CREA Calls the Numbers

CREA Calls

Highlights:

  • Home sales down 3.1% from April to May.
  • Actual (not seasonally adjusted) up 9% from levels in May 2011.
  • The year-over-year increase continues to reflect the slowdown in sales a year ago following changes to mortgage rules that came into effect in March 2011.
  • The number of newly listed homes edged up 0.3% from April to May.

Call it Balanced

Easing sales activity and a small uptick in new listings resulted in a more balanced national housing market. The national average home price edged down 0.3% on a year-over-year basis in May. Sales over MLS® Systems of real estate Boards and Associations in Canada declined by 3.1 per cent in May compared to April 2012. Having posted the first monthly decline since January, activity ran only slightly above the five- and ten-year averages for May.

We Are Doing Just Fine

“Returning to an average level of sales activity still leaves Canada’s housing market in great shape,” said Wayne Moen, CREA President. “The expected continuation of low interest rates will keep housing markets stable and homeownership affordable and within reach for many buyers in the months ahead.”

Some Slow Some Fast

Activity receded in about 60 per cent of all local markets in May as compared to April, led by the Greater Toronto Area, where sales nonetheless remained above levels recorded over most of last year. Monthly sales declines elsewhere overshadowed improving activity in the Ottawa-Gatineau region as well as in Newfoundland and Labrador.

Actual (not seasonally adjusted) activity remained nine per cent above levels in May 2011, and also stood above the reading for May sales in the previous three years by a similar margin, reflecting volatile spring markets in each of the past four years.

Not Much Different

For the third straight month, the number of newly listed homes was little changed in May, edging up just 0.3 per cent from April. The number of markets in which new listings either rose or held steady (49) ran almost even with those where new listings eased (52).

Just About Right

Moderating sales activity and a small uptick in new listings resulted in a more balanced national housing market in May. The national sales-to-new listings ratio, a measure of market balance, stood at 53.4 per cent in May 2012, down from its April reading of 55.3 per cent. Based on a sales-to-new listings ratio of between 40 to 60 per cent, more than half of all local markets were in balanced market territory in May.

Inventory Up

Nationally, the number of months of inventory stood at 5.9 months at the end of May, up from the April reading of 5.7 months. The number of months of inventory represents the number of months it would take to sell current inventories at the current rate of sales activity, and is a further measure of the balance between housing supply and demand.

The actual (not seasonally adjusted) national average price for homes sold in May 2012 was $375,605, down 0.3 per cent from the same month last year. While the national average price is more or less flat compared to last spring, average sale prices were up from year-ago levels in about seven of every ten local Canadian markets.

Toronto Leads

“Activity in Greater Toronto is stronger this spring than it was last year, and higher-priced homes are still selling quickly. As Canada’s most active housing market, and one of the priciest, it is still the biggest factor boosting the national average price but its support was less of a factor in May,” said Gregory Klump, CREA Chief Economist. “At the same time, national average price is finding support from Calgary, where sales and average selling prices are up from levels in May last year. Overall, price growth remains modest amid balanced market conditions in much of the rest of Canada.”

PLEASE NOTE: The information contained in this news release combines both major market and national MLS® sales information from the previous month.

CREA cautions that average price information can be useful in establishing trends over time, but does not indicate actual prices in centres comprised of widely divergent neighbourhoods or account for price differential between geographic areas. Statistical information contained in this report includes all housing types.

Copyright CREA Reprinted with Permission Full Report Here

About Larry Yatkowsky

Larry is a recognized real estate expert. A veteran professional, his experienced counsel leads Vancouverites in his west side community to place their trust in a man passionate about his work. Uncompromising ethics bring a balanced approach to realizing your real estate dreams.

When Life Moves You - contact Larry:

*Disclaimer: Statistics Courtesy REBGV. While believed to be accurate they are not guaranteed.
**Numbers provided may vary as they are dynamically posted by the REBGV.

Reader Comments:

Makaya Says:
June 28th, 2012 at 2:22 pm

“The actual (not seasonally adjusted) national average price for homes sold in May 2012 was $375,605, down 0.3 per cent from the same month last year. While the national average price is more or less flat compared to last spring, average sale prices were up from year-ago levels in about seven of every ten local Canadian markets.”

Which means it only took 30% of the cities to bring the average down… Reading between the lines, me thinks some areas in Canada are in trouble. Hmmm… could it be Vancouver?

June 28th, 2012 at 4:52 pm

@Makaya

But you missed pointing out that everything is ‘balanced’.

