TORONTO, ONTARIO -- (Marketwired) -- 06/17/13 -- According to BMO Chief Economist Doug Porter, the latest data from the Canadian Real Estate Association (CREA) shows that the Canadian housing market remains on track for a soft landing.
Existing home sales rose for the third month in a row in May, posting a 3.6 per cent seasonally adjusted gain from the prior month and down just 2.6 per cent from the robust readings of a year ago - just before the new mortgage rules hit.
"The surprises on the sales data have consistently been on the high side of expectations recently," noted Mr. Porter. "The difference from a month ago is that many other housing indicators are also on the high side, including starts above 200,000, a double-barrelled rise in building permits and a record share of employment in the construction sector. Most other key sales metrics also strengthened last month, with the sales-to-listings ratio nudging up to 51.4 per cent, and the backlog of unsold homes easing to 6.4 months."
Mr. Porter also emphasized that prices remain stable, "There is no imminent collapse with 24 of the 26 reporting major cities posting price gains from year-ago levels in May - Victoria and Trois-Rivieres being the exceptions. Far from plunging, most price measures have in fact firmed a tad in recent months."
The reported average price increase across Canada was 3.7 per cent year-over-year, while median prices were up 3.3 per cent year-over-year, and the MLS Price Index, a measure of repeat sales in seven of the largest cities, was up 2.3 per cent year-over- year. Hamilton, Ontario was at the very top end of price trends with a hefty price increase of 12.8 per cent year-over-year.
"It's essential that home buyers stress-test their mortgage against a higher interest rate to ensure they can handle any potential increases in interest rates down the road," said Frances Hinojosa, Mortgage Expert, BMO Bank of Montreal. "It's also wise to choose a mortgage with a shorter amortization, which can help homeowners become mortgage-free sooner."
Ms. Hinojosa added that those who are ready to enter the marketplace can get a head start on planning by getting pre-approved for a mortgage before setting out to lock down the perfect home.
About BMO Financial Group
Established in 1817 as Bank of Montreal, BMO Financial Group is a highly-diversified North American financial services organization. With total assets of $555 billion as at April 30, 2013, and more than 46,000 employees, BMO Financial Group provides a broad range of personal and commercial banking, wealth management and investment banking products and solutions.
Peter Scott, Toronto
Matt Duffin, Toronto
Valerie Doucet, Montreal
Laurie Grant, Vancouver
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