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Blog by Kevin Wong

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Canada’s Housing Market Finishes 2013 on Solid Footing

Canada’s housing market appears to have ended 2013 on a relatively strong note, with a number of major cities now reporting year-over-year sales gains for December and substantial increases in average selling prices.

The market, which was in the midst of a deep and lengthy sales slump at the outset of 2013, surprised economists during the latter half of the year with the strength of its rebound. A few major cities have now released last month’s data, and the figures point to solid sales and price gains. But the full picture won’t be known until the Canadian Real Estate Association discloses the national numbers later this month. Smaller cities and towns have not seen the same sales momentum as the country’s largest cities of late.

Toronto’s real estate board said Monday that sales of existing homes in and around the city last month were almost 14-per-cent higher than a year earlier. The average price of homes that sold over the Multiple Listing Service during the month was $520,398, up by 8.9 per cent from the average selling price in December 2012.

The Calgary area saw an 8-per-cent year-over-year increase in sales last month. The benchmark price of a single family home was $472,200, up 8.6 per cent from a year earlier.

Vancouver’s housing market, which soared to become the most overvalued in the country and then underwent the steepest sales correction beginning in the spring of 2012, saw a 71-per-cent year-over-year gain in sales in December. Vancouver, like most of the country, was in the midst of the slump in December of 2012, which lends a hand to the year-over-year growth comparisons. But last month’s sales were still 8.1 per cent above the 10-year average for the month.

The MLS Home Price Index benchmark for all types of properties in the Vancouver area came in at $603,400, up 2.1 per cent from a year earlier. Economists generally still point to Vancouver as the most overvalued and least affordable market in the country.

December’s sales level in the Vancouver area was down 15.9 per cent from November, with December traditionally being a slower sales month in much of the country. While the number of existing homes that sold in Greater Vancouver during all of 2013 came in 14-per-cent higher than 2012, it was 11.9-per-cent lower than 2011 marked the third-lowest annual total for the area in the last decade.

Sales in the Calgary area during all of 2013 were 11-per-cent higher than the prior year.

“Sales growth exceeded expectations in 2013, pushing above long-term trends,” the Calgary Real Estate Board’s chief economist, Ann-Marie Lurie, stated in a press release.

“In 2013, both sales activity and prices (in Calgary) are expected to improve, but not at the same pace recorded this year,” she stated.

Toronto’s sales for all of 2013 came in about 2-per-cent higher than 2012.

“After a slow start to the year, sales growth accelerated to a brisk pace in the second half of 2013, Dianne Usher, president of the Toronto Real Estate Board, stated. “Despite the inclement weather in December, we finished the year with a respectable gain in transactions compared to 2012.”

The average price of all homes that sold over the MLS in the Toronto area during 2013 was $523,036, up 5.2 per cent from the average for all of 2012.

Opinions on the fate of Canada’s housing market continue to diverge. Last month economists at Deutsche Bank issued a report saying they believe house prices in this country are 60 per cent too high. In a recent interview with CTV Finance Minister Jim Flaherty reiterated his belief that the market is headed for a soft-landing.