Canadian real estate agents may have recorded the first year-over-year sales drop in 11 months in March, regional data suggest, as the Vancouver market plunged.
The value of purchases reported by 11 regional real estate boards fell 1.1 percent from a year earlier to C$12.4 billion ($12.4 billion), as the number of homes sold fell 1.4 percent, according to real estate board data compiled by Bloomberg News. Those markets had a 9.1 percent annual rise in value during the prior month.
Policy makers, including Finance Minister Jim Flaherty, have said parts of Canada’s housing market have become overvalued as households add to record debt levels, encouraged by historically low mortgage rates. Canadian builders began work in March on the most housing units since 2008, led by condominium construction in Toronto, the country’s biggest city, Canada Mortgage & Housing Corp. reported Friday.
“There are a lot of regional currents beneath the surface that have pretty significantly different trends,” Robert Kavcic, an economist at BMO Capital Markets in Toronto, said in a telephone interview. “Valuations in Vancouver did get very stretched relative to incomes.”
British Columbia led real estate declines in March as demand fell in one of the country’s most expensive regions. The number of homes sold in that province’s three largest markets plunged 26 percent in March while Vancouver home prices, which had almost tripled in the decade through last year, fell 2.9 percent from a year earlier.
Buoyant outside B.C.
Markets outside British Columbia remained buoyant, data showed, with the total value of homes sold in Toronto rising 19 percent in March and Montreal gaining 9 percent. The average sales price for a home in Toronto was 11 percent higher than a year earlier, according to that city’s real estate board. Realtors sold 7.8 percent more homes in Canada’s biggest city during the month than in March 2011.
Kavcic said starts typically lag sales, suggesting the pick-up in construction is a reaction to strong realtor activity last year.
Multiple-unit starts rose by 50 percent in Ontario last month, while starts of all units in British Columbia urban areas fell 28 percent, CMHC said.
According to data compiled by Bloomberg from regional real estate associations, the national average price rose to C$453,093 in March from C$451,934 a year earlier, a 0.3 percent gain from year-earlier levels, compared with a 2.8 percent rise in February.
Montreal recorded a 4.1 percent gain in sales and a 4.4 percent increase in average price.
Bank of Montreal said March 7 it would cut its five-year fixed-rate mortgage rate by 50 basis points to 2.99 percent, leading other banks to follow suit. That rate is still being offered as part of a campaign sent by mail to a small number of customers and markets that runs until April 19, Paul Gammal, a Bank of Montreal spokesman, said in an April 9 email.
The Canadian Real Estate Association releases aggregated national data in the middle of every month. In February, the value of transactions in all major Canadian markets rose 10.7 percent from a year earlier with an 8.6 percent increase in unit sales. The association also publishes seasonally adjusted data that showed the value of transactions rose by 4.3 percent in February.
An annual decline in the value of home sales would be the first since April 2011, according to data from the association.