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Mortgage Rate Outlook


The growing fears of the potential impact of COVID-19 resulted in a full market meltdown in late February, sending equity markets into free fall and global bond yields plummeting. On top of an already volatile situation, two of the world’s largest oil producers, Saudi Arabi and Russia, have engaged in a price war that sent oil prices to levels not seen since the late 1990s.


The panic sent Canadian bond yields down sharply and prompted emergency rate cutting by the Bank of Canada. Variable and 5-year fixed qualifying mortgage rates have followed bond yields lower with the 5-year fixed rate reaching 2.59 per cent, its lowest level since 2016 and very near its lowest level on record.


How prolonged and just how serious this outbreak will be is still unknown, which makes forecasting extremely difficult. What we do know is that the economy is in for at least a quarter of significant loss of economic output as measures to stop the spread of COVID-19, such as social distancing, sheltering in place and mandatory business closures, put a halt to economic and social activity.


Though mortgage rates have started rising as risk increases, we anticipate that measures implemented by the government, the Bank of Canada and other global central banks will help to calm fears over financial system liquidity and stem a longer-term spike in bank funding costs. As the economy recovers, mortgage rates will once again decline.


Of note, the Canadian government has postponed changes to the mortgage stress test. The qualifying rate for insured mortgages was set to change from the 5-year posted mortgage rate to the average 5-year fixed rate plus 200 basis points on April 6, with the B-20 stress test for uninsured mortgages to follow suit. By postponing this change, the government has muted the passthrough from monetary policy to the housing market, particularly since the 5-year posted rate has maintained at 5.19 per cent, despite the average 5-year contract rate falling to near historical lows. The impact of dramatically lower rates will still help those renewing or refinancing mortgages at lower rates by freeing up monthly cash flow due to lower mortgage payments.


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Provided by: BCREA


“Copyright British Columbia Real Estate Association. Reprinted with permission.”

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Canadian home sales up in February


Statistics released today by the Canadian Real Estate Association (CREA) show national home sales were up between January and February 2020.

Highlights:

  • National home sales climbed 5.9% on a month-over-month (m-o-m) basis in February.
  • Actual (not seasonally adjusted) activity was up 26.9% year-over-year (y-o-y).
  • The number of newly listed properties jumped 7.3% m-o-m.
  • The MLS® Home Price Index (HPI) advanced by 0.7% m-o-m and 5.9% y-o-y.
  • The actual (not seasonally adjusted) national average sale price climbed 15.2% y-o-y.

Home sales recorded over Canadian MLS® Systems rose by 5.9% inFebruary 2020, marking one of the larger m-o-m gains of the past decade.


With transactions up in about 60% of all local markets in February, the big national increase was largely the result of a 15% jump in activity in the Greater Toronto Area (GTA). Many other Central and Southern Ontario markets also posted sizeable sales gains between January and February.


Actual (not seasonally adjusted) sales activity stood 26.9% above February 2019, although sales were quite weak a year ago. February 2019 marked a decade-low for the month, so a good part of the big y-o-y gain reflects low levels of activity recorded at the time. February 2020 also benefited from an additional day due to the leap year.


Transactions surpassed year-ago levels in about 80% of all local markets, including all large urban markets.


“Home prices are accelerating in markets where listings are in increasingly short supply, specifically in Ontario, Quebec and the Maritimes which together account for about two-thirds of national sales activity,” said Jason Stephen, president of CREA. “Meanwhile, ample supply across the Prairies and in Newfoundland and Labrador means increased competition among sellers. Whether you are looking to buy or sell, or both, all real estate is local, and nobody knows that better than a professional REALTOR®, your best source for information and guidance when negotiating the sale or purchase of a home,” said Stephen.


“Following a quieter than normal December/January period, February saw a burst of new listings in some of Canada’s most supply-starved markets, so it was not a surprise that sales were up alongside that increase in new supply,” said Shaun Cathcart, CREA’s Senior Economist. “There is some question about how much pent-up demand remains in parts of the country where listings have been low for some time now. That said, it will take more than one month of increased new listings to even start to turn some of these markets towards some semblance of balance. In the meantime, expect competition among buyers for available listings to continue to drive prices higher.”


The number of newly listed homes jumped 7.3% in February compared to January, more than erasing the declines of late last year. New supply gains were posted in a number of large markets, including the Fraser Valley, Calgary, Edmonton, the GTA, Hamilton-Burlington, Kitchener-Waterloo, Windsor-Essex, Ottawa and Montreal.


With new listings rising by slightly more than sales in February, the national sales-to-new listings ratio fell back to 64% compared to 64.9% posted in January. That said, the bigger picture is that this measure of market balance has been significantly above its long-term average of 53.8% for the last five months. Barring an unforeseen change in these recent trends, home prices appear poised to post further growth in 2020.


