This is despite the recent slowdown in Canadian home sales figures
In a recent analysis, Dominion Lending Centres chief economist Dr. Sherry Cooper noted that multiple housing markets nationwide are now reaching a more stable footing in terms of supply and demand, despite “marked slowdown” in key metropolitan areas.
Data from the Canadian Real Estate Association (CREA) covering July 2017 showed that the number of new listings has decreased by 1.8 per cent on a monthly basis, led by the Greater Toronto Area.
“Many other markets in the Greater Golden Horseshoe region also saw new supply pull back after having surged immediately after the Ontario government housing policy changes in April 2017,” Cooper explained.
New listings also declined in Calgary, Edmonton, Montreal, and northern British Columbia. Overall, the national sales-to-new listings ratio sat at a “well-balanced” 53.5 per cent, in contrast to the high-60-per-cent range in Q1 2017.
“The ratio in the range of 40%-to-60% is considered consistent with balanced housing market conditions. Above 60% is considered a sellers’ market and below 40%, a buyers’ market,” Cooper wrote. “Based on a comparison of the sales-to-new listings ratio with its long-term average, more than 60% of all local markets are in balanced market territory.”
“In the Greater Golden Horseshoe region, housing markets that recently favoured sellers for an extended period are now balanced, with some beginning to tilt toward buyers’ market territory,” she added.
Recent measures and industry moves played key roles in these developments, Cooper stated.
“Notably impacting psychology, was the Bank of Canada rate hike in July, the first such hike in seven years. Positive surprises in the Canadian economy this year caused the Bank to preempt inflation pressures sooner than many had expected.”
“The Canadian dollar and mortgage rates rose in response to the Bank’s action. The posted mortgage rate has now increased 20 basis points to 4.84%, which is of particular importance because this is now the assumed borrowing rate at which mortgage applicants must qualify for insured loans. There is a proposal to extend this qualification criterion to uninsured borrowers as well–that is, those that put at least 20% down on their home purchase. Before October 2016, the eligibility rate was the contract rate, which is meaningfully lower than 4.84%.”
The full text of Cooper’s analysis can be viewed here.
Data from the Canadian Real Estate Association (CREA) covering July 2017 showed that the number of new listings has decreased by 1.8 per cent on a monthly basis, led by the Greater Toronto Area.
“Many other markets in the Greater Golden Horseshoe region also saw new supply pull back after having surged immediately after the Ontario government housing policy changes in April 2017,” Cooper explained.
New listings also declined in Calgary, Edmonton, Montreal, and northern British Columbia. Overall, the national sales-to-new listings ratio sat at a “well-balanced” 53.5 per cent, in contrast to the high-60-per-cent range in Q1 2017.
“The ratio in the range of 40%-to-60% is considered consistent with balanced housing market conditions. Above 60% is considered a sellers’ market and below 40%, a buyers’ market,” Cooper wrote. “Based on a comparison of the sales-to-new listings ratio with its long-term average, more than 60% of all local markets are in balanced market territory.”
“In the Greater Golden Horseshoe region, housing markets that recently favoured sellers for an extended period are now balanced, with some beginning to tilt toward buyers’ market territory,” she added.
Recent measures and industry moves played key roles in these developments, Cooper stated.
“Notably impacting psychology, was the Bank of Canada rate hike in July, the first such hike in seven years. Positive surprises in the Canadian economy this year caused the Bank to preempt inflation pressures sooner than many had expected.”
“The Canadian dollar and mortgage rates rose in response to the Bank’s action. The posted mortgage rate has now increased 20 basis points to 4.84%, which is of particular importance because this is now the assumed borrowing rate at which mortgage applicants must qualify for insured loans. There is a proposal to extend this qualification criterion to uninsured borrowers as well–that is, those that put at least 20% down on their home purchase. Before October 2016, the eligibility rate was the contract rate, which is meaningfully lower than 4.84%.”
The full text of Cooper’s analysis can be viewed here.
