GTA housing market in September 2010

House prices across GTA increased in September 2010 keeping in line with the monthly trend of positive month-over-month change.

2010	Sales	Average Price	YoY (%)	MoM (%)
January	4986	$409,058	19.04%	-0.70%
February	7291	$431,509	19.43%	5.49%
March	10430	$434,696	20.07%	0.74%
April	10898	$437,600	13.47%	0.67%
May	9470	$446,593	12.89%	2.06%
June	8442	$435,034	7.69%	-2.59%
July	6564	$420,482	6.34%	-3.35%
August	6232	$411,012	5.95%	-2.25%
September	6310	$427,329	5.03%	3.97%

The average price for September is about 4.3% below the recent peak in May 2010. The monthly price increase of 4% is quite surprising given the softer sales numbers.

Technical Analysis update – USD & S&P 500

A quick update on the technical picture, highlighting major support and resistance levels.

Currencies are grabbing headlines these days thanks to constant tug-of-war in the race to the bottom. Japan announced quantitative easing today. Last week, the US Fed signalled another round of QE and Bank of England has maintained its QE stance.

With that, here is a technical picture of the US Dollar… the rather ominous death cross on the USD doesn’t bode well for its trading partners and is probably in anticipation of QE2 measures leading to downward dollar spiral.

The recent US dollar sell-off was rather quite fast and the chart now signals a recovery from the oversold conditions…The recent sell-off in USD is good news for equity markets… S&P 500 is breaking above the 1150 mark today… finally, after trying everyday for the last 7 trading sessions.

The 50 day SMA is trending upwards and could cross the 200 SMA before the end of 2010 giving the all clear Golden cross.

One caveat is that the September rally wasn’t accompanied with increase in volume but then again the average volume relative to prior years has been low in 2010.

Measures of Housing Affordability – is Canadian housing affordable?

This research report us by far the easiest to read, understand and perhaps right on the money!

The table below illustrates the different measures of a housing affordability and the pros/cons of each… I have written about the first 2 measures before here and here

It is worthwhile noting that method 4 – Carrying Cost is very similar to the housing affordability index published by Bank of Canada which at current levels is close to the affordable range – see chart below.

(Note: this chart is inverted so a higher point on the chart means more affordable and lower means less affordable)

For the technically inclined here is the equation for the above chart:

c = monthly payment on mortgage rate r

r = blended monthly mortgage rate reflecting fixed & variable rates

N = number of payments (300 or 25 yrs)

M0 = 0.95 x P0

P0 = value of average home

CIBC and RBC both recently published their housing reports and warned of overvaluation. I haven’t paid attention to the prior forecasts by the big banks here but I reckon some of them have been sounding the alarm bells since mid 2006-2007.

Secondly, none of these housing measures take account of “animal spirits” or simply, emotion! Let’s not forget that human emotions (along with myriad other factors) played a big role in the housing bubble down south… and housing is more often than not a very emotional purchase. Until consumers realize and understand, it is usually too late and the bubble has burst or the situation is out of hand.

Next, I’ll add a post on the share of housing to Canada’s economy… there was some chatter based on July’s GDP numbers