Considering the degree and duration to which market balance readings are above or below their long-term averages is the best way of gauging whether local housing market conditions favour buyers or sellers. Market balance measures that are within one standard deviation of their long-term average are generally consistent with balanced market conditions.


Based on a comparison of the sales-to-new listings ratio with the long-term average, about 60% of all local markets were in balanced market territory in February 2020. Apart from a few areas of Alberta and Saskatchewan, the remainder were all favouring sellers.


The number of months of inventory is another important measure of the balance between sales and the supply of listings. It represents how long it would take to 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 February 2020 – the lowest level since the summer of 2007. This measure of market balance is now more than a full month below its long-term average of 5.2 months, suggesting sales negotiations are becoming increasingly tilted in favour of sellers.


National measures of market balance continue to mask significant and increasing regional variations. The number of months of inventory has swollen far beyond long-term averages in the Prairie provinces


and Newfoundland & Labrador, giving homebuyers ample choice in these regions. By contrast, the measure is running well below long-term averages in Ontario, Quebec and the Maritime provinces,


resulting in increased competition among buyers for listings and providing fertile ground for price gains. The measure remains in balanced territory in British Columbia.



The Aggregate Composite MLS® Home Price Index (MLS® HPI) rose 0.7% in February 2020 compared to January, marking its ninth consecutive monthly gain.


The MLS® HPI was up in February 2020 compared to the previous month in 15 of the 19 markets tracked by the index. As of this release, Winnipeg is in the MLS® HPI.


Looking at the big Prairie markets, home price trends have ticked downwards in Calgary and Edmonton to start 2020 but have generally been stable since the beginning of last year. Prices in Saskatoon have also been stable over the last year, while those in Regina have continued to trend lower. Prices in Winnipeg have been on a slow upward trend since the beginning of 2019.


Meanwhile, the recovery in home prices remains in full swing in British Columbia and in Ontario’s Greater Golden Horseshoe (GGH) region. Further east, price growth in Ottawa, Montreal and Moncton continues as it has for some time now, with Ottawa and Montreal prices accelerating to start 2020.


Comparing home prices to year-ago levels yields considerable variations across the country, although for the most part trends are still regionally split along east/west lines, with rising gains from Ontario east, and a mixed bag of smaller gains and declines in B.C. and the Prairies.


The actual (not seasonally adjusted) Aggregate Composite MLS® HPI rose 5.9% y-o-y, the biggest year-over-year gain since February 2018.


Prices are now back in positive y-o-y territory in both Greater Vancouver (+0.3%) and the Fraser Valley (+1.4%). Elsewhere in British Columbia, home prices logged y-o-y increases in the Okanagan Valley (+3.9%), Victoria (+4.3%) and elsewhere on Vancouver Island (+3.2%).


Calgary and Edmonton continued to post small y-o-y price declines, while the y-o-y gap was -5.4% in Regina. Prices in Saskatoon (+1.1%) and Winnipeg (+1.6%) both posted a small y-o-y increases in February.


In Ontario, home price growth has re-accelerated across the GGH, with a number of markets posting double-digit growth as of February. Meanwhile, price gains in recent years have continued uninterrupted in Ottawa (+14.7%), Montreal (+10.4%) and Moncton (+7.5%).


All benchmark home categories tracked by the index accelerated further into positive territory on a y-o-y basis, with similar sized gains among the different property types.


Two-storey single family homes posted the biggest y-o-y increase (+6.2%) followed closely by prices for apartment units (+6%), one-storey single-family homes (+5.4%) and townhouse/row units (+5.1%).


The MLS® HPI provides the best way to gauge price trends because averages are 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 February 2020 was around $540,000, up 15.2% from the same month the previous year.


The national average price is heavily influenced by sales in the GVA and GTA, two of Canada’s most active and expensive housing markets. Excluding these two markets from calculations cuts close to $130,000 from the national average price, trimming it to around $410,000.


Provided by: CREA

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BC Home Sales Trend Higher in February

The British Columbia Real Estate Association (BCREA) reports that a total of 5,741 residential unit sales were recorded by the Multiple Listing Service® (MLS® ) in February 2020, an increase of 26.3 per cent from February 2019. The average MLS® residential price in BC was $758,863, a 12 per cent increase from $677,681 recorded the previous year. Total sales dollar volume in February was $4.4 billion, a 41.4 per cent increase over 2019.


“Housing markets in BC continued to trend near long-term average levels in February,” said BCREA Chief Economist Brendon Ogmundson. “Recent declines in mortgage rates and favourable changes to mortgage qualifying rules may provide a boost to home sales heading into the spring, although there is significant economic uncertainty lingering over the outlook.”


