izomax
New Member
The time has come.
So much for those who say price will never fall.
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http://www.reportonbusiness.com/servlet/story/RTGAM.20080814.wmls0814/BNStory/Business/home
Globe and Mail
August 14, 2008 at 5:25 PM EDT
Ontario will likely follow major cities in Western Canada into a house price decline, but while its slide should be shallower it will also be more worrisome due to the province's weaker outlook, an economist says.
Last month the average price of a resale home in Canada fell by 3.6 per cent, continuing a decline that started in June when prices lost ground for the first time in more than nine years, according to data released Thursday by the Canadian Real Estate Association (CREA).
So far the drop in average home values has mainly radiated from Calgary and Edmonton, where prices fell by 7.8 per cent and 5.3 per cent respectively in July from the year before.
But it wouldn't be surprising to see prices in these and other large Western cities slump by as much as 20 per cent in the near term, in a correction of markets that got ahead of themselves, said Benjamin Tal, senior economist at CIBC World Markets Inc.
“You don't have to be an economist to predict that prices will go down in Saskatoon and Regina, but in terms of the fundamentals, all the pieces there are still fine – a healthy economy, energy boom and rising food prices,†Mr. Tal said. “Other than people who bought last year thinking prices would keep doubling over breakfast, most people there [the Western provinces] should still end up ahead.â€
More concerning is the softening real estate market in Ontario, he added.
Hard hit by the auto sector slump, Windsor-Essex became the first major market in the province to post year-over-year house price declines. Now Toronto also appears headed for a drop, with prices rising a scant 1.5 per cent last month, while sales fell by 12.4 per cent and new listings surged by 17.8 per cent.
“The concern here is that the potential decline in Ontario would not reflect overshooting, but instead the further slowing of an economy that is probably already in recession,†Mr. Tal said.
“While I would expect a more modest drop in prices of about 5 per cent in Ontario and the GTA, prices have not risen as much here and the decline would be more painful.â€
In July the average price of an existing home fell by 3.6 per cent from the year before, building on a 0.4 per cent drop in June, according to CREA.
The average price of a Canadian resale home stood at $327,020 at the end of last month, compared with $339,277 in July, 2007.
A sharp drop in consumer sentiment helped push sales activity down 10.9 per cent from the year before, and the latest figures drive home the impact that excess supply is having on prices, Doug Porter, deputy chief economist at BMO Nesbitt Burns Inc., said in a research note.
“While we still doubt that Canada will stage an instant replay of the trauma in U.S. markets, even a mild version would be bad news,†Mr. Porter said.
Listings also remained near record levels in July, with 50,782 properties listed for sale in major markets in July. That's the second highest level on record, and down a slight 0.2 per cent from the peak hit in May.
A newcomer to the list of markets experiencing price declines was Greater Vancouver, which had a 1 per cent year-over-year to an average of $575,256 in July.
While nationwide sales levels have been edging up slightly since bottoming out in February, activity stands below the levels hit in record-breaking 2007. Sales rose by 0.1 per cent month-over-month in July to 26,033 units on a seasonally adjusted basis.
Actual sales however, at 27,889 units, were down 10.9 per cent from the year before, which was the strongest July on record.
Sales fell in Montreal, Toronto, Victoria and Ottawa compared with the month before, but rose from June levels in Edmonton, Calgary, St. John's, Saskatoon, Halifax and London, Ont. In Winnipeg, sales in July broke previous monthly records.
Listings reached their highest level on record in the country's largest market, Toronto. Listings were also near peak levels in Saskatoon, Montreal, Gatineau, Trois-Rivières, Montreal and Victoria.
The government's recent decision to crack down on mortgage lending rules has likely fed the cooling of the real estate market, helping Canada avoid a U.S.-style bubble, Mr. Tal said.
Most Canadian cities are now in, or on the cusp of, being in buyers' territory, he added.
While home prices are softening, however, this is not expected to offset rising inflation, he said.
“If food and energy continue to rise, housing will not save us,†Mr. Tal said.
