Home Prices take a Hit
Year-over-year prices plunge 5.1 per cent in August, the sharpest decline since 1996The average price of an existing home in Canada fell by 5.1 per cent year over year in August, the steepest decline since 1996.
It was the third monthly drop since prices fell into negative territory in June for the first time in more than nine years, and was led by a sharp decrease in sales activity in the country's most expensive markets, including Vancouver, Victoria, and Calgary.
That put the average price of a resale home in Canada at $315,052 last month, according to data released yesterday by the Canadian Real Estate Association (CREA).
In Vancouver, the country's priciest housing market, unit sales plummeted by 54 per cent from the year before to an average of $557,114, CREA said.
The drop in sales gave Vancouver a lower weighting in the overall calculation of the country's national home price average, CREA said.
Prices also fell in Calgary, Edmonton, and Victoria, cities which saw dramatic run-ups during the housing boom, and in Windsor-Essex, which has been hard hit by the slump in the auto manufacturing sector.
Economists are sticking with the view that the housing market decline won't become as dramatic here as in the U.S., but said Canadians should brace for a continued slowdown in sales activity and softer prices.
"Canada's housing market continues to face strong headwinds from declining confidence, low affordability, and an upward trend in new listings," Robert Kavcic, economic analyst at BMO Nesbitt Burns Inc., said in a research note.
Resale home prices continued to rise in 20 of the 25 major markets included in the data. However, they edged up by only 0.8 per cent in Toronto, the country's largest market with more than double the sales of the second busiest city by activity, Montreal.
The largest price increases were mainly in smaller markets, led by Regina and Newfoundland & Labrador.
Across Canada unit sales also fell, dropping by 19.3 per cent in August compared with the year before, with increases in just three markets, Edmonton, Quebec City, and Thunder Bay.
Besides Vancouver, sales fell sharply in Victoria, Saskatoon, Regina, and Calgary, and in a number of Ontario cities including Toronto.
After surging for four months, new listings eased below the 50,000 mark in August, dropping by 4.6 per cent from the year before to 44,377 units.
"This report underscores the current shift in the Canadian housing market, as the tone of activity moves slightly closer to a buyer's market," Millan Mulraine, economics strategist at TD Securities Inc., said in a research note.
New listings plunged the most in markets which started slowing the earliest, including Edmonton, Calgary, and Windsor-Essex. Listings rose the most in Regina, Saskatoon, and Thunder Bay.
Despite the overall drop, annual listings growth is still outpacing sales in 22 of 25 major markets across the country, and the ratio of new listings to sales remains near a nine-year high, Mr. Kavcic said.
Source: The Globe and Mail, Lori McLeod, Real Estate Reporter, September 16, 2008.
posted by Ben Sage, Sales Representative @ 7:30 PM
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