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Canadian home sales rise in February despite drop in new supply

Highlights:

  • National home sales rose 2.3% month-over-month in February.
  • Actual (not seasonally adjusted) monthly activity came in 40% below February 2022.
  • The number of newly listed properties dropped 7.9% month-over-month.
  • The MLS® Home Price Index (HPI) edged down 1.1% month-over-month and was down 15.8% year-over-year.
  • The actual (not seasonally adjusted) national average sale price posted an 18.9% year-over-year decline in February.

Home sales recorded over Canadian MLS® Systems posted a 2.3% increase from January to February 2023. Gains were led by the Greater Toronto Area (GTA) and Greater Vancouver.

The actual (not seasonally adjusted) number of transactions in February 2023 came in 40% below an incredibly strong month of February in 2022. The February 2023 sales figure was comparable to what was seen for that month in 2018 and 2019.

“February’s data contained the potential of a more robust market to come, but to repeat the bottom line from last month, we won’t know what the 2023 market has in store until the spring,” said Jill Oudil, Chair of CREA. “While we’re not seeing it in the sales or listings data just yet, I would expect homeowners are getting properties ready for the market and prospective buyers are getting mortgage pre-approvals. Make sure to contact your local REALTOR® for information and guidance about buying or selling a property,” continued Oudil.

“The similarities between 2023 and the recovery year of 2019 continued to emerge in February, with sales up, the market tightening, and month-over-month price declines getting smaller,” said Shaun Cathcart, CREA’s Senior Economist. “But the biggest similarity was a sharp drop in seasonally adjusted new listings. Future sellers, many of whom will also be buyers, are likely biding their time until the optimum time to list and buy something else. For most, that’s in the spring. Will buyers jump off the fence to snap homes up in 2023 once they finally start to hit the market? They did in 2019.”

The number of newly listed homes dropped 7.9% on a month-over-month basis in February, led by double-digit declines in several large markets, particularly in Ontario.

With new listings falling considerably and sales moving higher in February, the sales-to-new listings ratio jumped to 58.4%, the tightest since last April. The long-term average for this measure is 55.1%.

There were 4.1 months of inventory on a national basis at the end of February 2023, down from 4.2 months at the end of January. It was the first time the measure has shown any sign of tightening since the fall of 2021. It’s also a full month below its long-term average.

The Aggregate Composite MLS® Home Price Index (HPI) was down 1.1% on a month-over-month basis in February 2023, only about half the decline recorded the month before and the smallest month-over-month drop since last March.

The Aggregate Composite MLS® HPI now sits 15.8% below its peak level, reached in February 2022.

Looking across the country, prices are down from peak levels by more than they are nationally in most parts of Ontario and a few parts of British Columbia, and down by less elsewhere. While prices have softened to some degree almost everywhere, Calgary, Regina, Saskatoon, and St. John’s stand out as

markets where home prices are barely off their peaks. Prices began to stabilize last fall in the Maritimes. Some markets in Ontario seem to be doing the same now.

The actual (not seasonally adjusted) national average home price was $662,437 in February 2023, down 18.9% from the all-time record in February 2022 but up more than $50,000 from its January level resulting from outsized sales increases in the GTA and Greater Vancouver, two of Canada’s most active and expensive housing markets. Excluding these two markets from the calculation cut almost $135,000 from the national average price in February 2023.

Provide by: CREA

 
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Provincial Housing Market Showing Signs of Recovery Heading into Spring

The British Columbia Real Estate Association (BCREA) reports that a total of 4,775 residential unit sales were recorded in Multiple Listing Service® (MLS® ) systems in February 2023, a decrease of 46.5 per cent from February 2022. The average MLS ® residential price in BC in 2023 was 941,575, down 14.7 per cent compared to the average price of over $1.1 million in February 2022, recorded at the market's peak. The total sales dollar volume was $4.5 billion, representing a 54.4 per cent decrease from the same time in the previous year.

“While activity across provincial housing markets remains well below normal,” said BCREA Chief Economist Brendon Ogmundson. “There are encouraging signs that the market is balancing out. Home sales rose month-over-month in most markets, and prices appear to be firming up in the face of low supply.”