Turkey Says:
June 28th, 2012 at 6:06 pm

Dry wit becomes you. Well done!

Adam Says:
June 29th, 2012 at 12:34 pm

The real losers out of this whole crash will be the Real Estate Boards, as they lose their integrity. How long can they keep a straight face while skewing numbers.

Larry, when are you going to post the June average for Vancouver? Can we expect it nice and early maybe on Monday? Or will those numbers be delayed due to the holiday? I am anxiously awaiting the news.

June 29th, 2012 at 2:11 pm

@adam

I fully disagree with you and don’t think the boards will lose their integrity.

Basically their mandate is to provide information based on the numbers in a manner that neither ‘pumps’ the market nor claim that it is otherwise.

While some may choose to dislike their interpretations it is for the most part (you are going to dislike this) – ‘balanced’ and considered as opposed to reactionary.

While I am not a ‘white knight’ defender of some board policies what I can tell you is that nothing passes the gate to the public at large unless it has been carefully and thoughtfully vetted by a great number of people who bring to the table a tremendous level of real estate knowledge.

Adam Says:
June 29th, 2012 at 2:47 pm

Hi Larry,

I respect your opinion, but I think the loss of integrity is in the public eye. For instance, when they introduced the HPI benchmark it was questionable. Why now? Why don’t median and average prices work anymore? They worked fine for years before. Why the sudden change? It was questionable that it was happening right as the 2008 crash was about to happen. E.g., they didn’t mind using averages and median prices when RE was going up, but then when it was about to go down it was time for a new HPI benchmark.

And then, just this last month, the HPI benchmark reported an INCREASE in prices MOM and since the beginning of the year, when average prices are way down. It looked suspicious to many. And then finally, at the bottom of those stats, it said they had reworked/recalculated the HPI benchmark, which really defeats the purpose of the benchmark.

I hear comments now such as “The HPI can’t POSSIBLY be down this next month”. It’s become a bit of a joke because everyone wonders if it possible for the HPI to ever go down, as if the day it happens it would be a miracle of some sort. I get the purpose of HPI, it essentially limits huge ups and downs because of spikes and is intended to act more like the CPI. But… you can’t ride averages and medians all the way up, and then ride HPI down. I wonder if 10 years from now when the next bubble starts, if the real estate boards will then dump HPI, and ride averages up again, and then implement HPI when the market starts to get rough?

And lastly, one can only hear the words “Balanced market” and “soft landing” so many times. To me, it seems like the goal of the real estate boards is to always look at the bright and positive side of real estate. If the market is doing well, it’s a “strong market”. If the market is doing poorly, it’s a “balanced market”, and if things get REALLY bad, it becomes a “seller’s market”. To me, it’s just spin. It would just be nice to see a real estate board report in a non-bias manner. I know everyone has bias, but really… don’t be so obvious about it. Anyways, no one pays attention to the HPI benchmarks, not even you.

As a realtor, do you and the other realtors get together and talk about HPI? What are the comments being said? Realtors must not like the HPI benchmark, because they realize the absurdity of it, I am sure. Plus, how much money is wasted by the board spending money developing and maintaining a useless tool that hardly anyone uses? The only time it gets used is when a new reporter accidently quotes it in their article, and then quickly revises it when it it brought to his attention.

Adam Says:
June 29th, 2012 at 2:49 pm

I meant “buyers market” > “sellers market” above (as could be assumed).

June 29th, 2012 at 10:27 pm

@adam
And lastly, one can only hear the words “Balanced market” and “soft landing” so many times. To me, it seems like the goal of the real estate boards is to always look at the bright and positive side of real estate. If the market is doing well, it’s a “strong market”. If the market is doing poorly, it’s a “balanced market”, and if things get REALLY bad, it becomes a “seller’s market”

One adjective left out is ‘it’s a buyer’s market”. Never know, in time you could hear those words trumpeted.

“As a realtor, do you and the other realtors get together and talk about HPI?”

We do but we treat it as any one else should in that it is merely another tool to be used in evaluating the future of the market place. In that the board found a glitch and adjusted it is better than not ever having found it. In that they concluded that new HPI with new calculation methodologies would provide in time a more realistic assessment based on the parameters chosen is to my mind an improvement and deserved of accolades. In reality the boards are just trying to make it better.

Is it good? Is it bad? Is it wrong? My answer to all three – maybe!

