The Canadian real estate market reignited in March, with the number of new listings skyrocketing even as the number of sales and average prices crept toward all-time highs.
February data from the Canadian Real Estate Association showed sales and prices moderating as supply began to creep back into the market, but March numbers suggest Canadians are feverishly jumping into the market to sidestep tougher mortgage requirements in effect Monday April 19 as well as to avoid new taxes being introduced in Ontario and British Columbia in June.
There were 97,663 homes put up for sale last month, a 20-per-cent jump from the previous high set in March 2008. A total of 233,402 listings have been booked since the beginning of the year, the most for any first quarter on record.
New listings are important because they can help moderate sharp price increases that occur in a sellers' market as buyers are forced to compete for what little inventory is available. That hasn't happened yet, however, with sellers still in control in most of the country.
The national average price also spiked in March, hitting $340,920 - just $300 short of the all-time high reached last October. Compared to a year ago, the average price has gained 17.6 per cent. CREA said 49,256 homes were sold, the second highest for any March and 40.8 per cent higher than March 2008.
"Negotiations still favour sellers during the home buying process in a number of major Canadian housing markets," said Georges Pahud, the association's president. "[However,]the rise in new listings mean that buyers may shop around more before making an offer."
In the first quarter, seasonally adjusted sales hit 130,072 homes, the fourth highest level on record. That's a 3.4-per-cent decrease from the fourth quarter, when a sizzling market spurred talk of a bubble among economists and pushed the Federal government to enact tougher mortgage rules to ensure consumers would be able to afford their mortgages should interest rates rise.
Sales activity in Ontario, Quebec, and Newfoundland & Labrador rose to new records in the first quarter, but the gains were moderated by a sharp drop in sales in British Columbia as consumers began to be priced out of the market.
"The erosion of housing affordability is crimping activity in some of Canada's priciest markets in the lower mainland of British Columbia," said CREA chief economist Gregory Klump.
"Higher mortgage interest rates and the rise in new listings may also soon reduce some of the urgency to purchase in Toronto. Sales activity in British Columbia and Ontario is expected to ease over the second half of 2010 once the HST comes into effect, pulling national activity lower. Rising supply and lower activity will take the steam out of the pricing environment following upbeat home sales this spring."
More to come
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