Worth mentioning, the provincial MLS® average price was up 8.5 per cent month-over-month to its highest level since July 2022, partially due to a more stable market but also because of the composition of sales reverting to a more normal mix following low sales of single detached homes through the Lower Mainland in January.

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Provided by: BCREA

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After eight successive rate hikes the Bank of Canada has decided to maintain its target for the overnight lending rate at 4.5%, while continuing its policy of quantitative tightening.

The Bank indicated global economic developments have evolved in line with their expectations amidst a backdrop of slowing global growth and easing inflationary pressures. However, China’s economic recovery along with the Russia-Ukraine war were cited as key sources of upside risk. According to the Bank, overall financial conditions have tightened in recent months along with the Canadian dollar losing value against its U.S. counterpart.

According to the Bank, fourth quarter economic growth in Canada was flat and came in below expectations, due mainly to a falloff in inventory investment. The Bank added that tight monetary policy continues to weigh on household spending and business investment amidst slowing domestic and foreign demand. Notwithstanding, the labour market remains vibrant as evidenced by strong job gains, historically low unemployment, increased job vacancies, and wage growth in the range of 4-5%.

Inflation eased to 5.9% in January, driven mainly by lower prices for energy, durable goods, and some services. The Bank acknowledged the hardships being faced by many Canadians, as food and shelter costs continue to rise. According to the Bank, price pressures, particularly in the product and labour markets, are expected to ease in line with weak economic growth over the next few quarters, leading to a moderation in wage growth and increased price competition among firms.

Overall, the Bank is of the view that recent data is in line with their expectation for Consumer Price Index inflation to fall to 3% by the middle of this year. Looking ahead, the Bank noted it will continue to assess economic conditions and is prepared to resume raising rates if necessary to return inflation to its 2% target.

The Bank of Canada’s next scheduled interest rate announcement will be on April 12, 2023, at which time it will publish its next Monetary Policy Report.

Provided by: CREA

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Renters will get a tax credit, families will get a bump in the B.C. Family Benefit and prescription contraception will be free. But the carbon tax is going up, which means gas will get more expensive.

David Eby’s first budget as premier delivered a $4.2 billion deficit to pay for the long-promised $400 renters’ credit, free prescription contraception, new rental housing and $200 million to expand mental health and addiction services across B.C.

The 2023/24 budget, presented Tuesday by Finance Minister Katrine Conroy, also provides cash to help people with the affordability crisis amid rising inflation by boosting existing tax credits for low- and middle-income families and lifting the shelter rate for people on income and disability assistance.

“It’s just not the right time to start making cuts,” Conroy said Tuesday. “It’s not the right time to start making people pay out of pocket for services they expect.”

The NDP government’s climate plan includes steady hikes to the carbon tax over the next seven years, which it said will encourage industry to lower their emissions. That will make it more expensive to fill up your tank of gas, adding 26 cents a litre to fuel by 2030.


Here are some of the key budget take-aways:

1. Supports for renters and new housing

The government has made good on its 2017 election promise to provide a $400 a year to renters but through a tax credit rather than a cash rebate starting in 2024. British Columbians who rent for at least six months in a calendar year and who earn $60,000 a year or less will get the full $400. Those who earn $80,000 a year or less will receive the rebate on a sliding scale. Conroy said 80 per cent of B.C. renters will get some assistance, including seniors, people with disabilities and low-income British Columbians who already receive rental supports.

The government also hopes to boost the rental stock through a new pilot program that will provide financial incentives to homeowners to build secondary suites on their property. That program will cost taxpayers $91 million over three years.

The budget promised $450 million this year to build more homes through the B.C. Builds program, including $83 million in capital funding to acquire lands for future affordable housing near transit corridors.

Another $45 million this year will help post-secondary institutions build more student housing.

The government will spend $384 million to address the homelessness crisis, include funding new regional teams to help people living in encampments.


2. Mental health and addictions

The province’s wait-list-plagued mental health and addictions treatment system will get a $867 million cash injection over three years, or $200 million this year, which Conroy called the largest investment in mental health services in B.C.’s history.

The bulk of that funding will add 190 new treatment and recovery beds and develop new “recovery communities” to support people after they leave treatment including Indigenous treatment centres and wraparound services for youth.

