo market is in need of regulation and transparency, say realtors whose clients are being routinely shut out of the frenzied market.

The presale market is the “wild west” of the industry, says realtor Steve Saretsky, who posted a blog post recently, titled “Vancouver Pre Sale Condo Ponzi Scheme.” Mr. Saretsky, who often speaks out against his own industry, says it’s common that offshore investors get first dibs on presale purchases. Those purchases are assigned, or flipped, to local buyers at a premium. He says in recent months, as the condo market has hit a fever pitch, so too has the flipping.

Speculative buying is driving prices up, shutting out owner-occupiers and adding to an already unaffordable market. Mr. Saretsky says that the presale market, once considered an unknown entity, is now viewed as a low-risk moneymaker. Full financing isn’t required until completion, which is several years away. During that interim, buyers can flip the property, and assign it to other buyers. If they are foreign, they dodge the 15 per cent transfer tax, which isn’t due until completion. He sees buildings that completed long ago remain half empty. Many of the units appear on Craigslist or the Multiple Listing Service once the building is complete, a sign that buyers have already maximized the gains to be had.

“If you call one of the developers, they say, ‘we are only selling to friends and family and we are open to the public next week.’ But what is friends and family? What is the definition? It’s basically offshore. And everybody in the industry knows it, and nobody likes to talk about it.”

Ontario Finance Minister Charles Sousa recently made headlines when he called such speculators “property scalpers.” In B.C., however, the practice rages on, unabated.

Realtor Shali Tark, creator of Presalematch.com, says investors are snapping up the most desirable condos, such as those around transit corridors. The frenzy for those units is on, she says.

“Those units are usually gone right away,” says Ms. Tark.

Investors either rent them out or leave them empty. It’s like placing your chips on an especially low risk bet, which is what Vancouver’s hot property market has become, especially with a near-zero vacancy rate and high rents.

Ms. Tark started her website, which lists available presale units, because she was having trouble finding units for her clients. When big projects come onto the market, many of the units are usually spoken for, snapped up by offshore buyers or those who have an inside connection to the developer, she says. Marketers of big developments will say a project is sold out, but in fact hold back several units that will be released later, at a higher price. Ms. Tark compares it to purchasing concert tickets. Buyers who line up all night for a presale think they’ll have their pick of the units, but are surprised to find that they’re getting leftovers. They’re also often surprised at the prices, which fluctuate greatly from what’s advertised.

“I get people that are wanting certain units in projects, and I’m straight up with them, that it’s just not going to happen unless you know the developer personally,” she says. “That’s the reality, and it’s not fair. When they say they are starting at $399,000, a really good price, that’s just used to market [the project]. They are rarely selling them for that.

“So local buyers themselves don’t get that advantage that they need to get into the market.”

The practice of selling off units en masse ensures the success of a development, she says.

“They try to do the bulk sales. They want units to be sold and earmarked, or get that interest, get the deposits and money and be able to claim they sold so many units. It gives them a bit more presence. It says, ‘this is the hot project.’”

Realtor Keith Roy says he doesn’t have an issue with developers selling to offshore buyers. Like any homeowner, the developer has the right to sell to whomever they want, says Mr. Roy. Developers are a private business with a bottom line. Should a homeowner be told that they can’t sell to the highest bidder?

“Yes, stuff is being sold primarily overseas because it is the path of least resistance for the seller,” he says. “The demand is unlimited…I don’t think that not selling a 60-storey highrise luxury-apartment is going to solve the affordability issue in Vancouver.”

Mr. Roy argues that luxury housing to foreign buyers creates construction jobs and a larger tax base. However, he also sees a need for transparency when it comes to assigning of presales, which is an unregulated practice without available data. Presales are usually not listed on the MLS, like resales. And if a presale unit has been sold repeatedly before it completes, those transactions are invisible to the public.

Some developers forbid assignments because they don’t want competition against their own project. Others charge a fee once the building has sold out, generally a small percentage of the sale.

