2008 - A YEAR OF CONTRASTS FOR NORTH AMERICA
Happy New Year! Let's finally say goodbye to 2008; and oh what a year it was! While the whole of the USA housing market reeled under the weight of the mortgage lending crisis, our Canadian Real Estate markets resisted, for the most part, the many negative events, policies and drivers that caused the American "Market Bubble" to burst.
- Canadian lenders had rejected the move toward sub-prime markets and continued to exercise more prudent mortgage policies and qualifications than south of the border.
- We saw most regional markets perform sensibly. Our rate of new home construction was generally far more in tune with national and regional needs than the speculative new construction rates seen in places like Phoenix and Las Vegas, USA.
- Canadians had greater amounts of equity in their homes compared to Americans. The end result was a much healthier and stable home ownership market, see below:
CANADIAN URBAN MARKETS - SLUMP STEEPENS
In urban markets such as Calgary, Edmonton, Vancouver and Toronto home prices had escalated sharply the last several years due to income growth, strong employment and overall economic health; much of it fuelled by the Alberta oil sands and the commodity-rich Canadian West.
- Our manufacturing and export markets started to erode with the weakening American consumption of our goods and services.
- Demand for Canadian oil, commodities and manufactured goods (notably the auto industry) were seriously damaged by low world-wide oil prices, low competitiveness, unemployment growth and the ensuing, gradual erosion of World markets.
- As demand slipped these same Canadian urban home markets started to experience serious price decreases in early 2008 which continued through the year.
- By the end of the third quarter virtually all Canadian housing markets were performing well down from the record setting outputs of 2007, as predicted by CMHC in 2007. The fall worsened in Q4 when the global banking crisis struck.
- Housing, being driven by supply and demand, was directly affected by these pressures; clearly the sign of an economic recession. Consumer confidence was shaken.
HALIFAX MARKET A BRIGHT LIGHT IN 2008
Halifax was indeed one of the bright lights in Canadian real estate in 2008. While many cities experienced huge decreases - not only in the number of homes sold but also the average home price, Halifax performed comparatively well. While sales were down close to -11% by year's end, average home prices managed to grow by 5.7%; some of that growth driven by the price of new home construction.
- CMHC had predicted that our markets would decrease by about 5.1% in 2008.
- This forecast however proved low largely due to the unforeseen severity of Q4 global and national economic pressures.
- Halifax MLS® sales had dropped by 7% after nine months and a total of 10.9% by the end of the fourth quarter.
- However Halifax Region total MLS® performance for 2008 was still the second best year on record after 2007!
- New construction was up 12% versus 2007 for the first nine months of the year, only to slip off by -34% in the very rough fourth quarter finishing down -2% for the year. Multi-family residential starts were affected much more, finishing down -28.5% from last year. Combined residential starts were off -15.8% in Halifax while Nova Scotia as a whole finished on a positive note at 0.2%, virtually unchanged from 2007.
2009 HALIFAX HOUSING FORECAST - CONTINUED HEALTH
All indicators point to the continuation of a comparatively positive market for MLS® re-sales in the Halifax Region. While we may experience price and unit sale decreases in certain areas, they will be minor when compared to many other areas across the country.
- Economists at TD Canada Trust predict the Nova Scotia economy will shrink by -0.2% in 2009 (compared to the National rate of -1.1% and Ontario and Alberta at -1.9%).
- TD Canada Trust predicts that Nova Scotia's will have the best economic performance in the country!
- Economists predict that new economic growth will begin in Q4 of 2009; countering the current recessionary trends that we will experience the first nine months of the year (TD Canada Trust).
- CMHC predicts 6,200 residential unit sales in 2009 for the Halifax Region, down slightly from this year. In spite of this downturn, at that rate it could become one of the best MLS® years on record in the Halifax Region.
- Average home prices are predicted to rise modestly by 3.5% to an average of $235,000.
- This average price is heavily influenced by the rising cost of new home construction; a single detached new home in Halifax will cost $355,000 on average.
- Re-sale prices for certain areas of the Halifax Region may experience price decreases in 2009.
MARKET IMPLICATIONS FOR BUYERS & SELLERS
- Our regional economy will continue to experience recessionary trends until at least Q4 of 2009, when TD Canada Trust Economists predict we will see the start of new growth that will continue through 2010.
- Our Halifax Region real estate market is still a balanced market and fundamentally sound; those who understand the market dynamics will be prepared to prosper.
- As re-sale home sale prices in some areas will continue to slow in 2009 these lower prices mean buying opportunities are on the rise for Investors and first time home buyers.
- Buyers may perceive that they are losing money when selling a home in these market conditions. However a home value is only determined by what motivated Buyers are prepared to spend for a specific home, in a specific market, at a specific time. One has to understand and accept this, then plan accordingly.
- Sellers soon become buyers and must remember they will be buying their next home in the same market conditions in which they sold their home. The return on the sale of their home will be proportionate and complementary to their purchasing power for their next home.
- Good news! Mortgage rates are still low and readily available for folks with good credit. Working with a professional Mortgage Broker will ensure that your credit qualifications are in place before shopping.
WHAT DOES THIS ALL MEAN TO ME?
One has to be very well prepared in order to generate a profitable home sale. Motivated Sellers and Buyers must heed the market indicators in order to have success. Successful, profitable home sales will occur for those who respect these changes and choose to work with an experienced, professional REALTOR®.
Please remember that only three things sell a home - Good Preparation, the Right Price and Good Marketing!
Expert Marketing and full-service support are essential for success. Avoid discount service plans or "For Sale by Owner" do-it-yourself services - doing so may well mean the difference between an efficient sale and a home sale disaster!
- Every neighbourhood and price bracket has competition - be aware of your competition and be ready, then price aggressively to sell ahead of them. The Seller that sells first, amongst "equal competitors" is more likely to extract the highest value! Too much time on the market means eventual price reductions and fewer net dollars in your pocket!
- You can't live in your RRSP! Think about investment strategies where the proven long-term stability of Real Estate puts accrued home equity or retirement savings to work for you. Think about income property buying opportunities for long term investment growth. Call Team Classic today for a professional investment property consultation!
- Remember that prices are slowing down in many neighbourhoods in Metro and surrounding areas; set your expectations realistically and then get to work on a positive selling strategy with your REALTOR®.
- REALTORS® are trained experts and ready to assist. They understand these tougher markets, know how to manage delicate, changing market conditions and are ready to serve!
- Call your REALTOR® today!
