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A tale of two cities: Canada’s big banks respond to CREA’s new housing report

August 18, 2015 - Updated: August 18, 2015

A dip in Canadian existing home sales in July doesn’t tell the whole story when it comes to the current state of the housing market, a recent CREA report suggests.

The report, published last Friday, found home sales down 0.4 per cent in July as compared to June, but noted that sales levels over the past three months are still the highest they’ve been in more than five years.

“National sales activity remains solid, fuelled by strength in British Columbia and the Greater Toronto Area, where listings are in short supply or trending that way,” said CREA President Pauline Aunger in the report, which was based on home sales processed through MLS systems nationwide.

Overall, Canadian home sales last month stood 3.4 per cent higher than they were in July 2014.

Here’s a rundown of how some of the nation’s biggest banks reacted to the CREA report.

TD Bank

  • TD economist Dina Ignjatovic wrote that the Toronto and Vancouver markets aren’t free of risks, but that “they are unlikely to intensify,” a view TD recently laid out in another report.
  • TD points to the fact that when compared to last year’s numbers, average prices in Toronto and Vancouver are higher, signaling the nation’s hottest real estate markets are still going strong.
  • Although national home prices were up 8.9 per cent this July over last, TD noted that when Greater Toronto and Greater Vancouver are removed from the equation that number falls to 4.1 per cent up from a year ago.
  • As some potential home buyers are priced out and pent-up demand subsides, TD expects price growth to slow down over the next year and a half with a projected increase of two to three per cent through 2016.

Royal Bank of Canada

  • Laura Cooper, an RBC economist, wrote that July’s sales-to-new listings ratio stayed within the high end of the range that usually indicates market balance and leads to upwards pressure on prices.
  • As well, RBC found it “encouraging” that some cities impacted by low oil prices like Calgary and Edmonton saw increased listings “pointing to some stabilization in these markets.”
  • Although these oil-driven markets are still “vulnerable,” RBC forecasts their gradual recovery as 2016 approaches.
  • Ultimately, RBC predicts Canadian home resales will climb further to a forecasted increase of five per cent, or 505,400 units in 2015.

Bank of Montreal

  • As Toronto and Vancouver’s markets continue to outperform the rest of the country, BMO’s senior economist Robert Kavcic wrote that “the big picture remains little changed in Canada’s housing market.”
  • Of the 26 Canadian markets surveyed, half saw an increase in sales compared to year-ago numbers while the other half saw a decrease, “highlighting the varying nature of housing market performance across the country.”
  • Meanwhile, BMO questioned the CMHC’s decision to call Toronto a high-risk market while giving Vancouver a low-risk rating because “both Vancouver’s sales-to-new listings ratio and home price growth are higher and accelerating faster.”
  • BMO said the reasons given for Vancouver’s low-risk rating – like a limited availability of land, a growing population, and buyers with extra cash to invest in property – apply to Toronto, too.


  • Scotiabank economist Adrienne Warren wrote that Canada’s low borrowing costs – which recently dipped even further down with the Bank of Canada’s recent key interest rate cut – will likely persist and “maintain a healthy level of sales in the coming months.”
  • That said, Warren notes consumer confidence and home prices may wane if Canadian and global economic conditions don’t improve.

Tagged with: toronto real estate crea cmhc home prices market balance
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