Historically elevated listings cause downward pressure on home prices

The supply of homes for sale is historically elevated relative to sales, causing benchmark home prices to remain down from year-ago levels in both Calgary and Edmonton, according to the latest national MLS statistics released Friday by the Canadian Real Estate Association.

The association said the benchmark price in Calgary was down 3.9 per cent year-over-year in January to $410,200 while in Edmonton it fell by 2.9 per cent to $317,200.

“The home pricing environment will likely remain weak in these cities until elevated supply is reduced,” it said.

Nationally, the aggregate price of $613,500 rose by 0.79 per cent from a year ago. It was the smallest increase since June 2018.

“The national average price is heavily skewed by sales in Greater Vancouver and the GTA (Greater Toronto Area), two of Canada’s most active and expensive markets. Excluding these two markets from calculations cuts almost $95,000 from the national average price, trimming it to just over $360,000,” said CREA.

Home sales via Canadian MLS systems climbed 3.6 per cent in January 2019 compared to December 2018. But sales were down four per cent from year-ago levels and turned in the weakest January since 2015. They also came in below the 10-year average for the month on a national basis and in Canada’s three westernmost provinces, Ontario and Newfoundland & Labrador, added CREA.

“Homebuyers are still adapting to tightened mortgage regulations brought in last year,” said CREA President Barb Sukkau, in a statement. “However, their impact on homebuyers varies by location, housing type and price segment.”

“Sales, market balance and home price trends are out of synch among major Canadian cities that have the greatest impact on national results,” said Gregory Klump, CREA’s Chief Economist. “It’s clear that housing market conditions remain weaker in the Prairie region and the Lower Mainland of British Columbia. Notwithstanding the intended consequences, tighter mortgage regulations that took effect in 2018 combined with previous tightening will weigh on economic growth this year.”

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