Home prices in Vancouver are almost back to where they were before the financial crisis hit. Prices in September rose 1.5% from August, according to this week’s Teranet-National Bank House Price Index.
It was “the smallest increase since the April bottom, but still substantial,” notes report author Marc Pinsonneault, senior economist, economic and strategy team, National Bank Financial Group, in a release. “If October shows the same rise, Vancouver prices will be back to their peak of August 2008.”
Year-over-year, the index for Vancouver home prices was down 1% in September.
The National Composite index, which brings together resale numbers from six major cities, was up 1.3% in September from the month before. The report’s author notes this was in keeping with more homes being sold and fewer coming on to the market thus far in 2009. (The index utilizes a repeat sales methodology, studying homes that have sold at least twice, measuring the increase or decrease of the property value in the period between the sales in a linear fashion.)
For the first time in three months, prices were down in Montreal, which showed a month-on-month drop of 0.2%. The other cities that make up the National Composite Index showed increases in September: 2.1% in Toronto, 1.1% in Calgary, 0.9% in Ottawa and 0.6% in Halifax.
However, nationally, prices in September still showed a decline from a year earlier. The National Index fell 1.8% year-over-year in September.
“It was the 10th consecutive 12-month decline, but the 12-month decline has been diminishing steadily since it peaked at 6.9% in May,” Mr. Pinsonneault notes. “September was the fifth straight month in which the index reading for Canada as a whole was up from the month before.”
Alongside the year-over-year decline in Vancouver, a 5.4% fall in Calgary and a 5.1% drop in Toronto home prices indices helped to weigh down the national figure. However, the three other cities that make up the index all saw year-over-year rises: Ottawa (3.4%), Montreal (2.9%) and Halifax (1.7%).
There were also improvements visible in house prices south of the border. The seasonally adjusted numbers for the S&P Case-Shiller house price index, which also measures resales, rose for the fourth straight month, up 0.3% in September for the 20-city composite index and up 0.4% from August for the 10-city index.
“Based on two popular measures, Case-Shiller and FHFA, house prices have stopped falling in recent months, as stronger demand has normalized the months’ supply of unsold homes,” notes Sal Guatieri, senior economist, BMO Capital Markets. “This may be cold comfort to the one in four borrowers who are underwater on their mortgage, and the over seven million in arrears or in foreclosure, but at least it will help stem the bleeding.”
The 20-city index is still down 9.4% on a year ago and the 10-city index is off 8.5%.
Homes sales, both new and existing, show signs of life.
Existing home sales in the U.S. leapt 10.1% to a seasonally adjusted annual rate of 6.10 million units in October from a downwardly revised pace of 5.54 million in September, according to the National Association of Realtors. This is a 23.5% increase on October last year and the highest level of activity for two and a half years.
“The big upside surprise in October existing home sales goes a long way to countering recent disappointing figures on mortgage applications and housing starts,” Mr. Guatieri says.
Rounding off the more positive numbers this week, U.S. new home sales rose 6.2% in October from a month earlier to reach 430,000 units, the highest level in a year and 5.1% up on October last year. (New home sales are more indicative of strengthening economic activity than are resales.)
“On the surface, one would have assumed that the surge in sales activity was induced by the rush of first-time home buyers trying to get ahead of the originally scheduled end of the first-time homebuyers’ tax credit at the end of October,” notes Millan Mulraine, economics strategist at TD Securities. “However, given the lopsided regional dimension to the increase in home sales, we are not entirely convinced that this was the only story.
“Interestingly, sales were only higher in the South, where activity surged a whopping 23.2% month over month; sales in the Midwest were sharply lower (-20%), while sales activity in the West and Northeast dropped 5.1% month over month.”