Canadian house prices: a regional picture
By Peter Diekmeyer • Bankrate.com
Judging from the latest statistics, the Canadian housing sector remains fairly solid, particularly when compared with that
of the United States, which is mired in a slump. That said, last month, a slight crimp appeared here, too. During June, the average selling
price for existing homes fell by 0.4 percent compared to the same month the year before. The big question now is whether that little drop
means anything.
At first glance, you'd have to say no. For one, the decline is tiny, especially when measured in conjunction with overall house
prices, which have more than doubled in Canada during the past 10 years. Furthermore, the job market, which is a key driver of real estate
sector demand, remains relatively solid. According to Statistics Canada's most recent
Labour Force Survey, employment remained stable in
June for the second consecutive month, and the overall unemployment rate came in at a respectable 6.2 percent.
In addition, interest rates, which for many buyers represent the single largest cost involved in owning a home, also look
fairly attractive. Though creeping up slightly, mortgage rates remain extremely low when measured
on a historical basis.
Housing sector activity remains strong
To be judged fairly, price data regarding existing homes need to
be evaluated in context. For example, the Canadian
Real Estate Association, or CREA, recently released data collected
via its Multiple Listing
Service for the first six full months of the year, and those
numbers look far better. During that period, the average selling
price of existing homes actually increased by 3.6 percent.
Recently released data regarding new home construction also look strong. Although housing starts slipped slightly in June to
a seasonally adjusted annual rate of 217,800 units, according to the Canada Mortgage
Housing Corporation, the pace remains near record levels.
Contractors' selling prices for those new homes also continue to rise. In May, new home prices rose by an average of 4.2 percent
compared to the same month the year before. And while the rate of those increases has been tailing off in recent months, the increases remain
well above the core inflation rate.
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