March was another slow month for real estate. In terms of sales, it is the slowest March in more than 30 years. The sales number is 46.3% below the 10-year March average.
The number of newly listed homes was up 11.2% compared to March of last year and 27.2% higher than February of this year. The total number of homes listed is 52.4% higher than March 2018 and 10.2% higher than last month. After waiting through most of the winter, the sellers are coming to grips with the lower prices and are deciding to sell their property anyways. With the higher inventory and a surge of new listings, I see prices going down further.
The sales-to-active listings ratios are very similar to last month. For detached homes it is 9.4%. For attached homes it is 15.9% and 17.2% for apartments. Here are the corresponding one-month benchmark price decreases in the same order: 0.4%, 0.7% and 0.5%. No signs things are changing here.
However, the Federal government announced two incentives for first time home buyers in the budget. Hard to say how much impact each of these will have, but it should boost demand a little at least. One is to allow an increase in the amount of money you can withdraw from your RRSP for your first home purchase. It went up from $25,000 to $35,000. But remember the time period required to pay it all back is still 15 years. When this comes into effect is not known.
The second incentive involves the government giving an interest free loan. Eligible buyers will be offered a 10% down payment loan on a new home or 5% down payment loan on an existing home. The household income cannot exceed $120,000. Also, the first-time home buyer must have at least 5% down payment themselves. There are a lot of details that has yet to be clarified for this program. The government plans to have this roll out by September.
All economic indicators continue to be weak for Canada. The positive side is that the interest rate should stay low. In fact, most experts expect the Bank of Canada to not raise rates this year. TD went one better and predicted the rate will be steady till the end of 2020! Hopefully, the low rate environment and the new incentives will liven up the market a bit.
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