Mr. Roy wants assignment sales to be registered with the land titles office, like any other sale.

“Knowledge is power,” says Mr. Roy. “And the consumer would be better served if we had that data. Developers and marketers would also be better served if they had that data. The consumers are the ones who benefit most if we start registering assignments.”

If the consumer could see the number of times a presale has been assigned, or flipped, and the price for each transaction, that would show speculation activity. That activity would shed light on where the speculation is, and what type of housing it attracts. It would also give a marketer an idea of current values. As is, there isn’t even a resource for the consumer to find presale asking prices.

Bob Rennie, the household-name marketer of presales, has also been pushing for data on Vancouver’s mystery market.

“The condo market is on fire, but the problem with the Greater Vancouver market is that nobody knows the amount of presales going through and the price levels they are selling at,” Mr. Rennie says.

The Urban Development Institute looked at the possibility of using the MLS to list presales, but decided against it, partly because it is an expensive service, and would add to the price, says president Anne McMullin.

“You could argue that there is a minor gap on that final sale price,” says Ms. McMullin. “If there is a lag between sales, like 16 to 18 months to sell, there may be different prices and we won’t know what those different prices are until closing, just like if you sold your house.

“I think that’s legitimate [to want that data]. But I don’t know how we would track that.”

With the market as ridiculously hot as it is, somebody needs to start tracking it, says realtor Ian Watt. He’s seeing “stupid money” thrown at condos, mostly from locals who believe in the power of the market. He worries that over-leveraged buyers will get burned, especially if the offshore presale buyer pulls out. For wealthy investors, it wouldn’t be too painful to walk away from a 5- or 10- or 15- per cent down payment. If enough were to do that, it would create oversupply.

“It’s 100 per cent hype,” he says. “So many Canadians are buying because they believe it’s never going to go down.”

Ms. Tark also wants a system overhaul.

“In the last three years, all this speculation has added more fuel to the market. I think it definitely needs to be addressed in more of a think tank manner rather than the government rolling out taxes and then rolling them back.

“Even though local representatives try to implement certain provisions, I don’t think they are understanding the big picture.

“Developers aren’t doing anything illegal by making their projects known to the international markets, but there needs to be some sort of cost in place for anybody buying offshore, to give the local people more advantage. Also, they need to pay into the infrastructure if they are not going to live here.

“You look at a master planned community and they have amenities and schools. How is that going to be supported?”

Mr. Saretsky believes in the need for a speculation tax.

“We were talking about the condo market in my office and how totally out of control it is — basically multiple offers are happening anywhere and everywhere. With presale condos, there’s got to be a speculation tax or something.

“My issue is when developers are pushing for density like it’s the solution, and then they offload that supply offshore. The product getting built in Vancouver, the stuff on the eastside and presale stuff, is going for $1,200 a square foot. That’s not helping anybody. I understand it’s a business — they have to make money. But everything being built in my opinion is luxury in Vancouver, so I don’t think it’s making anything affordable.”

Follow Kerry Gold on Twitter: @goldiein604

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Five-pillar approach will build stronger communities

The British Columbia Real Estate Association (BCREA) today announced a five-pillar approach to address housing affordability for renters, homebuyers and homeowners across British Columbia.

BCREA’s five pillars include timely recommendations to:  assist consumers with housing costs,  encourage the creation of more rental housing,  densify urban areas,  adjust the Property Transfer Tax, and  promote best practices among local governments.

“REALTORS® understand the importance of housing affordability in creating strong communities,” says Robert Laing, BCREA CEO. “Through these five pillars, BCREA’s recommendations provide a clear pathway toward making homes more accessible and affordable for British Columbians.”

BCREA’s recommendations are supported by the Canadian Home Builders’ Association of BC. “Many of the BCREA proposals on market housing affordability are shared priorities and goals of CHBA BC,” says Neil Moody, CEO. “These actions on supply and building costs help industry deliver a more affordable product for homebuyers, provide more choice for buying or renting, and decrease extra costs for buyers like the Property Transfer Tax.”

