CBC News
Fewer homes were listed for sale on the Canadian Real Estate Associations multiple listing service in the third quarter, as the market cooled in Alberta and British Columbia, according to figures released Thursday.
Third-quarter MLS listings fell to 230,107 on a seasonally adjusted basis, a 3.1% decline from the record-setting level in the previous quarter.
The value of MLS sales in the same period was $34 billion a drop of 5.4% from second quarter.
Calvin Lindberg, CREA president, noted the easing Canadian market differs from the U.S.
U.S. prices were driven up by speculative investment and relaxed lending standards. Canadian resale housing prices climbed due to strong job growth and low interest rates, especially in Alberta and B.C., Lindberg said in a statement.
We did not have the relaxed lending standards offered to homebuyers in the U.S.
CREA Chief Economist Gregory Klump said Canadian consumers should not expect to see a major price correction as in the U.S., suggesting that Canadians are not under particular duress to sell their homes.
Lower interest rates and a Canada-U.S. currency exchange rate will help support Canadian economic growth, he said. However, whether Canada avoids a technical recession, economic growth is likely to stall, so that it feels like one.
Many may take their home off the market if it remains unsold when the listing expires, he said. The resulting decline in listings limits the extent to which the resale housing market balance will realign.
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In August, the Canadian Real Estate Association forecast a 2.6 per cent increase in national housing prices for 2008 and another 2.1 per cent next year. Yesterday, CREA released a new forecast, calling for a 0.6 per cent slide this year and a further 2.1 per cent drop in 2009.
"This is in line with the downward revisions of the Canadian economic and job growth forecasts," CREA chief economist Gregory Klump said yesterday. A bigger-than-expected price depreciation and lower sales in British Columbia are expected to pull down the national average, Klump added.
The downgrade comes on the heels of another revision by Canada Mortgage and Housing Corp. last week.
The federal housing agency said Ontario housing starts were originally forecast to hit 65,000 units next year, but revised that down to 62,000. Existing home sales, forecast to be 178,000 in 2009, were downgraded to 173,000.
"With a weak domestic economy and tighter lending conditions, we expect Canadian housing activity to slow notably further in the future," said Millan Mulraine, an economics strategist with TD Securities.
Meanwhile, in a separate release yesterday, the CMHC said Canadian residential construction declined by 3.1 per cent in October compared with a month earlier.
Starts came in at 211,800 annualized units, greater than the expected 200,000 units, thanks to remaining strength in the condominium sector.
"The strongest level of condominium apartment construction on record has resulted in a substantial jump in total new home construction this year," said Jason Mercer, senior market analyst for the federal housing authority.
This is particularly true in the Toronto area, where year-to-date starts are up by almost a third compared with the same time last year.
Starts are a lagging indicator. Most of the starts today are from sales of condos that occurred a year or two ago, and that trend isn't expected to continue as strongly in the future. "New home and condo sales have slowed in the last couple of months from the record highs of the past couple of years," said Ontario Home Builders' president Frank Giannone. Last week, the Toronto Real Estate Board reported a 35 per cent decline in year-over-year sales in October.
The average price of an existing home in Toronto is now $376,896, down 13 per cent from last October's average of $434,022. The impact was more muted in the 905 suburbs, where the average price of a home is down by 8 per cent to $336,049.
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Contact Peter Bhandari For More Info- 416-827-2340
Several pricey markets drag averages down in September
The Canadian Real Estate Association says the falling average sale price nationally is a reflection of a decline in sales in the highest-priced markets, noting that prices are still rising in a majority of markets. The Ottawa-based group, which represents more than 100 boards across the country, said the average sale price of an existing home, sold through the MLS system, fell 5.4 per cent in September to $289,916 from $306,347 a year earlier. But it said prices are actually up in 65 per cent of the boards it represents.
"The recent price declines in the Canadian housing market reflect lower activity in some of Canada's priciest housing markets that had posted large price increases. Price declines in the U.S. reflect a massive oversupply of housing due to soaring foreclosures and overbuilding," said Calvin Lindberg, the president of CREA.
Vancouver, the most expensive market in the country, has had year-over-year sales declines in the 40-per-cent range, and many real estate analysts suggest the results are skewing the national number. Some of the price trends by province included a 7.4-per-cent decline for British Columbia to an average of $412,149, and a five-per-cent fall in Alberta to $342,052.
On the other hand, the average sale price in Saskatchewan was up 23.2 per cent to $229,381, and Newfoundland and Labrador's going rate for housing rose 17.5 per cent to $178,062.
B.C.'s average price was no doubt influenced by a 33.6-per cent-decline in sales in September, compared to a year earlier, to 7,688. In Newfoundland, sales were up 26.2 per cent to 431.
CREA said the supply of new houses reaching the market is also shrinking. It said there were 230,107 new listings in the third quarter on a seasonally adjusted basis, down 3.1 per cent from the previous quarter, which was the highest on record.
Home Sales
September home sales price movements by percentage (from September 2007):
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