1. TD Economics
October 17, 2011
Data Release: See-saw pattern in sales and price activity continues
• Seasonally adjusted, month-over-month resale housing activity increased in September by 2.7%. So far
in 2011, sales hit their peak in January. If we use this as a benchmark, sales are down by 2.6% in
September.
• Listings moved up M/M by 0.2% in September. The increase in sales outweighed the greater number of
listings, resulting in a higher sales-to-listing ratio. The ratio now stands at 0.528, the highest reading of
this measure in six months. Even with the upward movement noted of late suggesting tighter
conditions, the sales-to-listing ratio remains in balanced territory.
• Unsold inventory needs approximately 6.1 months to completely exhaust – an estimate that has held
steady so far this year.
• On the price front, the national average residential resale price decreased M/M in September by 0.4%.
With the decrease, the national price tally rests at roughly $361K. However, on a year-over-year basis,
prices remain up by a significant 8.1%.
• For the Greater Toronto market, both resale prices and sales followed the national trend; sales were up
M/M by 5.2%, but prices were up by -0.6%. For the Greater Vancouver market, sales were up by 2.4%,
but prices were down by -3.7%. With the month’s developments, the average resale price in Toronto
sits at $469K, whereas in Greater Vancouver, the number sits at $757K.
Key Implications
• Several factors appear to have clipped the wings on resale activity this year, including: (1) new
mortgage eligibility rules; (2) a wave of economic uncertainty emerging in recent months; and (3) a
growing saturation of the first-time home buyer category. Helping cushion the impact of these negative
forces has been the persistence of low mortgage rates.
• While sales have receded so far this year, the same cannot be said for prices. However, this outcome
is largely expected as there is usually a lag between sales weakness and the corresponding price
adjustment. Still, it is important to stress that the significant price gains being recorded in British
Columbia are skewing the national statistic. If we strip away this province’s outsized performance from
the national total, the year-to-date price gain becomes more moderate at 4-5%.
• Going forward, we anticipate a tug-of-war action to take hold in the Canadian real estate market
between low interest and mortgage rates and only modest economic, income and employment growth.
With both push and pull momentum, we expect both prices and sales to hold fairly steady, relative to
current levels, over the next year.
Sonya Gulati, Economist
416-982-8063
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