CANADIAN REAL ESTATE ASSOCIATION:
"Canadian homebuyers should not expect to see the kind of price correction that's underway in the United States"
The number of properties listed via the Multiple Listing Systems of real estate boards in Canada declined in the third quarter of 2008, according to statistics released by The Canadian Real Estate Association (CREA). With new listings down from their peak the previous quarter, the balance of sales-to-new-listings tightened on a quarter-over-quarter basis for the first time since early 2007. The average sale price of residential properties sold via the MLS® declined by 5.4 per cent compared to where it stood in the same month last year.
National new MLS residential listings numbered 230,107 units on a seasonally adjusted basis in the third quarter of 2008. This is 3.1 per cent below the highest level on record, set the previous quarter. New listings eased most in Alberta and British Columbia.
The balance between sales and new listings has stabilized in many provinces in recent months. This trend stands out most in Alberta, where a sharp drop in new listings and rising sales activity has firmed up the resale housing market considerably since the beginning of the year.
New listings remain most elevated relative to sales activity in British Columbia and Saskatchewan, making these the most balanced provincial markets in the country. By contrast, the balance of supply and demand remains tightest in Manitoba and Newfoundland & Labrador due to strong sales activity.
Seasonally adjusted national MLS® residential home sales activity eased by two per cent on a quarter-over-quarter basis to 113,905 units in the third quarter of 2008. The small decline in activity reflects fewer transactions in British Columbia, which more than offset a rebound in activity in Alberta.
Seasonally adjusted sales activity rose on a month-over-month basis in the majority of local markets in September 2008. On a seasonally adjusted basis, some 38,182 homes traded hand via the MLS® systems of real estate boards in Canada in September. That's an increase of 2.8 per cent from levels recorded in August. The increase may reflect an influx of buyers prior to the elimination of mortgage default insurance availability for those with less than a five per cent down payment.
Unadjusted (actual) sales activity was down 2.4 per cent in September 2008 compared to the same month last year. Activity is up in many areas where homes are affordably priced, while the largest year-over-year declines in activity are in some of the Canada's priciest housing markets.
More than 65 per cent of real estate boards have reported year-over-year average price gains in September 2008. Declining sales activity in pricier markets continues to weigh on the national MLS® residential average price.
Lower activity in some of Canada's pricier markets has weighed on the overall average price trend this year due to a decline in their weight in the national average price calculation compared to last year. The price trend is similar but less dramatic for the weighted average price, in which the proportion of privately owned housing stock in each province is taken into account. The weighted average price eased by a more muted 1.0 per cent year-over-year in September 2008.
Seasonally adjusted dollar volume for MLS® sales totaled $34 billion in the third quarter of 2008, down 5.4 per cent from levels recorded in the second quarter. Lower sales activity in British Columbia accounted for most of the quarterly decline in national MLS® dollar value.
"Price declines in some of Canada's more expensive housing markets will outweigh further price gains in other markets and continue pulling the national average price lower over the rest of the year and into 2009," said CREA Chief Economist Gregory Klump. "Slowing global economic growth will continue weighing on Canadian exports and economic growth. Lower interest rates and a Canada-U.S. currency exchange rate will help the Canadian economy avoid entering a technical economic recession. That said, economic growth is likely to stall so that it feels like one in all but name."
"The Canadian housing market and pricing environment will continue cooling so long as consumer sentiment about the economy and making major purchases is grounded by headline news. However, Canadian home sellers are under no financial duress to sell, and many may take their home off the market if it remains unsold once the listing expires. The resulting decline in listings limits the extent to which the balance of sales and new listings will realign. Canadian homebuyers should not expect to see the kind of price correction that's underway in the United States. Unlike Canada, the U.S. market has a massive oversupply of housing due to financial distress."
Source: Canadian Real Estate Association
For more information regarding the real estate market in Toronto, North York, Armour Heights, the Cricket Club, Hogg's Hollow or Bathurst Manor, please feel free to call Liz Gordon, Sutton Group Admiral Realty, Brokerage, at (416) 739-7200, or email at egordon@trebnet.com