More information on BCREA’s five pillars can be found on the Association’s new website: www.bchousingaffordability.ca.

According to the Royal LePage House Price Survey[1] released today, Canada’s residential real estate market saw substantial price growth in the first quarter of 2017. While the majority of Canadian housing markets posted modest gains, price appreciation across much of Ontario significantly outpaced the rest of the country, with similar market dynamics to those that have driven housing activity in the Greater Toronto Area (GTA) beginning to impact the entire “Golden Horseshoe” region of south-central Ontario, and as far away as Windsor and London in southwestern Ontario. Meanwhile, the pace of year-over-year home price appreciation in Greater Vancouver was noticeably lower than the historic highs witnessed in 2016, and for the first time since 2013, home values for the region as a whole declined on a quarterly basis.

The Royal LePage National House Price Composite, compiled from proprietary property data in 53 of the nation’s largest real estate markets, showed that the price[2] of a home in Canada increased 12.6 per cent year-over-year to $574,575 in the first quarter. The price of a two-storey home rose 13.9 per cent year-over-year to $681,728, and the price of a bungalow increased 10.9 per cent to $490,018. During the same period, the price of a condominium increased 8.9 per cent to $373,768.

“For the first time in several years, real estate markets in Vancouver and Toronto are headed in opposite directions,” said Phil Soper, President and CEO, Royal LePage. “The Vancouver market stalled, as confused consumers took to the sidelines after a series of uncoordinated moves by all three levels of government. With the housing shortage becoming more acute, Toronto easily stepped forward to assume the title of Canada’s most overheated real estate market.”

A price reset is underway in British Columbia’s Lower Mainland, where eroding affordability coupled with recent public policy intervention abruptly slowed activity. The number of homes trading hands has fallen steeply, and home values have begun to adjust downward as demand falls.

“Vancouver house prices are up compared to the first quarter of 2016, yet this doesn’t tell the complete story,” continued Soper. “For weeks now, we have witnessed a steady fall in real estate values in the Lower Mainland, with sales activity down some 40 per cent compared to recent norms.”

“There is now reason to believe that the market correction underway in Vancouver may be short-lived,” said Soper. “The principal victims of the B.C. government’s foreign buyer tax were Canadians who had planned to sell or buy a home and were frightened away by unsubstantiated rhetoric in which the Chinese were entirely to blame for Vancouver’s housing shortage. The reality is that as much as 90 per cent of the housing activity that disappeared overnight in the Lower Mainland after the tax was introduced was from Canadian residents, not foreign investors. Homebuyers are waking up to this reality and may be ready to rush back into the market.”

Soper explained, “An unfortunate side effect of heavy-handed regulatory intervention is that we risk market whiplash. In the coming weeks, it is possible that six months of pent-up demand will be unleashed on the market, sending prices sharply upward again; this when the pre-intervention 2016 trend was a natural market slowdown based on eroding affordability.”

Meanwhile, price appreciation in the Greater Toronto Area reached new heights in the first quarter, rising by an unprecedented 20 per cent year-over-year across all housing types studied. As Toronto home prices continued to significantly rise over the past year, so too did values in suburban regions outside of the city’s core, as more and more homebuyers looked farther afield for affordable housing. Elsewhere in Ontario, expanding economies and improving employment have lifted what were listless housing markets into the strong growth category, particularly those within a two-hour drive radius of the province’s capital.

Significant home price appreciation has also extended much further into other southwestern Ontario markets like London and Windsor, due to strong demand, supportive economic factors and the quest for affordability. In fact, the torrid pace of home price appreciation in much of Ontario contributed almost half of the national aggregate home price increase in the first quarter, with the rest of Canada appreciating by a healthy, but much lower, 6.4 per cent year-over-year when excluding all regions within Ontario.

For this reason, dialogue concerning the health of the GTA housing market has moved to the forefront of real estate commentary in recent weeks, amid growing apprehension over the region’s steep price gains and declining housing affordability – prompting some analysts to forecast major downward price adjustments, while others call for public policy responses.

