Sorry for the bad news folks.
Housing boom 'officially over'
LORI MCLEOD
Globe and Mail Update
April 17, 2008 at 2:39 PM EDT
It's time for Canadians to bid the housing boom farewell as data for the first quarter of the year, released Thursday by the Canadian Real Estate Association (CREA), showed a 13 per cent tumble in existing home sales year-to-date.
“Canada's six-year housing market boom is officially over. Aside from a few choice Prairie locales, sales are melting faster than this year's snow pack,” Douglas Porter, deputy chief economist at BMO Nesbitt Burns Inc., said in a research note.
Double-digit declines in sales activity in “more markets than you can shake a stick at,” suggest the weakness has spread across Canada rather than being centred in any specific market, Mr. Porter said in an interview.
Home sales waned and new listings surged in the first quarter of 2008 as activity in Toronto cooled and a glut of sellers hit the markets in Western Canada, according to CREA's data.
In the first three months of the year 75,467 housing units changed hands in Canada, a 13 per cent drop from the first quarter of 2007, according to CREA. Sales tumbled by 18.7 per cent in March compared with the same month a year ago.
While the drop likely had something to do with this year's nasty winter weather, the cross-country weakness in sales suggests a deeper trend, Mr. Porter said.
While he's willing to declare an end to the housing boom now that a full quarter's worth of data are available, it will be important to watch the traditionally strong spring months to get a better handle on where the market will end up in 2008, he added.
By contrast with the weakening sales figures, new listings soared to their highest recorded level at 154,217 units in the first quarter, led by Calgary, Edmonton and Vancouver. Seasonally adjusted new listings climbed by 4.8 per cent quarter-over-quarter, despite a drop in newly listed properties in Toronto, the country's largest resale market.
In March, sales fell by 22 per cent year-over-year in Toronto, which accounts for one-quarter of existing home sales across the country. Last month, CREA attributed 53 per cent of the 5.6 per cent month-over-month drop in resale home sales to the softer Toronto market.
“Sales activity in a number of major markets trended lower while listings swelled in the first quarter. Many major markets are becoming more balanced and price gains are becoming more modest as a result. This trend is forecast to continue, as rising mortgage carrying costs and property taxes erode affordability,” Gregory Klump, chief economist at CREA, said in a statement.
Year over year basis, sales volumes fell in 16 of the 18 major markets for which data were available, led by a 35.9 per cent drop in Calgary and a 29.8 per cent decline in Edmonton.
In its statement, CREA also said seasonally adjusted sales activity hit new quarterly records in Regina and Saskatoon, but data for those cities were listed as not available in the tables included with the release.
The only two markets where sale activity rose, year over year, in the first quarter according to available data were Newfoundland and Labrador, and Thunder Bay, which showed increases of 14.3 per cent and 9.5 per cent, respectively.
The average price of a resale home rose by 5.5 per cent year-over-year in the first quarter to $327,620, the smallest such increase since the fourth quarter of 2001 and just half of last year's 11 per cent rise.
In March, the average existing-home price rose by 4 per cent year-over-year to $329,383, with new records set in markets including Saskatoon, Winnipeg, Hamilton-Burlington, Ottawa and Halifax.
None of the markets in the study showed a decline in home prices, and like many other economists, Mr. Porter expects moderate price gains this year.
“The residential average price continues to increase, unlike conditions in many U.S. markets,” said CREA president Cal Lindberg in a statement.
“The size of the increase is returning to what we consider more normal levels for most markets in Canada, reflecting a sound but cooling market for existing homes.”
In its release, CREA said the Canada's resale housing market was more balanced in the first quarter of 2008 than it has been compared with any other quarter over the past nine years.
This statement from CREA is enough to suggest that things are “calming down quickly,” Mr. Porter said.
