Home Price trends Continue to Diverge in April
According to statistics released today by The Canadian Real Estate Association (CREA), the MLS® Home Price Index, the leading measure of Canadian home prices, increased in April 2012.
- The Aggregate Composite MLS® Home Price Index in April 2012 was up 5.2% year-over-year.
- Toronto again posted the largest year-over-year increase (7.9%), with more modest gains in Calgary (4.0%), Vancouver (3.7%), the Fraser Valley (2.7%), and Montreal (2.3%).
- Year-over-year price gains accelerated in April in Toronto and Calgary but slowed in Vancouver and the Fraser Valley and were little changed in Montreal.
- Single family home prices again posted the biggest gains (6.4%), with apartment unit and townhome sales making more modest headway (3.6% and 2.7% respectively).
The MLS® Home Price Index (MLS® HPI) rose 5.2 per cent year-over-year in April 2012. The increase was similar to those for the previous two months and among the smallest since last August. However, the moderation in overall price gains in recent months masks diverging trends among the major Canadian markets.
In April, the MLS® HPI again posted the largest year-over-year increase in Toronto (7.9%), followed by Calgary (4.0%), Vancouver (3.7%), the Fraser Valley (2.7%), and Montreal (2.3%).
Year-over-year price growth in Greater Vancouver slowed markedly in April and moderated in the nearby Fraser Valley. By contrast, Montreal — a market that tends towards more stable price growth — saw a small uptick in line with the aggregate index.
Toronto’s price index accelerated for the second straight month, consistent with its market balance where negotiations continue to favour the seller. Calgary is also now seeing prices begin to advance in earnest, supported by a strong economic outlook, recent gains in in-migration, and strong full-time job growth.
“Canadian home price gains are generally expected to moderate, but there are a few hot spots where prices are being fuelled by some very strong housing market fundamentals,” said Wayne Moen, CREA’s President. “Toronto has less than two months of supply compared to six months nationally, so it ranks among the tightest of Canadian housing markets. With prices moderating in some housing markets and bucking the trend in others, buyers and sellers should talk to their local REALTOR® to best understand how home price trends are evolving where they live.”
Among the different housing types tracked by the index, single family homes again posted the biggest year-over-year gains in April (6.4%), led by two-storey single family homes (6.9%). The MLS® HPI for one-storey single family homes rose 5.6 per cent from April 2011, while townhouses and apartments saw gains of 3.6 per cent and 2.7 per cent, respectively.
“Just as there are some pretty clear differences emerging across markets right now, there have also been some interesting developments in price trends across housing types,” said Gregory Klump, CREA’s Chief Economist. “The one that really stood out in April was accelerating price growth for the townhouse segment right across the board. In Vancouver and the Fraser Valley, it was the only segment in which prices gains accelerated.”
In focus: Price growth among housing types
The MLS® HPI tracks four different Benchmark housing categories: one- and two-storey single family homes, townhouses, and apartment units. Based on detailed characteristics specific to each neighbourhood, Benchmark prices are aggregated for each metropolitan market and the headline Aggregate Composite MLS® HPI.
Two-storey single family homes are generally (with the exception of Montreal) the most expensive of the four Benchmark categories, followed by one-storey single family homes, townhouses, and condo apartment units.
From the depths of the economic recession of early 2009 and over 2010, prices in all Benchmark housing categories exhibited similar trends.
However, beginning in early 2011, price gains for one- and two-storey single family homes were bigger than they were for townhouses and condo apartment units, and accelerated faster. The difference in year-over-year price gains between single family homes and the other Benchmark housing categories is now bigger than at any other time since 2005.
As a result, the townhouse and apartment units have remained relatively more affordable than one- and two-storey single family homes since 2005 from the standpoint of price. For this reason, the recent acceleration in townhome prices in all markets tracked by the index may indicate the beginning of a shift in demand away from the increasingly expensive single family sector.
A similar acceleration in prices has yet to materialize for apartment units, which are more affordable than townhouses from a price standpoint. One reason for this could be that as an alternative to expensive single family homes, townhouses are viewed more favourably than apartments by families looking for housing in more centrally located areas. The apartment segment is also better supplied, and recent trends for multiple units under construction suggest that this may remain the case going forward. Another reason might also be the almost daily news media stories about potential price corrections in condo markets.
For additional information, including interactive tables, please go to: www.homepriceindex.ca.
MLS® is a co-operative marketing system used only by Canada’s real estate Boards to ensure maximum exposure of properties listed for sale.
The Canadian Real Estate Association (CREA) is one of Canada’s largest single-industry trade associations, representing more than 100,000 REALTORS® working through more than 100 real estate Boards and Associations.
Further statistical information can be found at http://crea.ca/statistics.