“Canada is now the fastest growing advanced economy in the world, and most new Canadians are building their new lives in Ontario,” Phil Soper said. “With high household formation levels driven by expanding employment opportunities, we are playing catch-up with the supply of housing. In a low interest rate environment, many of these people will want to purchase a home, which is going to put further upward pressure on home prices.”

“The hasty introduction of new real estate-related regulations or taxes in Ontario, in the absence of data and analysis to support these policy moves, could lead to a sharp price correction, impacting not only household wealth, but damaging the broader Canadian economy as well,” said Soper. “We applaud the Canadian government’s federal budget commitment to partner with the provinces and municipalities to create a coordinated national housing strategy.”

Elsewhere in the country, housing markets are in balance. Fairly priced homes are selling within a reasonable amount of time. Bidding wars are rare and buyers have an opportunity to make conditional offers.

Soper stated, “The mood in Alberta is brightening, as the region adjusts to a world of $50 a barrel oil. Signs of renewed optimism can be seen all around the province, from a spate of recent deals and pipeline approvals in the oil patch to major business investments such as a recently announced five-storey, 95,000 square foot Simons’ retail department store in Calgary’s historic Lancaster building. This sense of stability is reflected in our House Price Composite which is showing slight year-over-year upticks in prices in the province’s largest cities, where home values remained unexpectedly resilient throughout the oil price collapse driven downturn.”

On the other side of the country, continued strong economic improvement is also underway in Quebec, against the backdrop of a provincial government surplus and a refreshed focus on attracting business investment in the region.

“Quebec has emerged as an economic shining star in Canada, showcasing the lowest unemployment rates in over 40 years and a promising year ahead for GDP growth. As a result, Montreal’s residential real estate market is seeing strong house price vitality that is likely to grow over the coming year. The region is now one of the healthiest real estate markets in the country, currently sitting at mid-single-digit appreciation – which is well within the historical range that we would hope to see in the GTA and Lower Mainland of British Columbia,” concluded Soper.

The Canadian economy was boosted by strong export performance to an expanding United States market, infrastructure spending at home, and stabilizing global commodity prices. The country’s unemployment rate dropped to 6.7 per cent in March, close to its lowest level in two years.

“The overall Canadian market is healthier in 2017 than it has been in years, yet the downside risks are greater too,” concluded Soper. “Our economy, which has recovered nicely from the 2014 oil crisis, is sadly dependent on moves by an unpredictable U.S. federal government and can be swayed by unforeseen global events, such as fallout from Europe’s restructuring. Still, housing activity is strong and prices are rising at a healthy mid-single-digit rate across the land. The trend in Alberta, Quebec and Atlantic Canada is particularly encouraging. Our concerns with the state of Canadian real estate begin and end with Toronto and Vancouver.”

Provincial and City Summaries and Trends

Following many years of economic acceleration, most forecasters expect British Columbia’s growth to slow in 2017 as the housing sector decelerates to a more sustainable pace. In the first quarter of 2017, the aggregate price of a home in Greater Vancouver increased 12.3 per cent year-over-year to $1,179,482, compared to a 25.6 year-over-year increase in the fourth quarter of 2016.  Meanwhile, the regions of Langley, North Vancouver, Surrey and Richmond saw first quarter increases of 21.2 per cent, 18.9 per cent, 15.4 per cent and 13.4 per cent, to $794,213, $1,387,141, $763,806 and $1,069,218, respectively. During the same period, the City of Vancouver also saw a reduced rate of year-over-year home price appreciation compared to the previous quarter, with an increase of 10.1 per cent year-over-year to an aggregate price of $1,412,527.

Although the province may be coming off a high, British Columbia will likely remain an economic growth leader in Canada. Earlier this year, a major Canadian financial institution reported that it expects British Columbia to tie Ontario with a growth rate of 2.3 per cent for the year, exceeding the national average. However, with the real estate market going into a slightly lower gear, other industries are projected to drive growth in the Vancouver region in 2017, with the Conference Board of Canada predicting that the retail sector will overtake housing as the highest growth industry in the city.

