Canadian Housing Market Calm, Cool and Collected: BMO Economics

Canadian Housing Market Calm, Cool and Collected: BMO Economics 
- Home sales: Up 0.6 per cent in April  
- Home prices: 20 of the 26 cities reporting price increases over the
past year  
- BMO recommends prospective buyers stress-test their mortgage at a
higher interest rate to ensure sustained mortgage affordability 
TORONTO, ONTARIO -- (Marketwired) -- 05/15/13 -- According to BMO
Chief Economist Doug Porter, the latest data from the Canadian Real
Estate Association shows that evidence continues to mount that the
Canadian housing market will be able to pull off the fabled soft
landing.  
Existing home sales edged up 0.6 per cent in April, trimming the
annual decline to 3.1 per cent year over year. Mr. Porter noted that
sales have risen on a seasonally adjusted basis in 3 of the past 4
months, and are essentially unchanged since last August - the first
full month of the new mortgage insurance rules.  
"Most of the other key metrics are also fully in line with a
well-tamed market," added Mr. Porter. "Sales to listings stand at
just over the 50 per cent line, and the backlog of unsold homes is
now at an unremarkable 6.6 months." 
But it is on the price side where the stable nature of the market is
perhaps most evident, according to the report.  
"Despite concerns, Canadian home prices remain incredibly calm, cool,
and collected," said Mr. Porter. "Every major index for home prices
is now up between 1.3 per cent and 2.2 per cent from year-ago levels.
The MLS Price Index, a measure of repeat sales in seven of the
largest cities, is at the top end of that range, while average
transactions prices are at the low end."  
Mr. Porter added that the range of yearly price changes among the 26
largest cities was fairly narrow, in April, from a high of +6.6 per
cent in Kitchener to a low of -3.4 per cent in Saguenay, Quebec. And,
20 of the 26 cities are still reporting price increases over the past
year, a far cry from a hard landing and a sign of stability in
Canada's housing market. 
"While some are highlighting the fact that prices are now rising at
their slowest pace since the 2009 recession, the plain facts are that
they are still rising faster than inflation, and prices are at
all-time highs, suggesting concerns of a meltdown were unfounded." 
Mr. Porter noted that in major markets, Vancouver had been by far the
weakest in the country, but there are signs even there that the
market is stabilizing. Sales were down a moderate 6 per cent from
year-ago levels in April, and average prices were essentially
unchanged, after both metrics had posted notable declines in the
first quarter of the year. 
It's a similar, more muted, picture in Toronto, where sales were down
about 5 per cent from a year-ago and prices have nudged up by almost
2 per cent. 
Calgary remains an outlier on the strong side, with sales up roughly
10 per cent from a year ago and prices up by almost 4 per cent. With
one of the strongest job markets in the country and a sales/listings
ratio above 64 per cent the picture remains quite positive for the
Calgary market. 
Laura Parsons, Mortgage Expert, BMO Bank of Montreal, noted that it's
essential for both buyers and sellers to be aware of any changing
conditions on the local level. "If planning to buy or sell a
property, consider working with an expert who can help you make
decisions that are appropriate to the health of your local market,
and more importantly, that responsibly fit within your particular
financial situation." 
Ms. Parsons added that home buyers should stress-test their mortgage
against a higher interest rate to ensure they could handle any
potential increases in interest rates down the road and choose a
mortgage with a shorter amortization, which can help them become
mortgage-free sooner.  
About BMO Financial Group  
Established in 1817 as Bank of Montreal, BMO Financial Group is a
highly diversified North American financial services organization.
With total assets of $542 billion as at January 31, 2013, and more
than 46,000 employees, BMO Financial Group provides a broad range of
personal and commercial banking, wealth management and investment
banking products and solutions.
Contacts:
Media Contacts:
Matt Duffin, Toronto
(416) 867-3996
matthew.duffin@bmo.com 
Valerie Doucet, Montreal
(514) 877-8224
valerie.doucet@bmo.com 
Laurie Grant, Vancouver
(604) 665-7596
laurie.grant@bmo.com 
Internet: www.bmo.com
Twitter: @BMOmedia