Com­pos­ite house price index shows gains after six-month string of declines

Susan Pigg – Toronto Star

The Cana­dian hous­ing pic­ture looked a lit­tle sun­nier in March, despite con­cerns on the Toronto condo front, as the Teranet-National Bank com­pos­ite house price index increased 0.4% over Feb­ru­ary after six straight months of decline.

Com­ment: Which is amaz­ing, since we still have the same mort­gage rules that cause the ini­tial drop. But now, we are turn­ing it around, a lot like I said would hap­pen. I said last sum­mer, just wait and watch, peo­ple will just save up more for longer and then start buy­ing again. Which is what it appears is now happening.

Most of the country’s major urban cen­tres recorded increases in house prices in March, year over year, which pushed the com­pos­ite index up 2.6%, accord­ing to fig­ures released Wednesday.

Com­ment: Toronto has had price increases every month, even with the lower sales.

The Toronto house price index was up 4.7% over March 2012, despite a sig­nif­i­cant soft­en­ing in the condo sec­tor and the fact house prices, over­all, have declined 1.8% since their peak last Sep­tem­ber, said National Bank econ­o­mist Marc Pinsonneault.

Com­ment: Con­dos are back up, both in sales vol­ume and in price. Don’t call the condo mar­ket dead just yet! And we have not yet hit the peak of the year, for prices. You CANNOT com­pare months, they are all dif­fer­ent. April is way higher than Decem­ber, same as August is lower than Sep­tem­ber. Com­pare Sep­tem­ber 2013 to Sep­tem­ber 2012 if you want a proper com­par­i­son. But he does not, which is why he is using num­bers that he knows will give a skewed result.

“There is only one area of real soft­ness and that is the condo apart­ment mar­ket,” stressed Pin­son­neault. “For con­dos, you have the worst mar­ket con­di­tions, out­side of the reces­sion, that we’ve seen since 1998.”

Com­ment: No, that is not true. And a rather dumb and out­ra­geous thing to say.

In March there were 4.3 months of condo inven­tory on the mar­ket, much of it in high­rise tow­ers that are planned or under con­struc­tion. That’s the high­est active sales-to-listings ratio — a key barom­e­ter of the health of a hous­ing mar­ket — since the unprece­dented 5.5 months worth of con­dos that were on the mar­ket dur­ing the 2008 reces­sion, said Pin­son­neault in a tele­phone interview.

Com­ment: Sure, low­est condo mar­ket since 2008, that I can accept (though it is chang­ing in April, this might be totally out of date in a cou­ple of days when we get the full data for April), but worst since 1998 is sim­ply a fabrication.

The his­toric median level is 3.1 months.

The fact that hous­ing starts have declined sig­nif­i­cantly just since the start of this year shows that devel­op­ers are delay­ing projects for fear of dump­ing yet more con­dos on an already over­loaded mar­ket, noted Pinsonneault.

Com­ment: NO. It does not. It only proves that they are delay­ing things. Unless you have asked every sin­gle one of them why they are delay­ing, you can­not make such a blan­ket state­ment. The fact that every crane you see means 80% of units sold, and build­ings com­plete with 90% sold – what is being dumped on a mar­ket? The new ones are sell­ing like hot cakes, it is just the resales that are slower. And now they are pick­ing up – mid-April saw list­ings drop, sales rise and prices increase. That is the truth of the matter.

“But I still think some cor­rec­tion is in the off­ing,” albeit prob­a­bly less than the 3–5% National Bank is expect­ing for Cana­dian house prices over­all this year, he added.

Com­ment: Wrong. Same “cor­rec­tion” every­one has been pre­dict­ing (except the one ridicu­lour 25% claim) for years now. Hasn’t hap­pened. Ain’t gonna. Even with Vancouver’s long slow plum­met, it is still NOT pulling the national aver­age down.

When it comes to the single-family home mar­ket in Toronto, how­ever, demand con­tin­ued to out­strip sup­ply in March. That has buoyed house prices and seen the active sales-to-listings ratio drop to 2.2 months, below his­toric aver­ages closer to 3%, said Pinsonneault.

Com­ment: Demand out­strips sup­ply every month, that is why prices keep ris­ing. That is why there are bid­ding wars on rentals. And exactly why the entire mar­ket is healthy and will keep increasing.

Ter­anet com­piles the com­pos­ite house price index, which had fallen each of the last six months in the wake of tighter lend­ing rules and min­i­mal eco­nomic activ­ity, by look­ing at select home sales in 11 major markets.

Toronto was among nine regions that saw increases in index prices in March, year over year, rang­ing from a high of 5.9% in Que­bec City and 5.7% in Cal­gary to 2.3% in Ottawa and 1.5% in Montreal.

Van­cou­ver and Vic­to­ria were the only two cities in the sur­vey to see declines over last March. They were 1.5% and 3.5% respectively.

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Con­tact the Jef­frey Team for more infor­ma­tion – 416−388−1960

Lau­rin & Natalie Jef­frey are Toronto Real­tors with Cen­tury 21 Regal Realty.
They did not write these arti­cles, they just repro­duce them here for peo­ple
who are inter­ested in Toronto real estate. They do not work for any builders.
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