The new money will also expand the Red Fish Healing Centre model — a much-lauded addictions and mental health treatment centre located on the former site of the Riverview Hospital in Coquitlam — to other areas of the province.

The B.C. Liberals’ treatment plan included a promise to waive all user fees for treatment services so people do not have to pay out of pocket. Conroy said the government will remove user fees only on the 190 new treatment spaces but not on existing treatment beds.

New funding will also expand access to prescription opioids as an alternative to toxic street drugs.


3. Free contraception

The government has delivered its promise to provide free prescription contraception effective April 1, making it the first jurisdiction in Canada to do so. The program, which will cost $39 million this year, covers oral contraception, injections, intrauterine devices, subdermal implants and emergency contraceptive, such as Plan B. B.C. will be the first jurisdiction in Canada to do so.

For people who pay an average of $25 a month for contraception, the government said free coverage could save them $10,000 over their lifetime.


4. Affordability

Families stung by the rising costs of groceries and overall costs related to inflation will get a 10 per cent bump to the B.C. Family Benefit starting in July. That means a two-parent family with two kids will get an additional $250 a year while a single parent with one child will get an extra $650 a year.

Starting in July, people with disabilities or those on income assistance will get $125 more a month to pay for shelter, something advocates had been calling for to support vulnerable people amid rising costs.

That means a single person on income assistance will receive $1060 a month and people with disabilities will receive $1,483. The higher social assistance rates are expected to benefit 161,000 people and will cost the government $147 million this year.

The government will also spend $88 million this year to boost financial support for care providers such as foster families and caregivers who support seniors or people with disabilities. 

Following Conroy’s visit to Ruth King Elementary Monday where she served hot lunches to students, the budget earmarks $59 million this year to expand existing school food programs.


5. Health care

The budget earmarks an additional $2.3 billion this year to prop up B.C.’s flagging health care system which has left people without a family doctor and led to overcrowded emergency rooms and burned out health care staff. The $6 billion over 10 years in heath care cash promised by the federal government is not included in the budget.

The government’s health and human resources plan aimed at recruiting new health care staff and retaining existing staff, announced by Health Minister Adrian Dix in September, will cost $273 million this year.

Another $400 million this year will pay for the previously announced compensation model for family doctors and incentives to attract recent graduates into family medicine.

The government not cover psychological services under the Medical Services Plan which B.C. psychologists had been pushing for as a way to help people with mental health challenges before they show up at already-stretched emergency rooms in crisis.


6. Climate

There will be major hikes to the carbon tax over the coming years to increase the cost for emissions output. The tax, which is currently $50 a tonne, will increase every year by $15 a tonne until rates hit $170 a tonne in 2030. That will increase prices at the pump by 26 cents by 2030.

Conroy said the rising cost of fuel will be offset by increasing the Climate Action Tax Credit, an income-tested credit distributed by the Canada Revenue Agency. Last year, a two-parent family eligible for the full amount received $500 but this year, the same family could receive up to $900.

In 2023/24, individuals with an income of $39,115 or less will get the credit and families with a household income of $50,170 or less are eligible. The income ceiling for who can receive the tax credit will also raise every year with the goal of providing the credit to 80 per cent of households by 2030.

Provided by: Katie DeRosa for the Vancouver Sun


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Below average home sales allow inventory to inch upwards

February listing data show a continued reluctance among prospective home sellers to engage in Metro Vancouver’s* housing market, leading to below-average sales activity. With sales remaining well-below historical norms, the number of available homes for sale in the region have continued inching upwards.

The Real Estate Board of Greater Vancouver (REBGV) reports that residential home sales in the region totalled 1,808 in February 2023, a 47.2 per cent decrease from the 3,424 sales recorded in February 2022, and a 76.9 per cent increase from the 1,022 homes sold in January 2023.

Last month’s sales were 33 per cent below the 10-year February sales average.

“It’s hard to sell what you don’t have, and with new listing activity remaining among the lowest in recent history, sales are struggling to hit typical levels for this point in the year,” said Andrew Lis, REBGV’s director, economics and data analytics. “On the plus side for prospective buyers, the below-average sales activity is allowing inventory to accumulate, which is keeping market conditions from straying too deeply into sellers’ market territory, particularly in the more affordably priced segments.”