HPI or any other real estate measurement is a valid as you choose it to be. It ranks as do other measurements such as the global influence of the European financial markets, China’s economy – real or fake, or the price of copper. All have their place and each may or may not influence a decision you might make.

Bottom line is nobody really knows at a level of 100% where things are going to end up because all measurements are historical in nature. It is the ‘prediction’ of what might be that is the conundrum and it is that which always brings me to my 50/50 rule. Only history can confirm if you made a decision that proved favorable to your individual circumstance. Waiting to find out can however, be fraught with anxiety.

Bottom line is that no measurement is perfect! As testament I could surf through the 5000 odd comments on this blog and find as many who dislike average prices or median price stats. Consider HPI as just another arrow in your quiver for that’s all it was meant to be. It’s your choice to use or not use that arrow to hit the target.

BubbleBoy Says:
June 30th, 2012 at 7:55 am

I totally agree with @Adam. A person that doesnt follow real estate closely could be given the wrong information when browsing on the REBGV or FVREB website. HPI will show prices are stable and on a slight rise. Some people are led to believe that prices are not capable of sliding here and then base their decision on the new hpi numbers. I believe the boards should still use averages, median, and the new hpi. Give the public a clear indication of what the market is really doing.

June 30th, 2012 at 10:53 am

@bubbles
“I believe the boards should still use averages, median, and the new hpi”

I have to ask what the hell are you talking about? Are you in a bubble?

On page 2 of the June 4, 2012 Stats release from REBGV. In bold print Spotlight on Greater Vancouver home prices I see HPI,AVERAGE AND MEDIAN.

It couldn’t be more clear!

BubbleBoy Says:
June 30th, 2012 at 1:14 pm

“are you in a bubble?”

I would say yes. Same applies to you and the rest of us

Anon Says:
June 30th, 2012 at 3:49 pm

@Larry – that is an amalgamated average and median for greater Vancouver. Do they release the same for all different areas? When I go to their stats page, I certainly cannot access that info. It would really be nice to have access to the average and median in addition to HPI for different areas.

Just “Greater Vancouver” is not really all that useful kwim? If I am missing where to get that info I would appreciate you pointing me in the right direction.

BubbleBoy Says:
June 30th, 2012 at 3:56 pm

Larry,

The link you provided above, can it be found on. The rebgv website. I have some friends that tried to look for the stats package but couldn’t find it. We could only read page 1 of the stats package on the rebgv website. And that only shows the hpi. This is what I meant. The main monthly statement should include hpi, avg, and median.

June 30th, 2012 at 5:35 pm

@anon
you are correct. An example of what you seek can be found here – this one happens to be the average.

There is graphical information for all the types you ask about per neighbourhood. The problem is that each neighbourhood generates up to 20 graphs with various information. With approximately 40 neighbourhoods in the east and west side alone you can see that this quickly becomes a time consuming logistical nightmare were you to consider every community within REBGV service area.

From time to time I’ve flirted with making some available on a selected basis but invariably I can’t keep everybody happy. I have even considered a fee for service to offset the time it takes. Sorry but that is my reality. Do I hear any offers for monthly subscription? 🙂

June 30th, 2012 at 5:50 pm

@bubbles

I don’t get it. Your bubble is definitely different.

The single page you refer to includes the HPI, Average and Medians as outlined in my last comment.

Further and finally:
If you read my posts you would know that I publish that information every month.

olga62 Says:
July 3rd, 2012 at 3:15 am

I disagree that the goal of the real estate boards is to keep it “positive and bright”. It’s goal is to serve the RE industry and to keep the market active. Artificial pumping the prices to keep it appear to be growing sends the seller the wrong signal and instead of dropping the expectations and lowering the price decide to wait out the temporary worsening. And it is going to kill the market. It is a seller’s unrealistic expectation that is the problem as there is nothing really to do with the buyer – this side of the market is already worked out. The manipulation by the stats is always backfired. The RE agents have to realize that and change the sides – they need lower RE prices to make RE market active again.

CRC Says:
July 3rd, 2012 at 9:33 am

“the goal of the real estate boards is to always look at the bright and positive side of real estate” As a posed to telling the truth?

The boards have already lost integrity in my mind. They hide valuable data from the MLS and they’ve created their own data index they can easily manipulate it to help them reach their “goal”.

July 3rd, 2012 at 7:08 pm

@crc
“hide valuable data from the MLS and they’ve created their own data index they can easily manipulate”

It must be a conspiracy! Real estate spies are everywhere and some may have laced your chocolate sprinkles with arsenic. 🙁

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