Home prices edge up in most markets, Royal LePage says

Average home prices were slightly higher in Canada during the first quarter, according to the latest survey from realtor Royal LePage. The country's largest real estate company says it doesn't see signs of broad market price declines and doesn't expect any.
Home prices are still rising in most markets in Canada, according to the latest market survey from realtor Royal LePage. But there are unmistakeable signs that the market is well into a cooling phase. (Reuters)

Average home prices were slightly higher in Canada during the first quarter, according to the latest survey from realtor Royal LePage.

Royal LePage said the average price for a standard two-storey detached home in the first quarter of this year edged up 2.2 per cent over the same quarter last year to $407,044. The average detached bungalow was worth $364,857 in the January to March quarter — up 2.4 per cent. The average condo in its survey was worth $246,071 — up 1.2 per cent over the year.

Among 16 major markets in Canada, the country's largest real estate company found that prices for all three major types of housing increased year-over-year and quarter-over-quarter in 13 markets. Vancouver, Victoria, and Saint John, N.B., saw price declines in all housing types.

Royal LePage CEO Phil Soper acknowledges that there are some housing watchers who are anticipating big price declines in the Canadian market. But he says his firm hasn't seen that happen yet, and doesn't expect to.

"While some have spoken loudly about impending market volatility and dramatic downward pressure on home prices, we are simply not seeing evidence of this," he said.

"The current environment is very supportive for housing. Those waiting for big declines in home prices will likely be disappointed."

Soper says the housing market is undergoing a bit of an anomaly at the moment.

"The combination of very low mortgage rates and flat home prices, against a background of general economic improvement across the nation, is not something we've seen before," Soper said.

"Typically one of these variables is moving hard in an opposite direction."

Cooling market

Sales data released by the Canadian Real Estate Association last month showed more evidence of downward price pressures. CREA's February  numbers, which are based on actual MLS sales, showed year-over-year price declines in seven of 26 markets surveyed, with average prices down by 1.0 per cent overall.

There is broad agreement that the Canadian housing market is cooling. The Teranet-National Bank house price index recorded its sixth straight month-to-month decline in February. CREA data also showed a double-digit drop in sales activity in most markets, with February sales down 11.6 per cent nationally from a year earlier.

The Toronto and Vancouver real estate boards both released sales figures this week for March. Toronto's board said sales were off 17 per cent from a year ago, while Vancouver saw 18.3 per cent fewer sales. Average selling prices were up 3.8 per cent in Toronto from last March, but Vancouver said the MLS home price index composite price was down 3.9 per cent year-over-year.

Some economists are calling for average national prices to drop by about 10 per cent over the next several years. The U.S. ratings agency, Fitch, released a report last month that said Canadian housing prices were overvalued by about 20 per cent. But over the next several years, it said the combination of inflation and existing price momentum would mean that "the actual observed decline in prices could be as low as 10 per cent."

Last year, the federal government tightened mortgage rules to make it more difficult for less-qualified buyers to obtain an insured mortgage. 

Royal LePage Q1 2013 home price survey - 2-storey detached houses

City Avg. price Change from Q1/2012
St. John's $387,667 +10.6%
Halifax $319,833 +4.3%
Charlottetown $205,000 +2.5%
Saint John, N.B. $275,000 -6.2%
Montreal $392,929 +1.4%
Toronto $671,252 +4.0%
Winnipeg $319,409 +3.3%
Regina $337,000 +12.7%
Calgary $439,800 +5.2%
Vancouver $1,116,250 -5.6%
Victoria $452,115 -1.5%
NATIONAL $407,044 +2.2%