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Don’t panic about Canadian home sales dropping sharply in February

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Don’t panic about Canadian home sales dropping sharply in February

Canadian home sales dropped sharply in February 2019 from the previous month. But you likely don’t need to worry. Here’s why.

The latest statistics from the Canadian Real Estate Association (CREA) show that national home sales dropped sharply – 9.1 per cent – from January to February 2019.

Not only that, but the national average sale price fell 5.2 per cent, year-over-year.

Holy!

These are pretty huge and potentially scary numbers. Except that those refer to the national housing market, and there really is no such thing.

It’s a simple point that escapes many consumers: Real estate is local, and these days more local than ever.

What do we mean?

Well, the CREA, Canada Mortgage and Housing Corp. (CMHC) and other major real estate bodies are mandated to oversee the national market.

So, when CREA issues a release that says Canadian home sales are down by X per cent, or when CMHC reports the national vacancy rate is down for the second consecutive year – and major media report such headlines – people tend to worry.

You must remember, however, that when you buy a home, you don’t buy the national market. You buy one house, on one street, in one neighbourhood, in one city and region.

If you live in Ontario, Alberta’s ongoing oil industry struggles, which are pulling down home sales and prices in that province, aren’t likely to affect the performance of your market. Forget the national headlines. Drill down into what’s happening where you live.

Here’s why it matters

Examining CREA’s latest stats, actual (not seasonally adjusted) sales activity was down 4.4 per cent to reach the lowest level for month of February since 2009. It was also almost 12 per cent below the 10-year February average. In BC, Alberta and Newfoundland and Labrador, sales were more than 20 per cent below their 10-year average for the month.

In terms of prices, in BC, prices were down on a year-over-year basis in Greater Vancouver (-6.1 per cent) and the Fraser Valley (-2.8 per cent).

In the Greater Golden Horseshoe, however, benchmark home prices were up from year-ago levels in Guelph (6.8 per cent), the Niagara Region (6.5 per cent), Hamilton- Burlington (five per cent) and the GTA (2.3 per cent). Prices were little changed (up 0.2 per cent) on a y-o-y basis in Oakville-Milton, while in Barrie and District prices remain below year-ago levels (-4.3 per cent).

Further illustrating that market performance across Canada is – literally and figuratively – all over the map, prices were down by 4.4 per cent in Calgary, 4.5 per cent in Edmonton, 5.1 per cent in Regina and three per cent in Saskatoon.

But in Ottawa, home prices rose 7.4 per cent year-over-year, 6.2 per cent in Montreal and 1.6 per cent in Moncton.

The issues that exacerbate local market conditions – such as mortgage regulations – are worth paying attention to, however.

“For aspiring homebuyers being kept on the sidelines by the mortgage stress-test, it’s a bitter pill to swallow when policy makers say the policy is working as intended,” says CREA President Barb Sukkau. “Fewer qualified buyers means sellers are affected too. The impact of tighter mortgage regulations differs by local housing market and a professional realtor remains your best source for information and guidance in negotiating the purchase or sale of a home during these changing times.”

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