TORONTO — A record number of homes were sold across the country in March, although the Vancouver and Toronto markets saw sales declines from the previous month, the Canadian Real Estate Association said Friday.
March was the first full month for new federal mortgage rules primarily aimed at reducing buyers' appetite for expensive properties in Vancouver and Toronto without dampening interest in other cities, where average prices are lower.
But analysts attributed a 1.8 per cent drop in CREA transactions in Toronto, and 0.3 per cent in Vancouver, to other factors — particularly a short supply of properties for sale and high prices that are straining affordability.
TD economist Warren Kirkland also noted that February sales in Toronto were probably exaggerated as buyers moved to complete purchases before Feb. 15, when larger down payments were required under the new federal rules for properties worth between $500,000 and $1 million.
"We saw a very modest pullback in these markets in March, in line with our expectations, but the rule changes had little effect nationally as they were targeted at a small share of the market," Kirkland wrote in a commentary.
CREA chief economist Gregory Klump went further, saying sales of single-family homes valued at between $500,000 and $1 million set records for March in both B.C.'s Lower Mainland region and in the Greater Toronto Area.
“Meanwhile, sales below a half-a-million dollars, which were not subject to recently tightened mortgage regulations, are being increasingly restrained in these markets by a short supply of listings. If current sales and listings trends persist, price gains may pick up further this spring,” Klump said in CREA's commentary.
The Ottawa-based group said about 60 per cent of all local markets showed an increase in transactions from February, including Edmonton, Calgary, Montreal and Victoria. Nationally, the number of sales was up 1.5 per cent in March compared with February.
The national average price for homes sold through CREA members was $508,567, up 15.7 per cent from a year earlier — with a disproportionate impact from the Toronto and Vancouver areas. Excluding them, the national average price would be $366,950, up 10.4 per cent from March 2015.
The number of properties available for purchase fell 1.4 per cent in March compared with February — mostly because of the Greater Toronto Area and nearby Hamilton-Burlington.
BMO Capital economist Robert Kavcic wrote "it's the same ol' situation" with extreme strength in Toronto and Vancouver, weakness in oil-dependent markets and most other areas "somewhere in between."
"With supply in the two hot markets extremely tight, prices are likely to push even higher through the always important spring selling season. The question is, will policy-makers in B.C. and Ontario do anything to quell the fires?" Kavcic wrote.
Under the new federal rules for mortgage insurance, the first $500,000 of a house price still requires a down payment of at least five per cent but the second $500,000 requires at least a 10 per cent down payment. Properties above $1 million were already ineligible for mortgage insurance under a previous rule change in 2014.
