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Canada's House Prices Spike, But Economists Call It A ‘Soft Landing'

Canada’s House Prices Spike, But Economists Call It A ‘Soft Landing’.

The Huffington Post Canada  |  Posted: 03/17/2014 11:14 am EDT

house prices canada

Some economists are calling it a “soft landing,” because sales volumes have fallen and aren’t coming back up, but house prices in Canada showed no signs of easing up in February.

Prices for sales of previously owned homes jumped 10.1 per cent in the year to February, the Canadian Real Estate Association (CREA) reported Monday.

The average price for a re-sold house in Canada in February was $406,372, up from around $368,000 in February of last year.

But CREA trimmed its sales forecast for the rest of the year, noting that a slump in sales volumes isn’t showing signs of rebound. It now expects 463,000 sales this year, compared to 475,000 forecast in its December outlook.

TD economist Diana Petramala noted that the number of sales is down 9.3 per cent from its peak last August, and picked up by just 0.3 per cent in February.

Those are “signs of a soft landing,” Petramala wrote in a client note.

“The performance of Canada’s housing market over the last few months is largely reflective of a cooling in Canadian housing demand. Sales are moving at a pace that is neither too hot, nor too cold,” Petramala wrote.

She noted that the one thing that hasn’t happened is a slowing in house price growth, “but that too will likely come.” She says house prices are rising because of a shortage of supply in some cities, but that will be solved as new homes come online.

But she suggested prices of single-family homes could still keep going up.

“Most of the overbuilding occurred in the multi-unit segment of the market and will likely not help alleviate some of the supply constraints building in the more popular single-family home market,” Petramala wrote.

— With files from the Canadian Press

Canada’s House Prices Spike, But Economists Call It A ‘Soft Landing’

Canada’s House Prices Spike, But Economists Call It A ‘Soft Landing’.

The Huffington Post Canada  |  Posted: 03/17/2014 11:14 am EDT

house prices canada

Some economists are calling it a “soft landing,” because sales volumes have fallen and aren’t coming back up, but house prices in Canada showed no signs of easing up in February.

Prices for sales of previously owned homes jumped 10.1 per cent in the year to February, the Canadian Real Estate Association (CREA) reported Monday.

The average price for a re-sold house in Canada in February was $406,372, up from around $368,000 in February of last year.

But CREA trimmed its sales forecast for the rest of the year, noting that a slump in sales volumes isn’t showing signs of rebound. It now expects 463,000 sales this year, compared to 475,000 forecast in its December outlook.

TD economist Diana Petramala noted that the number of sales is down 9.3 per cent from its peak last August, and picked up by just 0.3 per cent in February.

Those are “signs of a soft landing,” Petramala wrote in a client note.

“The performance of Canada’s housing market over the last few months is largely reflective of a cooling in Canadian housing demand. Sales are moving at a pace that is neither too hot, nor too cold,” Petramala wrote.

She noted that the one thing that hasn’t happened is a slowing in house price growth, “but that too will likely come.” She says house prices are rising because of a shortage of supply in some cities, but that will be solved as new homes come online.

But she suggested prices of single-family homes could still keep going up.

“Most of the overbuilding occurred in the multi-unit segment of the market and will likely not help alleviate some of the supply constraints building in the more popular single-family home market,” Petramala wrote.

— With files from the Canadian Press

Garth Turner: Canadian Housing Data Unreliable, Needs Regulation

Garth Turner: Canadian Housing Data Unreliable, Needs Regulation. (source)

canadian housing market
A former member of Parliament has suggested data on Canadian housing markets should be regulated the way data on financial markets is regulated.

Garth Turner, who served as both a Progressive Conservative and Liberal member of Parliament for the Halton region near Toronto, has called the monthly numbers released by the Canadian Real Estate Association (CREA) a “fraud,” because of the apparent practice of houses being counted multiple times when they are sold.

CREA’s monthly sales and price releases are among the most closely-watched measures of the housing market. Several industry insiders confirmed to HuffPost Canada last month that duplication of house listings across multiple real estate boards could be distorting sales data.

Turner, who runs a blog focused partly on real estate and is a financial advisor at Turner Tomenson Wealth Management Group, also suggested that something fishy could be going on at the Toronto Real Estate Board (TREB).

Speaking on BNN Monday, Turner said TREB’s house sales numbers “are almost always revised down” after their initial public release. That would mean that, when new numbers are released, they appear to show a larger increase from the previous reporting period than otherwise would have been the case.

Other housing market observers, such as analyst and blogger Ben Rabidoux, have also suggested that TREB may be revising its older numbers too far down, and creating the impression of a stronger real estate market than may really be the case.

This sort of thing matters, Turner told BNN, because people’s perceptions of the housing market affect house prices.

“Real estate is a very emotional commodity,” Turner said. “If you think the housing market’s hot, you’re going to come in at a higher price point, there [will be] bidding wars.”

Turner didn’t speculate on how much house prices may be getting pushed up by potentially misleading data.

CREA economist Gregory Klump told HuffPost Canada last month that double-counted listings amount to a scant 0.8 per cent of housing supply on the market.

In an interview on CBC’s Lang & O’Leary Exchange on Monday, Klump said the double- or triple-listing of homes is largely concentrated in the Toronto area and Nova Scotia. But he described the effects of those listings as “statistically insignificant.”

“We remain completely confident in the reliability and accuracy of those statistics,” he said.

But real estate consultant Ross Kay, who is the original source for Turner’s arguments, suggested in an audit of housing data that sales numbers may have been over-reported this year by some 22,000 house sales so far.

He told HuffPost last month that the phenomenon of double-counted houses is having substantial effects on housing data.

“Statistically valid month-over-month comparisons on sales volumes are inflated as much as 15 per cent in some cities in 2013,” Kay wrote. “Average prices are skewed upward as much as 10 per cent some months.”

Noting that most Canadians’ net worth is in their homes, Turner suggested housing market data should be made reliable through regulation the way financial markets are regulated.

“We have complete regulation in the financial markets, and almost complete benign denial of the accuracy of numbers in the real estate market, which is so critically important to people,” he said.

“I hope it changes.”

 

Canadian housing boom in ‘9th inning’ – Business – CBC News

Canadian housing boom in ‘9th inning’ – Business – CBC News.

 

BoC Warns Against the Obvious – Ludwig von Mises Institute Canada

BoC Warns Against the Obvious – Ludwig von Mises Institute Canada.

 

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