There were 3,467 detached, attached and apartment properties newly listed for sale on the Multiple Listing Service® (MLS®) in Metro Vancouver in February 2023. This represents a 36.6 per cent decrease compared to the 5,471 homes listed in February 2022 and a 5.2 per cent increase compared to January 2023 when 3,297 homes were listed.

The total number of homes currently listed for sale on the MLS® system in Metro Vancouver is 7,868, a 16.7 per cent increase compared to February 2022 (6,742) and a 5.2 per cent increase compared to January 2023 (7,478).

“While we continue to expect home price trends to show year-over-year declines for a few more months, current data and market activity suggest pricing is firming up. In fact, some leading indicators suggest we may see modest price increases this spring, particularly if sales activity increases and mortgage rates hold steady,” Lis said. “In the somewhat unusual market environment we find ourselves in right now with higher mortgage rates, fewer sales, and inventory that is inching higher but remains far from abundant, working with a Realtor who understands your local market conditions and has experience navigating challenging markets is paramount.”

For all property types, the sales-to-active listings ratio for February 2023 is 23 per cent. By property type, the ratio is 16.8 per cent for detached homes, 30.1 per cent for townhomes, and 25.8 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 $1,123,400. This represents a 9.3 per cent decrease over February 2022 and a 1.1 per cent increase compared to January 2023.

Sales of detached homes in February 2023 reached 514, a 49.1 per cent decrease from the 1,010 detached sales recorded in February 2022. The benchmark price for detached properties is $1,813,100. This represents a 12 per cent decrease from February 2022 and a 0.7 per cent increase compared to January 2023.

Sales of apartment homes reached 928 in February 2023, a 49.9 per cent decrease compared to the 1,854 sales in February 2022. The benchmark price of an apartment property is $732,200. This represents a three per cent decrease from February 2022 and a 1.6 per cent increase compared to January 2023.

Attached home sales in February 2023 totalled 366, a 34.6 per cent decrease compared to the 560 sales in February 2022. The benchmark price of an attached unit is $1,038,500. This represents a 6.3 per cent decrease from February 2022 and a 1.8 per cent increase compared to January 2023.

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Provided by: REBGV

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It Is Thanks To Dedicated Supporters Like Hafez

We thank Hafez Panju for his continued support to kidney patients across BC & the Yukon. Since 2008, Hafez has donated $37,700 to the Kidney Foundation, through contributing a percentage of his sales commission, very generously to the BC & Yukon Branch.

Kidney disease is a complex and life‐altering condition that continues to grow at an alarming rate, with no cure. 1 in 10 Canadians (4 million people) now have kidney disease and millions more are at risk with leading causes such as diabetes and heart disease also on the rise.

It is thanks to dedicated supporters like Hafez, who make it possible for the Kidney Foundation, BC & Yukon Branch to provide vital programs and services to patients and their caregivers, including those who are vulnerable or disproportionately impacted by kidney disease such as individuals of South Asian, Asian or Indigenous descent.

We work hard to ease the physical, emotional, and financial burden that comes with a kidney disease diagnosis.

We would like to thank Hafez Panju for his on-going support.

With sincere appreciation,

Rylee Elfert
Philanthropy Officer
The Kidney Foundation, BC & Yukon Branch

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Housing Market Activity Off to a Slow Start in 2023

The British Columbia Real Estate Association (BCREA) reports that a total of 3,047 residential unit sales were recorded in Multiple Listing Service® (MLS® ) systems in January 2023, a decrease of 50.3 per cent from January 2022. The average MLS® residential price in BC in 2023 has seen a dip to $872,934, down 16.1% compared to the average price of over $1 million in January 2022, which was recorded near the peak of the market. The total sales dollar volume was $2.7 billion, representing a 58.3% decrease from the same time in the previous year.

“Provincial sales are off to a slow start in 2023 as activity continues to be weighed down by high borrowing costs,” said BCREA Chief Economist Brendon Ogmundson. “While average prices have flattened out in many markets over the past few months, yearover-year measures reflect the decline that occurred from the peak in 2022, as well as a marked shift in the composition of sales away from more expensive homes.”

The total number of active listings has significantly increased compared to the record low level recorded at the start of 2022. However, at just under 22,000 total listings, the inventory of homes for sales remains well below normal for January as a scarcity of new listings in many markets has muted the impact of slow sales activity. 