So much for those who say price will never fall.
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http://www.reportonbusiness.com/servlet/story/RTGAM.20080814.wmls0814/BNStory/Business/home
Globe and Mail
August 14, 2008 at 5:25 PM EDT
Ontario will likely follow major cities in Western Canada into a house price decline, but while its slide should be shallower it will also be more worrisome due to the province's weaker outlook, an economist says.
Last month the average price of a resale home in Canada fell by 3.6 per cent, continuing a decline that started in June when prices lost ground for the first time in more than nine years, according to data released Thursday by the Canadian Real Estate Association (CREA).
So far the drop in average home values has mainly radiated from Calgary and Edmonton, where prices fell by 7.8 per cent and 5.3 per cent respectively in July from the year before.
But it wouldn't be surprising to see prices in these and other large Western cities slump by as much as 20 per cent in the near term, in a correction of markets that got ahead of themselves, said Benjamin Tal, senior economist at CIBC World Markets Inc.
“You don't have to be an economist to predict that prices will go down in Saskatoon and Regina, but in terms of the fundamentals, all the pieces there are still fine – a healthy economy, energy boom and rising food prices,†Mr. Tal said. “Other than people who bought last year thinking prices would keep doubling over breakfast, most people there [the Western provinces] should still end up ahead.â€
More concerning is the softening real estate market in Ontario, he added.
Hard hit by the auto sector slump, Windsor-Essex became the first major market in the province to post year-over-year house price declines. Now Toronto also appears headed for a drop, with prices rising a scant 1.5 per cent last month, while sales fell by 12.4 per cent and new listings surged by 17.8 per cent.
“The concern here is that the potential decline in Ontario would not reflect overshooting, but instead the further slowing of an economy that is probably already in recession,†Mr. Tal said.
“While I would expect a more modest drop in prices of about 5 per cent in Ontario and the GTA, prices have not risen as much here and the decline would be more painful.â€
In July the average price of an existing home fell by 3.6 per cent from the year before, building on a 0.4 per cent drop in June, according to CREA.
The average price of a Canadian resale home stood at $327,020 at the end of last month, compared with $339,277 in July, 2007.
A sharp drop in consumer sentiment helped push sales activity down 10.9 per cent from the year before, and the latest figures drive home the impact that excess supply is having on prices, Doug Porter, deputy chief economist at BMO Nesbitt Burns Inc., said in a research note.
“While we still doubt that Canada will stage an instant replay of the trauma in U.S. markets, even a mild version would be bad news,†Mr. Porter said.
Listings also remained near record levels in July, with 50,782 properties listed for sale in major markets in July. That's the second highest level on record, and down a slight 0.2 per cent from the peak hit in May.
A newcomer to the list of markets experiencing price declines was Greater Vancouver, which had a 1 per cent year-over-year to an average of $575,256 in July.
While nationwide sales levels have been edging up slightly since bottoming out in February, activity stands below the levels hit in record-breaking 2007. Sales rose by 0.1 per cent month-over-month in July to 26,033 units on a seasonally adjusted basis.
Actual sales however, at 27,889 units, were down 10.9 per cent from the year before, which was the strongest July on record.
Sales fell in Montreal, Toronto, Victoria and Ottawa compared with the month before, but rose from June levels in Edmonton, Calgary, St. John's, Saskatoon, Halifax and London, Ont. In Winnipeg, sales in July broke previous monthly records.
Listings reached their highest level on record in the country's largest market, Toronto. Listings were also near peak levels in Saskatoon, Montreal, Gatineau, Trois-Rivières, Montreal and Victoria.
The government's recent decision to crack down on mortgage lending rules has likely fed the cooling of the real estate market, helping Canada avoid a U.S.-style bubble, Mr. Tal said.
Most Canadian cities are now in, or on the cusp of, being in buyers' territory, he added.
While home prices are softening, however, this is not expected to offset rising inflation, he said.
“If food and energy continue to rise, housing will not save us,†Mr. Tal said.