Total MLS® residential active listings fell 8.4 per cent to 28,303 units compared to the same month last year. The ratio of sales to active residential listings increased 20.3 per cent from 14.7 per cent last February.


Year-to-date, BC residential sales dollar volume was up 38.4 per cent to $7.6 billion, compared with the same period in 2019. Residential unit sales increased 24.8 per cent to 10,135 units, while the average MLS® residential price was up 10.9 per cent to $745,501.


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Provied by: BCREA

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Steady demand and low supply benefits home sellers

VANCOUVER, BC – March 3, 2020 – February saw steady home buyer demand and reduced home seller supply across Metro Vancouver*.


The Real Estate Board of Greater Vancouver (REBGV) reports that residential home sales in the region totalled 2,150 in February 2020, a 44.9 per cent increase from the 1,484 sales recorded in February 2019, and a 36.9 per cent increase from the 1,571 homes sold in January 2020.


Last month’s sales were 15.6 per cent below the 10-year February sales average.

“Home buyer demand again saw strong year-over-year increases in February while the total inventory of homes for sale struggled to keep pace,” Ashley Smith, REBGV president said. “This was most pronounced in the condominium market.”


There were 4,002 detached, attached and apartment homes newly listed for sale on the Multiple Listing Service® (MLS®) in Metro Vancouver in February 2020. This represents a 2.8 per cent increase compared to the 3,892 homes listed in February 2019 and a 3.4 per cent increase compared to January 2020 when 3,872 homes were listed.


The total number of homes currently listed for sale on the MLS® system in Metro Vancouver is 9,195, a 20.7 per cent decrease compared to February 2019 (11,590) and a 6.7 per cent increase compared to January 2020 (8,617).


"Our Realtors are reporting increased traffic at open houses and multiple offer scenarios in certain pockets of the market. If you’re considering listing your home for sale, now is a good time to act with increased demand, reduced competition from other sellers, and some upward pressure on prices," says Smith.


For all property types, the sales-to-active listings ratio for February 2020 is 23.4 per cent. By property type, the ratio is 17.3 per cent for detached homes, 26.9 per cent for townhomes, and 28.4 per cent for apartments.


Generally, analysts say downward pressure on home prices occurs when the ratio dips below 12 per cent for a sustained period, while home prices often experience upward pressure when it surpasses 20 per cent over several months.


The MLS® Home Price Index composite benchmark price for all residential properties in Metro Vancouver is currently $1,020,600. This represents a 0.3 per cent increase over February 2019 and a 2.7 per cent increase over the past six months.


Sales of detached homes in February 2020 reached 685, a 52.9 per cent increase from the 448 detached sales recorded in February 2019. The benchmark price for a detached home is $1,433,900. This represents a 0.7 per cent decrease from February 2019 and a 1.9 per cent increase over the past six months.


Sales of apartment homes reached 1,061 in February 2020, a 39.8 per cent increase compared to the 759 sales in February 2019. The benchmark price of an apartment property is $677,200. This represents a 0.9 per cent increase from February 2019 and a 3.6 per cent increase over the past six months.


Attached home sales in February 2020 totalled 404, a 45.8 per cent increase compared to the 277 sales in February 2019. The benchmark price of an attached home is $785,000. This represents a 0.6 per cent increase from February 2019 and a 1.7 per cent increase over the past six months.


*Editor’s Note: Areas covered by the Real Estate Board of Greater Vancouver include: Burnaby, Coquitlam, Maple Ridge, New Westminster, North Vancouver, Pitt Meadows, Port Coquitlam, Port Moody, Richmond, South Delta, Squamish, Sunshine Coast, Vancouver, West Vancouver, and Whistler. The real estate industry is a key economic driver in British Columbia. In 2019, 25,351 homes changed ownership in the Board’s area, generating $1.8 billion in economic spin-off activity and an estimated 12,910 jobs. The total dollar value of residential sales transacted through the MLS® system in Greater Vancouver totalled $25.3 billion in 2019. The Real Estate Board of Greater Vancouver is an association representing approximately 14,000 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

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Reciprocity Logo The data relating to real estate on this website comes in part from the MLS® Reciprocity program of either the Greater Vancouver REALTORS® (GVR), the Fraser Valley Real Estate Board (FVREB) or the Chilliwack and District Real Estate Board (CADREB). Real estate listings held by participating real estate firms are marked with the MLS® logo and detailed information about the listing includes the name of the listing agent. This representation is based in whole or part on data generated by either the GVR, the FVREB or the CADREB which assumes no responsibility for its accuracy. The materials contained on this page may not be reproduced without the express written consent of either the GVR, the FVREB or the CADREB.