The CREA says a cool-down in the national housing market is happening in advance of new mortgage rules set to come into effect April 19th. Here in BC there was a heavy drop in activity, partly offset by a Toronto market that’s still hopping. It will be interesting to see if this is a trend, or a blip caused by the winter games.
Meanwhile, the number of new listings — an indication that homeowners are looking to capitalize on demand — climbed 2.4 per cent, marking the fifth straight month that housing supply grew. The amount of housing inventory in February stood at 5.2 months, well below where it was a year ago, at 8.8 months, but on par with 2008 levels.
“Headline price increases are drawing new supply to the market, and so that’s taking some steam out of the market,” said Gregory Klump, CREA’s chief economist.
The average price of all homes sold in February through the MLS system was $335,655, CREA said, up a robust 18.2 per cent from a year ago.
However, CREA said the gain was smaller than in the past four months — down from the January increase of 19.6 per cent — and future increases are expected to become “further subdued” in the months ahead.
“Time will tell how normal the market becomes, but I think there are pretty clear signs that some self-correcting mechanisms are starting to take over and lead to a calmer market, compared to what we saw in late 2009,” said Douglas Porter, deputy chief economist at BMO Capital Markets.
Joycer points out that RBC has also released their affordability report, you can read the PDF here. They make some comments specifically about the BC market:
While still below their recent cyclical peaks, all RBC measures stand well above long-term averages. Such poor affordability levels represent an element of risk that could weigh heavily on markets when interest rates start rising.