MORTGAGES BY CHRISTINE MACPHERSON
Index Growth Slows Further In January
Christine MacPherson • Feb 25, 2021
In January the Teranet–National Bank National Composite House Price IndexTM was up 0.3% from the previous month. It was the third consecutive month in which the index rose less than the month before. The increase was led by five of the 11 constituent markets: Hamilton (2.0%), Montreal (1.0%), Victoria (0.6%), Halifax (0.4%) and Vancouver (0.4%). Rises of less than the countrywide average were reported for Quebec City (0.3%) and Ottawa-Gatineau (0.1%). Indexes were down from the month before in Toronto (−0.1%), Calgary (−0.2%), Edmonton (−0.4%) and Winnipeg (−0.4%). After three months – September, October, November – in which all 11 markets of the composite index were up from the month before, it was a second consecutive month in which one or more markets were down on the month.
The price rise is consistent with the rise of home sales volume over the last several months as reported by the Canadian Real Estate Association. For a fifth straight month, the number of sale pairs[1] entering into the 11 metropolitan indexes was higher than a year earlier. The unsmoothed composite index, seasonally adjusted, was up 0.9% in January, suggesting that the published (smoothed) index could continue its uptrend.
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In January, Canadian home sales increased 2.0% month-on-month, building on December's 7.0% gain. On a year-on-year basis, they were up 35.2%. Provincially, sales were up in 8 of 10 provinces in January, with strong gains recorded in PEI (+20.5% m/m) and Alberta (+11.9%). On the flipside, a relatively steep decline was recorded in Nova Scotia (-8.3%). New listings dropped by 13.5% m/m in January. The combination of rising sales and falling new listings brought the months supply of inventory measure to under 1.9 months. The national sales-to-new listings ratio also increased to 90.7% – its highest level by far. Every province was in sellers' territory in December, and many of those in the eastern part of Canada had ratios over 100% (Quebec: 128.3%; New Brunswick: 116.0%; Nova Scotia: 114.3% and PEI:101.5%). This means that there were more sales than new units listed last month in these provinces. This is a rare situation, but has occurred before in the Atlantic Provinces. However, January marked a first on this front in Quebec. Elsewhere, ratios were particularly elevated in Manitoba (86.1%) and Ontario (88.6). Strong demand and historically tight conditions were reflected in prices. Indeed, Canadian average home prices surged by 4.7% m/m in January. On a year-on-year basis, they were up 22.8%, marking an acceleration from December. However, prices were up in 8 of 10 provinces during the month, with the largest gains occurring in Alberta (+8.1%) and Ontario (7.4%). Compared with the average sales price, the MLS home price index, a more "like for like" measure, increased 2.0% m/m. Single family home prices rose 2.6% m/m (and a robust 17.4% y/y), whereas apartment prices advanced by a smaller 0.2% m/m (and decelerated to 3.3% y/y). In Toronto, apartment prices increased 0.4% m/m, the first gain in 4 months. Key Implications Home sales picked up right where they left off to start 2021. Demand was likely given a lift by ultra-low mortgage rates, which dropped again during the month. January's robust gain coupled with a strong handoff into this year virtually ensures that sales will increase in the first quarter. However, with sales likely running above fundamentally-supported levels, we think some cooling in activity will take place, especially in the second half. A dwindling supply of inventories, when benchmarked against the current sales pace, could also weigh on activity moving forward. With today's data showing a solid gain in prices last month and new supply collapsing across nearly the entire country, markets were historically tight. This points to further strong price gains ahead in the near-term. Also notable was that benchmark condo prices grew for the first time in several months in Toronto. Although supply remains elevated, conditions are becoming tighter than what we saw last fall. This suggests that further gains are in store. Source: https://economics.td.com/ca-existing-home-sales
(NC) Due to current travel restrictions, families will be spending March Break at home. One way to keep your kids busy is by making personal finance a group activity. Research shows that young people who discuss money matters with their parents have higher financial knowledge and skills, which leads to stronger financial well-being in the future. Here are five ideas for simple things you can do with your kids to help them develop good money habits early: Involve your children in age-appropriate conversations about news related to economics or budgeting, and discuss how the family is responding to the unprecedented circumstances caused by the pandemic. Use the Financial Consumer Agency of Canada’s online interactive budget Planner to teach your children about the importance of a financial plan. Try making a budget for your next family vacation. Encourage your child to set up a savings account. Forming good savings habits early can help kids learn how to be financially independent and avoid relying on credit cards and loans in the future. Help your child to make a plan to save for something they really want, like a new toy or video game. Show your child how to set up an automatic payment for either a subscription or their cellphone. This is an opportunity teach them about the importance of never missing a payment, which could have a negative impact on their credit report in the future. Review your child’s bank account agreement with them and make sure they understand their responsibilities, such as keeping their PIN secret, even from their parents. Sharing their PIN means they may not be protected from a fraudulent transaction on their account. Understanding personal finances can have a big impact on the present and future well-being of young people. No matter what life stages your child is at, you can find unbiased and fact-based information from the Financial Consumer Agency of Canada at canada.ca/money.
