14 June 2019

“Home sales kept improving in May, supported by healthy labour markets and the recent drop in mortgage rates,” – he noted. “Moreover, the markets had extra time to adjust to federal and provincial policy measures, which affected the activity last year sharply”. Although sales are recovering, we can still see prices issues.

The Multiple Listing Service House Price Index fell by 0.2% from April and by 0.6% from a year ago.
During the previous ten years, MLS HPI reported annual increases of 3%-20% and then drove into the negative territory for the previous five months.
The slowdown means CREA’s index is 1.4% lower than its peak seen in December. Nevertheless, there are many differences across the country from large drops in British Columbia to increases in Ontario.
CREA chief economist Gregory Klump believes the mortgage stress test introduced in early 2018 harmed the balance between supply and demand.
May saw the most active home sales since the federal government tightened mortgage rules in January 2018.
“We hope the stress test can be adjusted in order for homebuyers to qualify for mortgage financing faster but without pushing prices higher,” Klump noted.
The average cost of a home sold last month reached $508,000. But in case we exclude Toronto and Vancouver from the calculation, the average price will go down by $111,000, to almost $397,000.