Average Canadian house price shot up 3.8% to $268,215 in February: CREA

TORONTO (CP) - The average price of homes listed for sale in Canada shot up 3.8 per cent to a new record of $268,215 in February, from $258,274 in January, the Canadian Real Estate Association said Thursday.

Measured on a year-over-year basis, the average price of houses listed on the Multiple Listing Service jumped 12.3 per cent, from what was a record high level in February 2005. But Gregory Klump, the real estate association's chief economist, echoed recent warnings from his colleagues, saying the housing market is expected to cool this year.

"Although the national resale housing market has so far shown few signs of slowing, rising interest rates and home prices are expected to gradually slow resale housing market activity this year."

Seasonally adjusted dollar volume of sales totalled $11.2 billion in February, an increase of 1.5 per cent from January and a new high. British Columbia, Alberta, and Ontario led the pack, CREA said.

"The resale housing market remains tightest in Western Canada," Klump said.

"A shortage of homes available for sale and the continuation of strong resale housing demand in Western Canada are resulting in substantial price increases there," he said.

Across the country, a small decline in the number of homes for sale and a small increase in the number of houses sold caused the resale housing market to tighten slightly. But that does not explain the large price hikes, the association said.

On a seasonally-adjusted basis, 41,555 homes were sold in February, up two-tenths of a percentage point from January. Increasing sales activity in Ontario and Quebec more than offset a decline in British Columbia.

The number of Canadian homes sold during the first two months of the year across the country is 10.7 per cent ahead of the same period in 2005.

New listings, meanwhile, fell by one half of a percentage point from January to 64,382 in February.

The association's statistics come one day after a Royal Bank of Canada (TSX:RY) report found that Canadians spent a higher portion of their income on housing in the final three months of 2005.

The RBC report, which looked at the proportion of income needed to service the cost of owning a home, said that high home prices and utility costs have pushed affordability to its worst level in a decade.

Economists expect that rising wages and steady interest rates will improve the situation within the next year.

Home, sweet home. is retiree mantra

About 17% of Canadian homeowners say their homes will be their primary source of retirement income, according to a survey released last week.

The survey by RBC Royal Bank also found that 32% of respondents 55 and over hold a mortgage, and suggested that Canadians are increasingly comfortable with housing debt following the rise in house prices over the last few years.

"There's definately a trend amoung aging baby boomers that they are very comfortable in holding debt later in their lives, and so I think a reverse-mortgage, or at least everaging the equity in their homes, is something they're comfortable with," Catherine Adams, RBC's vice=president of home equity financing, said in an interview.

Another recent study by the bank found that 48% of Canadians do not believe it's necessary to retire debt free, she noted.

Surveys are a popular promotional tool for Canada's banks and mutual fund companies. Many use public opinion polls to guage demand for financial products and services, promote specific brand names and learn more about the public's financial management habits.

Royal Bank is Canada's biggest residental mortgage lender, with more than $91 billion in loans outstanding at the end of its 2005 fiscal year.

The survey also found that 60% of Canadian homeowners currently hold a mortgage, up from 56% in 2000.

The average amount owing is $95,840.

Nearly 40% of mortgage holders have borrowed against the equity in their homes.

The increased borrowing comes as the average homeowner estimates that their home has gone up 18% in value over the last two years, according to the survey.

The Canadian Press.

Alberta NO. 1 for wealth

Our family incomes finally pass those of Ontario

EDMONTON - A high-end fashion retailer offering a new line of jeans with prices topping $450 quickly sold out more than 60 pairs and now has customers on a waiting list.

A Porsche dealership coming off a record-breaking 100-vehicle year expects sales to keep climbing in 2006 as more Edmontonians buy their dream sports car -- $64,100 and up -- to celebrate their success.

And at an upscale electronics shop, big plasma TVs starting at $6,000 are flying off the shelves.

All this points to a much bigger trend highlighted by Statistics Canada in its 2004 Income of Canadians survey released Thursday: Albertans are richer than people in any other province.

For the first time, Alberta families of two or more recorded the highest median after-tax income of any province, passing Ontario. Half of Alberta families earned $61,800 or more in 2004 after taxes.

Nationally, the median family income after taxes was $54,100.

"It's not surprising, given you've seen some really strong growth in the Alberta economy as a result of the energy boom," Carl Gomez, an economist with TD Bank Financial Group, said.

"There's some very strong wage growth, very strong income growth and where that's being reflected is if you look at the retail sales numbers in Alberta, they lead the country as well."

The median after-tax income of Alberta families has climbed fairly steadily over the past decade. It was $48,300 in 1995 and $54,600 by 2000. In 2004, a climb over the $61,000-threshold marked a four per cent increase over 2003. In contrast, Statistics Canada noted, New Brunswick families also experienced a four- per-cent increase in their after-tax income compared to 2003. But that increase brought their median only to $46,400.

Single Canadians have not fared as well as families. Their median after-tax income was $21,300. But again, singles in Alberta did better than any other province with a median after-tax income of $23,200.

While the income survey is more than a year old, high-end retailers say that the buying trends that started a couple of years ago are even more obvious today. Albertans, even Edmontonians who had a reputation for being more frugal than Calgarians, are spending more money on luxuries. It's visible in the increasing number of Rolexes on wrists, expensive cars on the road and homes wired for sound. At Holt Renfrew, which specializes in designer fashion, the store continues to up its luxury offerings. It added a Tiffany & Co. boutique in February and designer-label children's wear. Its Louis Vuitton boutique will expand this summer and Armani cosmetics will be launched in the fall. "Price used to be much more of an issue here," said Holt Renfrew general manager Brahm Kornbluth.

At Norden Autohaus, the city's only Porsche dealership, sales manager Randy Miyagishima expects to sell 120 Porsche products this year ranging from SUVs to sports cars. For most customers, the purchase is something to reward themselves with when they've achieved their definition of financial success. However, Miyagishima said, Edmonton buyers remain modest about the status symbol.

"It's an interesting thing when you compare Edmonton to Calgary because the money in Edmonton is a lot quieter money and people are still concerned about what their employees or their customers think," he said.

For those who can't afford a Porsche, there are alternatives. David Groleau, sales manager at Argyll Motor Sports Ltd. (Edmonton), said most customers still can't afford to plunk down the ticket price for motorcycles or all-terrain vehicles. But they are opting to take on monthly payments, typically in the $200-a month range.

MEDIAN FAMILY INCOME- Median is the half-way point in a series of numbers. In 2004, Alberta families with two or more people had a median after-tax income of $61,800. That means half the families had income higher than that, while half earned less.

© The Edmonton Journal 2006