With the recent stabilization of oil prices, Alberta is projected to see an improved economic picture in 2017 when compared to the prior year. A wave of deals have already been announced in the oil and gas sector in recent weeks. As a result of the apparent upswing from the cyclical bottom, Alberta will likely be the fastest growing provincial economy this year when compared to last, with the Conference Board of Canada forecasting the province to expand by 2.8 per cent in 2017. This positive momentum has proved supportive of the residential housing market, with the aggregate price of a home in Calgary rising 0.6 per cent year-over-year to $461,635 in the first quarter, while the price of a home in Edmonton followed a similar trend, rising 0.3 per cent to $381,733.

Following two years of recessionary trends amidst the energy sector downturn, Saskatchewan is expected to resume growth in 2017. Saskatchewan’s agricultural sector is also expected to have a better year compared to 2016, while the potash sector may see continued declines.  With the regional improvement in economic fortunes forecasted for later this year, the first quarter of 2017 saw modest home price gains in the province’s largest cities, with Regina posting an increase of 1.8 per cent year-over-year to an aggregate price of $335,135. During the same period, the aggregate price of a home in Saskatoon remained relatively flat, decreasing 0.5 per cent to $385,980.

Manitoba remains in a good position for economic expansion, boasting strong ties to the U.S. economy in conjunction with the general economic improvement in other western provinces. Although the mining sector in the province is still under pressure, other sectors including manufacturing and transportation are expected to shield the province from its impact. In the first quarter of 2017, the aggregate price of a home in Winnipeg remained relatively flat, posting a slight dip of 0.9 per cent year-over-year to $274,844.

According to major forecasters, Ontario is expected to lead the country in provincial GDP growth in the coming year with British Columbia. This will be the first time that the province has taken the top spot since the year 2000. The province’s labour market will be a source of strength, with recent economic expansion having led to increased hiring in the province. As of March, employment in Ontario was up 1.2 per cent, with the majority of increases seen in full-time work. At 6.4 per cent, the province’s unemployment rate in March was close to a two-year low. U.S. economic strength and robust financial markets, trade, manufacturing and retail, in conjunction with continuously improving employment prospects, continue to reinforce a steep upward trajectory in home price appreciation in the province, particularly in southwestern Ontario.

In the first quarter, the aggregate price of a home in the Greater Toronto Area increased 20.0 per cent to $759,241, while the price of a home in the City of Toronto rose 17.0 per cent to $763,875. Home prices also increased significantly in the surrounding GTA regions, with suburbs such as Richmond Hill, Oshawa, Vaughan, Markham and Oakville posting increases of 31.5 per cent, 28.2 per cent, 25.8 per cent, 23.2 per cent and 23.1 per cent to $1,209,741, $500,105, $985,534, $970,216 and $987,001, respectively. During the same period, other parts of Southwestern Ontario saw mentionable home price increases. Hamilton saw an aggregate home price increase of 17.4 per cent year-over-year to $457,452, while Niagara/St. Catharines, Kitchener/Waterloo/Cambridge and London home prices rose 15.7 per cent, 14.4 per cent and 12.4 per cent to $326,545, $400,902 and 314,777, respectively.

Following several years of sluggishness, the Quebec economy has turned a corner and emerged as a Canadian leader. Within the first quarter, the Quebec unemployment rate hit generational lows, with the January rate falling to 6.2 per cent, the lowest seen since the outset of Statistics Canada’s records in 1976. In the 12 months ending in March 2017, employment rose by 97,000 (2.4 per cent) with an unemployment rate of 6.4 per cent, down 1.1 percentage points from a year earlier. Unlike many other provinces, the Quebec government is in a strong fiscal position, recently announcing a third consecutive budgetary surplus, allowing it to further boost the provincial economy through promised spending in large-scale public transit projects, health and education. An upswing in business investment is also underway in the region, particularly in the cloud computing and artificial intelligence sectors, where the city has attracted companies like Google, who recently selected Montreal to host a new data centre and tagged the market as its first Canadian Google Cloud Region. In effort to retain its tech savvy talent and advance research, the Federal government has also announced an investment of $40 million dollars over five years for the implementation of an all-new artificial intelligence institute.