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Provided By: BCREA

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How homebuyers can navigate the housing market upheaval

Buyers now face a severe lack of choice as falling prices deter some sellers from listing their property

A lot can change in a year. It's a hard lesson homebuyers and sellers are learning as they navigate an upheaval in the housing and mortgage markets that virtually no one saw coming.

While some might have the luxury to wait until the market stabilizes, certain life events and changes in one's financial situation, known in the real estate industry as the "Four D's" - death, divorce, debt and downsizing – mean the pressure is on for some buyers and sellers who need to relocate.

"Those four factors mean that there is always going to be some base level of transactions that occur," said Scott Ingram, a realtor with Century 21 Regal Realty.

"There are always people that will need to transact (or at least are a lot more motivated to do so)."

The more motivated a person is to buy or sell, the greater the importance of having a real estate agent and mortgage professional who know the market, your goals and will work in your best interests, he says.

The rapid jump in interest rates and the fact that home prices don't always go up might be familiar territory to older buyers and sellers, but these are generally new phenomena to younger Canadians. The last time interest rates were this high was in 2008.

"This recent rate-hiking cycle should be a subtle reminder that the world can be an unpredictable place and you should always be cautious about buying too much house," said Steve Saretsky, a realtor at Vancouver-based Oakwyn Realty.

Avoid bidding wars where possible

Buyers are also now facing a severe lack of choice as falling prices deter some sellers from listing their property. December marked the lowest level on record for new listings, according to the latest data from the Canadian Real Estate Association.

"New listings remain very scarce but buyers should not be panicking and competing in multiple offers. There will be more listings coming in the spring market and interest rates will 

remain elevated throughout 2023, there is no reason to rush and buy. Get a house that you're going to be happy in for the next 8-10 years," Saretsky said.

Meanwhile, Nasma Ali, a broker and founder of One Group, agrees that getting into a bidding war is not in the best interest of a buyer, especially if they're under pressure to find a property.

The best way to avoid competition is to consider homes that don't have professional staging or have poor photos in the listing, she says, and to "use your imagination to look beyond the furniture and funky wall colours. Chances are most buyers aren't and the seller has been growing somewhat desperate."

Provided By: Michelle Zadikian | senior reporter at Yahoo Finance Canada

Image Provided By: Mark Blinch | REUTERS (CANADA BUSINESS)

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What A Year

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BCREA - Housing Forecast Update

The once bright outlook for the economy, with visions of a second “roaring 20s” fueled by pent-up demand and accumulated savings, has given way to uncertainty and the gloom of a potential recession this year. The shift in outlook was brought on by the monetary policy response to multi-decade high inflation as the Bank of Canada tightened its policy rate at its fastest pace since the 1990s. While we are still waiting on a broader economic downturn, the housing market immediately felt the impact of elevated interest rates.

Although the annual level of home sales in 2022 was near its long-term average, that measure masks a radical shift in the market that coincided with the rise of interest rates. Home sales activity declined sharply through the spring and summer months and sales are now trending close to 25 per cent below normal. We anticipate that home sales will remain slow in 2023 as the market continues to be constrained by high mortgage rates and absorbs the impact of a slowing economy. However, the housing market historically tends to lead the business cycle and the onset of recession generally coincides with the beginning of a recovery in the housing market and a substantial rise in activity the following year as the economy heals and the impact of falling mortgage rates unlocks demand. The recovery will be given a further boost as Canada looks to welcome a record 1.5 million new immigrants over the next three years. As such, we expect activity to pick up later this year and strengthen through 2024. That said, sales will be low this year at a forecasted 75,150 units before rising to 93,025 units next year.

With sales down sharply, inventories have accumulated from the severely depleted level at the start of 2022 but remain low by historical standards. However, the abrupt shift in market conditions has meant that prices have come down despite low inventory, falling from peak levels through the spring before stabilizing toward the end of last year. While we expect MLS® average prices to trend relatively flat this year, they will be lower than peak values of 2022. Consequently, year-over-year comparisons will register negative for much of 2023, which will likely result in negative annual price growth even if monthly prices begin to recover as expected later this year.

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Provided by: BCREA

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