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Home resales down but prices keep on climbing

Blog by The Schacter Team | March 16th, 2010

 B.C. sees biggest drop but Ontario posts gain
The Winter Olympics may be responsible for B.C.'s low house resales in February.

The Winter Olympics may be responsible for B.C.'s low house resales in February.

Photograph by: Jason Payne, PNG, Canwest News Service

Home resales in Canada fell in February for a second straight month, with the biggest drop recorded in Vancouver, although purchasers were still higher on the year, the Canadian Real Estate Association said Monday.

The February decline in Vancouver and other parts on British Columbia was offset by "an equally large gain" in Toronto, CREA said.

The industry group said 42,799 units sold on a seasonally adjusted basis in February, down 1.5 per cent from the previous month, reflecting how "national sales activity has slowed while new listings continue to rise, resulting in a more balanced national resale housing market."

Sales in British Columbia were down 13.3 per cent in February from a month earlier, while Ontario posted a 3.3 per cent gain. There were 600 fewer houses sold in Vancouver in February than in January, and sales in Toronto rose by 648 units.

Year-over-year, residential sales were up 44 per cent from 2009, with Ontario and Quebec setting records, but national gains in sales activity were smaller than in the previous three months.

"Since a year will soon have elapsed following the recessionary decline and subsequent rebound for the Canadian resale market, year-over-year comparisons are expected to continue shrinking," the report said.

Meanwhile, the average resale price of homes rose 18.2 per cent in February from a year earlier to $335,655, it said.

"The Olympic Winter Games may have impacted February sales activity in British Columbia, so activity for the province in March will be closely watched," said CREA president Dale Ripplinger.

"Activity is expected to remain elevated in Ontario and British Columbia over the first half of the year, with buyers looking to beat the introduction of the HST (harmonized sales tax, in July) and expected interest rate hikes."

Millan Mulraine, economics strategist at TD Securities, said the moderating trend seen in the first two months of 2010 will be "briefly reversed over the next two months as homebuyers affected by the recent changes in Canadian mortgage rules attempt to get ahead of the April deadline."

"After this, we should see the Canadian housing market move slowly back into a balanced-market position as higher mortgage rates and prices begin to temper demand."

In a separate report Monday, Ipsos Reid said a poll showed the number of first-time buyers in British Columbia is starting to decline as housing prices rise.

The poll found that 29 per cent of home purchasers during the first quarter of this year were first-time buyers, gradually trending down from 38 per cent at the same time in 2009, but still higher than in late 2008, when only 17 per cent were first-time buyers.

"Greater Vancouver, in particular, has seen a very rapid recovery in prices since the bottom of the market in the first quarter of 2009," said Hanson Lok, senior research manager for Ipsos Reid in Vancouver. "While low mortgage rates have kept monthly payments within reach for first-time buyers, escalating prices will push many potential first-time buyers back out."

The poll suggests 53 per cent of British Columbians feel it's a seller's market, up from 14 per cent a year ago, while 68 per cent say it's a good time to buy, a number that has fallen from a high of 76 per cent in September 2009.