The province’s economic performance is being reflected in its residential housing market which has displayed healthy home appreciation in recent months. In the first quarter, the aggregate price of a home in the Greater Montreal Area rose 4.9 per cent to $367,702. Montreal West witnessed the highest year-over-year appreciation, with the price of a home rising 6.8 per cent to $419,404, followed by Montreal Centre which saw an increase of 6.4 per cent to $449,883. Moderate to healthy home price gains were also seen in other areas of the province. Trois-Rivières, Sherbrooke and Quebec City posted gains of 6.1 per cent, 5.1 per cent and 2.7 per cent to $208,154, $254,147 and $299,245, respectively.

In Atlantic Canada, Newfoundland and Labrador remains in a recession in light of the downturn in commodity prices. With little to offset the decline in resource-based activity, economic indicators from the unemployment rate through to retail sales reflect an economy in decline. In the first quarter, the aggregate price of a home in St. John’s decreased 1.9 per cent year-over-year to $328,485.

Against the backdrop of a stable or improving economy in the rest of the Atlantic region, the residential real estate market showed varying trends across major cities in the first quarter. In New Brunswick, the aggregate price of a home in Saint John and Fredericton showed strong increases of 8.0 per cent to $218,604 and 6.4 per cent to $259,040, respectively. During the same period, the price of a home in Moncton remained relatively flat, declining 0.6 per cent year-over-year to $188,797. In Nova Scotia, Halifax saw an aggregate home price increase of 3.6 per cent to $306,944 and in Prince Edward Island, Charlottetown saw a year-over-year home price decline of 2.9 per cent to $217,333, as sales activity slowed in the winter months.

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According to statistics released today by The Canadian Real Estate Association (CREA), national home sales were up on a month-over-month basis in March 2017.

Highlights:

• National home sales rose 1.1% from February to March.
• Actual (not seasonally adjusted) activity in March was up 6.6% from a year earlier.
• The number of newly listed homes climbed 2.5% from February to March.
• The MLS^® Home Price Index (HPI) was up 18.6% year-over-year (y-o-y) in March 2017.
• The national average sale price increased by 8.2% y-o-y in March.

Home sales over Canadian MLS^® Systems edged up 1.1% in March 2017, surpassing the previous monthly record set in April 2016 by one-quarter of a percent.

March sales were up from the previous month in more than half of all local markets, led by the Lower Mainland of British Columbia, London & St. Thomas and Montreal.

Actual (not seasonally adjusted) activity in March was up 6.6% year-over-year, with gains in close to 75% of all local markets. Sales in the Greater Toronto Area (GTA) posted the biggest increase, which offset a decline in the number of homes changing hands in Greater Vancouver.

“The current strength in national home sales mainly speaks to what’s going on in and around Toronto,” said CREA President Andrew Peck. “Elsewhere, sales either remain slow or well below previous heights. All real estate is local, and REALTORS^® remain your best source for information about sales and listings where you live or might like to in the future.”

“The latest Canadian housing market statistics suggest that the drum-tight housing market balance in Toronto and nearby cities stands in contrast to housing market trends elsewhere in Ontario and other provinces,” said Gregory Klump, CREA’s Chief Economist. “Because housing market balance varies by location, federal or provincial policy measures aimed at cooling demand in Toronto risk destabilizing housing markets elsewhere.”

The number of newly listed homes rose 2.5% in March 2017, led by gains in the GTA, Calgary, Edmonton and the Lower Mainland of British Columbia.

With new listings having climbed by more than sales, the national sales-to-new listings ratio eased to 67.4% in March compared to 68.3% in February.

A sales-to-new listings ratio between 40 and 60 is generally consistent with balanced housing market conditions, with readings below and above this range indicating buyers’ and sellers’ markets respectively.

