Canadian housing "Balanced and stable"

In recent weeks two of the big players in the Canadian real estate market have issued their latest reports, offering calm words – “balance and stability” – for the country’s housing market.


The Canadian Real Estate Association (CREA), the national body that represents the real estate industry, and Canada Mortgage and Housing Corporation (CMHC), the government agency that tracks housing and insures mortgages, are in agreement that the market remains balanced and will remain stable for the next year, or so.

CREA: Market behaving as it should

CREA's March report shows the market is behaving as it should, albeit with smaller numbers. While recognizing that actual sales have dropped from a year ago, CREA points out that they have been stable since the introduction of new mortgage rules last summer. The association's March report shows sales rose 2.4% from February, which is what would be expected as the home-buying season warms-up. The report also shows that home prices are rising to keep pace with inflation.

Sales to new listings show balance

When it comes to balance, CREA focuses on the ratio of sales to new listings. The report shows that ratio at 50.3%, up slightly from 49.9% in February. A range between 40% and 60% is considered balanced which puts the current figures right on target. A little more than 60% of regional markets in Canada are operating in balanced territory.

CMHC: Economy will shift balance... slightly

This year's first-quarter CMHC housing report shows Canada's housing market has been in balance since 2010, with a slight bias toward sellers. It expects that bias will shift somewhat toward buyers over the next two years. CMHC cites improving economic conditions, low interest rates, employment growth, immigration and a reduction in new home starts as factors keeping the market in check.

CMHC: Sales & Prices will rise thru 2014

CMHC is forecasting a modest 0.5% drop in housing re-sales for 2013, with a 4.7% increase for 2014. The agency also predicts price increases will keep pace with inflation posting a 2.7% increase from 2013 to 2014.

It's worth noting that CREA and CMHC use different methods to arrive at their numbers so they sometimes don't appear to match-up. They do, however, generally point in the same direction.

Even Mark Carney sees balance

Even the Bank of Canada Governor has remarked on the balance in the Canadian market. During a recent parliamentary testimony, Mark Carney used typically cautious language, saying "We're encouraged by the evolution of house prices in a number of markets. We're on the path to a balanced evolution of the household sector and we have to continue to be vigilant."