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BMO Financial Group

November 25, 2011 11:40 ET

Low Mortgage Rates Supporting Balanced Canadian Home Sales-BMO Economics

- Regina now the national sales growth leader, up 24.8 per cent year-over-year

- Seasonally-adjusted increases in Western Canada, Toronto and Montreal

- Condos outperforming detached homes in Toronto

TORONTO, ONTARIO--(Marketwire - Nov. 25, 2011) - Canada's housing market continues to look balanced, with Regina leading the way and red hot Vancouver beginning to cool, according to a commentary from BMO Capital Markets Economics on the most recent national resale housing activity numbers.

"Low mortgage rates are offsetting weaker consumer confidence and cooling job growth," said Robert Kavcic, Economist, BMO Capital Markets. "Relatively stable sales and price trends are likely in the year ahead."

Mr. Kavcic noted that sales gains were relatively broad based in October-Western Canada, Toronto and Montreal all saw seasonally-adjusted increases. "Regina is now the sales growth leader, up 24.8 per cent year-over-year, while Calgary's market continues to firm up, with sales running 15.2 per cent above year-ago levels."

In Vancouver, despite an increase in October, sales were 1 per cent below year-ago levels and prices have mellowed to an 8.5 per cent year-over-year pace. "After peaking above $800,000 in June, seasonally-adjusted prices in Canada's most expensive city have drifted down to $758,000 - partly due to fewer high-end sales - and B.C. is looking like more of a buyers' market," stated Mr. Kavcic.

Toronto continues to see solid growth, with sales up 14.3 per cent year-over-year and prices chugging along at a 7.8 per cent year-over-year clip. "Condo sales and prices have outperformed detached properties somewhat in the past year, up 19 per cent year-over-year and 9 per cent year-over-year, respectively," said Mr. Kavcic. "Overall, Ontario remains a relatively tight market, with the sales-to-new listings ratio sitting above historical norms at 57.4 per cent."

"These numbers show that Canada's real estate market remains resilient with opportunities for prospective buyers," said Katie Archdekin, Head of Mortgage Products, BMO Bank of Montreal. "That said, Canadians looking to buy or sell their home still need to ensure they stay realistic about what they can afford. One way to do this is by stress testing your budget using a mortgage payment based on a higher interest rate to help avoid any surprises in the future should market conditions change."

Ms. Archdekin added that Canadians should also consider a shorter amortization period in order to become mortgage free faster. For instance, BMO offers a low 5 year-fixed rate mortgage with a maximum 25-year amortization at 3.69 per cent.

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