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Home sellers flooded the markets in Toronto and Saskatoon last month, causing listings to surge to a record level in Canada.
The number of resale home listings rose by 17.7 per cent in April from the year before to 67,554 units on an unadjusted basis, according to data released Tuesday by the Canadian Real Estate Association (CREA).
Unit sales dropped by 6.1 per cent from the year before, but edged up by 0.8 per cent compared with March, on a seasonally adjusted basis.
Listings rose by a whopping 121 per cent in Saskatoon from the year before, the biggest increase of any city. They rose by a more moderate 18 per cent in Toronto. While this gain was seventh on the list, it has an impact because Toronto usually makes up about 18 per cent of national sales activity on the Multiple Listing Service (MLS).
The number of homes on the market was down in just three areas for which data were available: Kitchener-Waterloo, Newfoundland and Labrador, and Thunder Bay.
The news comes on the same day as a report suggesting two-thirds of Canadians are either negative or neutral about the prospect of buying a home right now.
Asked whether it was a good time to buy a home, one-third of those surveyed as part of a report by the Canadian Association of Accredited Mortgage Professionals (CAAMP) said “no,” one-third said “yes” and the rest were neutral. The response was similar to that in CAAMP's last survey, which was done in the fall.
Residents of Saskatchewan, where home prices have continued to skyrocket despite a cooling trend in much of the rest of Canada, appeared to be most leery about the idea of buying a home. Seventy per cent said it was not a good time to make a purchase, compared with 60 per cent last year.
In 2007, the average price of a resale home in Saskatchewan rose by 32 per cent compared with the national average increase of 11 per cent, according to data from CREA. This year, the average home price in Saskatchewan is expected to rise by 19.5 per cent to $208,400, the highest year-over-year provincial gain in Canada and well above CREA's forecast national average increase of 5.3 per cent.
Sticker shock in regions where prices escalate in a short period of time can sink consumer sentiment quickly, CAAMP chief economist Will Dunning said in an interview.
“Gradual change people can deal with, it's sudden change that people get thrown by,” said Mr. Dunning, who wrote the broader report on the housing industry that was released with the survey.
However, in a strong economy, the state of the labour market appears to be more important to Canadians than home affordability, Mr. Dunning added. Jobs also trump concerns about the broader state of the housing market, including fallout from the subprime mortgage market in the U.S., he said.
“What really matters is job creation, and how people feel about their own personal job situation. If people are comfortable there, they'll find a way to work with the affordability situation in their community,” he said.
“If you start feeling threatened in your job or your neighbour gets laid off, then your opinion will change very rapidly.”
Atlantic-Canadians were the most positive towards a home purchase, according to the CAAMP survey, with 49 per cent saying it was a good time to buy compared with 24 per cent who said it was not.
Unit sales last month rose the most in Newfoundland & Labrador at a 27 per cent gain over last year, followed by Saint John at 18 per cent, according to CREA.
Sales fell the most in Calgary and Edmonton in April with drops of 31.2 per cent and 25.4 per cent respectively.
Mr. Dunning also said he expects to see a levelling off in the adoption of newer products including longer-amortization and zero-down payment mortgages.
“We had this spike in housing markets across the country in the middle third of last year. I'd say that was largely consumers entering the market because of the new products,” Mr. Dunning said.
“We're seeing that activity come down from that peak, suggesting those products aren't having the same impact they were last summer.”
Thirty-seven per cent of home buyers took out mortgages with longer amortizations than the standard 25 years in the period from September, 2006, to September, 2007, according to CAAMP's most recent data.
In a survey last month, Re/Max released even more striking numbers, suggesting almost two-thirds of Canadians had adopted longer amortizations, which go as long as a 40-year term.
Data in the CAAMP report were obtained from various sources including an online survey of 2,058 Canadians carried out during the first half of April, 2008.
