Sales of existing homes in Canada’s major markets set new annual records in 2004, according to The Canadian Real Estate Association.

Home sales via the Multiple Listing Service in Canada’s major markets continued to return to more normal levels in December 2004. Seasonally adjusted existing-home sales numbered 25,595 units in December, which represents a decline of 1.7 percent compared to the previous month. The number of sales transactions exceeded 25,000 units for the 11th month in a row – their longest monthly run above that level ever.

Housing demand remained unusually strong throughout 2004 and major-market MLS home sales set a new annual record in 2004 at 316,386 units. Annual sales were up 2.7 percent over the previous record set in 2003. It was the sixth consecutive year in which major-market unit sales surpassed all previous annual records. Sales activity surpassed all previous annual records in a number of major markets, including Calgary, Edmonton, Toronto, Hamilton, London, Ottawa and St. John’s.

Low mortgage interest rates also encouraged many existing homeowners to move up, which pushed new listings to 503,217 units. New listings rose by 8.6 percent compared to last year and exceeded the previous record set in 1990 by 2.3 percent. Homes remained in short supply despite the annual increase in listings. A shortage of existing homes available for sale supported new-home construction, which reached its highest level in 17 years.

The shortage of listings also caused the major-market MLS residential average price to reach a new annual record for the fifth year in a row at $245,149 – some 10.1 percent above its previous record set in 2003. Average price shattered all previous records in almost every major market. Seasonally adjusted new listings dropped by 7 percent from the previous month to 39,433 units, causing the resale housing market to tighten. This resulted in a year-over-year average price increase of 11.8 percent – its biggest increase since May 2004. “Although the market tightened late last year, it is expected to become more balanced in 2005,” said CREA’s chief executive officer, Pierre Beauchamp.

“After a year of remarkably strong activity, sales are trending toward more normal levels,” said CREA’s chief economist, Gregory Klump. “Less frenzied sales activity will likely encourage many existing homeowners looking to move up to list their home on the Multiple Listing Service to market their home. An increase in new listings and a return to a more normal pace of activity will cause the resale housing market to become more balanced over 2005. A more balanced market will also keep a lid on average price increases.”

Klump added that average price increases are forecast to moderate beginning in the spring of 2005, since prices surged in April 2004 and have since held fairly steady. Once that surge is no longer a factor in year-over-year comparisons, average price increases over the rest of 2005 will range between three and five percent.

“Because economic growth slowed in the fourth quarter of 2004 and its near-term prospects have become clouded by a higher Canadian dollar, job growth may soon soften. Nonetheless, additional full-time job creation posted during the second half of 2004 will continue to support housing demand in the first half of 2005,” Klump said.

“Job growth in the second half of 2004 largely benefited more mature segments of the workforce. In the absence of renewed job growth for younger workers, move up activity may ease this year due to a decrease in the number of younger buyers looking to buy their first home,” he added. “Although slower job growth could cause housing demand to soften, the continuation of low interest rates and resilient consumer confidence will keep housing activity in good health this year.”

***

What’s your opinion? Send your Letter to the Editor to opinion@inman.com.

Show Comments Hide Comments

Comments

Sign up for Inman’s Morning Headlines
What you need to know to start your day with all the latest industry developments
By submitting your email address, you agree to receive marketing emails from Inman.
Success!
Thank you for subscribing to Morning Headlines.
Back to top
TODAY ONLY: Lock in a full year of monthly digital events to keep you at the top of your game.Register now×
Cyber Week Sale: Get 1 year of Inman Select for $75.SUBSCRIBE×
Log in
If you created your account with Google or Facebook
Don't have an account?
Forgot your password?
No Problem

Simply enter the email address you used to create your account and click "Reset Password". You will receive additional instructions via email.

Forgot your username? If so please contact customer support at (510) 658-9252

Password Reset Confirmation

Password Reset Instructions have been sent to

Subscribe to The Weekender
Get the week's leading headlines delivered straight to your inbox.
Top headlines from around the real estate industry. Breaking news as it happens.
15 stories covering tech, special reports, video and opinion.
Unique features from hacker profiles to portal watch and video interviews.
Unique features from hacker profiles to portal watch and video interviews.
It looks like you’re already a Select Member!
To subscribe to exclusive newsletters, visit your email preferences in the account settings.
Up-to-the-minute news and interviews in your inbox, ticket discounts for Inman events and more
1-Step CheckoutPay with a credit card
By continuing, you agree to Inman’s Terms of Use and Privacy Policy.

You will be charged . Your subscription will automatically renew for on . For more details on our payment terms and how to cancel, click here.

Interested in a group subscription?
Finish setting up your subscription