The ratio was above the sellers’ market threshold in about 60% of all local housing markets in March, the majority of which are located in British Columbia, in and around the GTA and across southwestern Ontario.

The number of months of inventory is another important measure of the balance between housing supply and demand. It represents how long it would take to completely liquidate current inventories at the current rate of sales activity.

There were 4.1 months of inventory on a national basis at the end of March 2017, down from 4.2 months in February and the lowest level for this measure in almost a decade. The number of months of inventory in March 2017 stood at or below one month in the GTA, Hamilton-Burlington, Oakville-Milton, Kitchener-Waterloo, Cambridge, Brantford, Guelph, Barrie & District, parts of the Niagara Region and parts of cottage country.

The Aggregate Composite MLS^® HPI rose by 18.6% y-o-y in March 2017. Price gains accelerated for all benchmark housing categories tracked by the index.

Prices for two-storey single family homes posted the strongest year-over-year gains (+21%), followed closely by townhouse/row units (+17.9%), one-storey single family homes (16.6%) and apartment units (16.3%).

While benchmark home prices were up from year-ago levels in 11 of 13 housing markets tracked by the MLS^® HPI, price trends continued to vary widely by location.

In the Fraser Valley and Greater Vancouver, prices have been recovering in recent months after having dipped in the second half of last year. On a year-over-year basis, home prices in the Fraser Valley and Greater Vancouver remain well above year-ago levels (+19.4% y-o-y and +12.7% y-o-y respectively).

Meanwhile, y-o-y benchmark price increases were in the 20% range in Victoria and elsewhere on Vancouver Island. Guelph recorded a similar price gain, while Greater Toronto and Oakville-Milton saw prices rise in the 30% range in March.

By comparison, home prices eased by 1.2% y-o-y in Calgary and by 1.5% y-o-y in Saskatoon. Prices in these two markets now stand 5.4% and 5.1% below their respective peaks reached in 2015.

Home prices were up modestly from year-ago levels in Regina (+1.7%), Ottawa (+4%), Greater Montreal (+3.3% y-o-y) and Greater Moncton (+4.7%).

Year-over-year price gains were led by different benchmark housing categories in each of these markets. In Regina, apartments posted the biggest price increase, which snapped a long series of price declines for apartments that began in early 2015. In Ottawa, prices rose most for one-storey single family homes. In Montreal, two-storey single family home prices posted the biggest gain; meanwhile in Moncton, it was townhouse/row unit prices that climbed the most.

The MLS^® Home Price Index (MLS^® HPI) provides the best way of gauging price trends because average price trends are prone to being strongly distorted by changes in the mix of sales activity from one month to the next.

The actual (not seasonally adjusted) national average price for homes sold in March 2017 was $548,517, up 8.2% from where it stood one year earlier.

The national average price continues to be pulled upward by sales activity in Greater Vancouver and Greater Toronto, which remain two of Canada’s tightest, most active and expensive housing markets.

Greater Vancouver’s share of national sales activity has diminished considerably over the past year, giving it less upward influence on the national average price. Even so, the average price is reduced by more than $150,000 to $389,726 if Greater Vancouver and Greater Toronto sales are excluded from calculations.

Further information can be found at http://crea.ca/statistics.

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The British Columbia Real Estate Association (BCREA) reports that a total of 9,826 residential unit sales were recorded by the Multiple Listing Service® (MLS®) in March, down 21.8 per cent from the same period last year. Total sales dollar volume was $6.79 billion, down 30 per cent from March 2016. The average MLS® residential price in the province was $690,597, a 10.5 per cent decrease from the same period last year.

“Consumer demand continues to normalize following blockbuster home sales in 2016,” says Brendon Ogmundson, BCREA Economist. “However, the supply of homes available for sale has not recovered and is still declining in many markets around the province.”

