Canada Housing market 'stronger than expected' | Waccabuc Real Estate

The latest real estate results look impressive for seven-figure homes but the story is not as dramatic once you factor out Canada's two most expensive cities and look at three months of falling sales.
Prices across the country rose 10.4 per cent in December from a year ago to an average of $389,119, according to the Ottawa-based Canadian Real Estate Association. Once you hack out Toronto and Vancouver, the increase drops to 4.6 per cent.

"The 10 per cent number, unless you are a millionaire living in Vancouver, this is not your number," said Benjamin Tal, deputy chief economist with CIBC World Markets.

Tal says prices are up nationally only 6.5 per cent from a year ago if you create a weighted average that limits the impact of Vancouver and Toronto by factoring out a massive surge in the sale of high-end homes.

A year ago, sales were way down, making activity today look that much stronger and allowing expensive markets to skew the national results even more. But he acknowledges even the 6.5 per cent increase is more than most people had predicted for the market at this point in the housing cycle.
"We are running out of excuses and the housing market might be a bit stronger than expected," said Tal.

There is cause for concern in the market. Seasonally adjusted December sales were down 1.8 per cent from November and are now off 5.2 per cent from the peak that was reached in September. Historically, price declines have followed sales declines.



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