Although the average price in BC was down year-over-year due to a shift in the composition of sales away from higher-priced homes in Greater Vancouver, home prices in most markets are being pushed higher due to severe supply constraints. This is particularly true for the Victoria region, which currently has just over one month of inventory for sale, as well as for the apartment and townhouse market in the Lower Mainland.

Year-to-date, BC residential sales dollar volume was down 34.7 per cent to $14.1 billion, when compared with the same period in 2016. Residential unit sales declined 25.5 per cent to 20,893 units, while the average MLS® residential price was down 12.4 per cent to $674,856.

A shortage of residential property listings coupled with strong demand, particularly for condos and townhomes, continued to impact Metro Vancouver’s housing market in March.

Residential property sales in the region totalled 3,579 in March 2017, a decrease of 30.8 per cent from the 5,173 sales recorded in record-breaking March 2016 and an increase of 47.6 per cent compared to February 2017 when 2,425 homes sold. 

Last month’s sales were 7.9 per cent above the 10-year sales average for the month. “While demand in March was below the record high of last year, we saw demand increase month-to-month for condos and townhomes,” Jill Oudil, Real Estate Board of Greater Vancouver (REBGV) president said.

“Sellers still seem reluctant to put their homes on the market, making for stiff competition among home buyers.”

New listings for detached, attached and apartment properties in Metro Vancouver totalled 4,762 in March 2017. This represents a decrease of 24.1 per cent compared to the 6,278 units listed in March 2016 and a 29.9 per cent increase compared to February 2017 when 3,666 properties were listed.

This is the lowest number of new listings in March since 2009. The total number of properties currently listed for sale on the MLS® system in Metro Vancouver is 7,586, a 3.1 per cent increase compared to March 2016 (7,358) and a 0.1 per cent decrease compared to February 2017 (7,594). 

The sales-to-active listings ratio for March 2017 is 47.2 per cent, a 15-point increase over February. Generally, analysts say that downward pressure on home prices occurs when the ratio dips below the 12 per cent mark for a sustained period, while home prices often experience upward pressure when it surpasses 20 per cent over several months.

“Home prices will likely continue to increase until we see more housing supply coming on to the market,” Oudil said. 

The MLS® Home Price Index composite benchmark price for all residential properties in Metro Vancouver is currently $919,300. This represents a 0.8 per cent decrease over the past six months and a 1.4 per cent increase compared to February 2017. 

Sales of detached properties in March 2017 reached 1,150, a decrease of 46.1 per cent from the 2,135 detached sales recorded in March 2016. The benchmark price for detached properties is $1,489,400. This represents a 5.0 per cent decrease over the past six months and a one per cent increase compared to February 2017.

Sales of apartment properties reached 1,841 in March 2017, a decrease of 18.3 per cent compared to the 2,252 sales in March 2016.The benchmark price of an apartment property is $537,400. This represents a 5.2 per cent increase over the past six months and a 2.1 per cent increase compared to February 2017.

Attached property sales in March 2017 totalled 588, a decrease of 25.2 per cent compared to the 786 sales in March 2016. The benchmark price of an attached unit is $685,100. This represents a 1.3 per cent increase over the past six months and a 1.4 per cent increase compared to February 2017.

*Editor’s Note: Areas covered by the Real Estate Board of Greater Vancouver include: Whistler, Sunshine Coast, Squamish, West Vancouver, North Vancouver, Vancouver, Burnaby, New Westminster, Richmond, Port Moody, Port Coquitlam, Coquitlam, Pitt Meadows, Maple Ridge, and South Delta. 

The real estate industry is a key economic driver in British Columbia. In 2016, 39,943 homes changed ownership in the Board’s area, generating $2.5 billion in economic spin-off activity and an estimated 17,600 jobs. The total dollar value of residential sales transacted through the MLS® system in Greater Vancouver totalled $40 billion in 2016. The Real Estate Board of Greater Vancouver is an association representing more than 13,500 REALTORS® and their companies. The Board provides a variety of member services, including the Multiple Listing Service®. For more information on real estate, statistics, and buying or selling a home, contact a local REALTOR® or visit www.rebgv.org.