By Marty Hope, Calgary Herald August 28, 2010
The harmonized sales tax recently introduced into British Columbia and Ontario has had an impact, likely short-term, on the resale housing activity in those two provinces, according to an industry survey.
An online survey conducted at the end of July by Royal LePage Real Estate Services shows that residents have misconceptions about how the HST affects real estate transactions.
When respondents were asked to provide examples of comments heard from buyers and sellers regarding the tax and its effect on the housing market, almost half of the comments (46.7 per cent) indicated that confusion about it continues even more than one month after coming into effect.
Among the most common responses to the survey's open-ended questions were that many home buyers incorrectly believe the tax applies to the sale price of resale properties.
About 44 per cent of the 765 realtors polled in Ontario and B.C. said the HST that took effect in both provinces July 1 is having the greatest effect on the cooling residential real estate market, compared to just 28.4 per cent who cited rising interest rates as having the greatest effect.
In all, more than 86 per cent of respondents said the HST is affecting their business somewhat.
"While we predicted that the prospect of rising interest rates would put a damper on the housing market, our agents are finding that the HST is actually having the greater impact on buyer behaviour, at least in the short-term" says Phil Soper, president and chief executive officer of Royal LePage.
The HST applies to the purchase price of a newly-built home, and fees for services and commissions associated with any real estate transaction, but it does not apply to the purchase price of resale homes.
Resale homes comprise the bulk of transactions in the Canadian housing market, and the majority of agents surveyed by Royal LePage indicated that new home sales account for less than 10 per cent of their business.
"We wanted to understand the impact HST has had since it was introduced, and what we found is that there is a need to better educate home buyers and sellers to ensure they understand when the HST is applicable," says Soper.
"According to our realtors in B.C. and Ontario, misconceptions about the HST are having an effect on the market in both provinces."
Nearly one quarter (24.1 per cent) of respondents in the Royal LePage survey say home buyers and sellers have a low level of awareness about how the HST applies to a home sale transaction, while 44 per cent say buyers and sellers are only somewhat aware.
"Realtors are there to help guide buyers and sellers through the often complex negotiation and closing process, so our take-away from this survey is that we need to do more as an industry to educate consumers about the HST," says Soper.
© Copyright (c) The Calgary Herald
Showing posts with label Canadian Real Estate Association. Show all posts
Showing posts with label Canadian Real Estate Association. Show all posts
Monday, August 30, 2010
Friday, August 20, 2010
Metro housing fares well
Published Wednesday, August 18, 2010
FREDERICTON - Despite seeing a decline in selling prices and sales, the Metro Moncton real estate market outperformed the rest of Canada in 2009, according to statistics released this week by the Canadian Real Estate Association (CREA).Robert Kavcic, an economist with BMO Capital Markets, says the Hub City's performance during the past year has been relatively stable.
"It's quite a bit better actually than both Canada as a whole and Atlantic Canada. It's definitely better performance than Canada-wide," he says.
"I think the more important thing is there's much more stability in sales, relative to the rest of the country and new listings actually falling quite a bit, year-over-year, which helps to balance the market."
From July 2009 to July 2010, existing home sales in Moncton were down 13.8 per cent. Prices were down 0.3 per cent and the number of new listings were down 7.9 per cent
By comparison, Canadian residential sales were down 30 per cent. The average price rose one per cent during the year, but that amount was dampened by low sales in the country's biggest markets.
"It's a situation where the market is soft and if the sellers aren't getting what they had hoped for, they seem to be in a position to just pull the listing and not sell the house," Kavcic says, adding that the Canadian market is in a different position than that south of the border.
"It's a much different situation than in the U.S., where a lot of those sales are forced. Here that's simply not the case and that's probably one of the reasons we saw such strength in prices during the past year."
At five per cent, new Brunswick had the fifth-largest increase of any province from July 2009 to 2010, while Nova Scotia and Prince Edward Island were the only provinces to show a decline in average residential price.
Canadian home sales were down 6.8 per cent from June to July. About 85 per cent of July's decline can be traced to fewer sales in B.C. and Ontario - which generally account for more than half of national sales - as the new harmonized sales tax prompted many buyers to push sales into the first half of the year, CREA president Georges Pahud says.
"The soft sales figures we're seeing right now can be attributed in part to accelerated home purchases earlier in the year," he says.
Sales activity peaked in December 2009 and hovered near record levels during the first quarter of this year as buyers rushed into the housing market ahead of changes to mortgage rules, interest rate hikes and the HST.
British Columbia had the biggest drop-off at 14.1 per cent, followed by Ontario with an eight per cent decline. Meanwhile, sales in the Prairies and Quebec were on par with June levels.
The average price of homes sold through CREA's Multiple Listing Service in July was $330,351, up one per cent from a year ago - the smallest increase since prices began to rise in May 2009.
Meanwhile, July saw the steepest decline of new listings in over a decade - down 7.2 per cent from June.
* with files from the Canadian Press.
FREDERICTON - Despite seeing a decline in selling prices and sales, the Metro Moncton real estate market outperformed the rest of Canada in 2009, according to statistics released this week by the Canadian Real Estate Association (CREA).Robert Kavcic, an economist with BMO Capital Markets, says the Hub City's performance during the past year has been relatively stable.
"It's quite a bit better actually than both Canada as a whole and Atlantic Canada. It's definitely better performance than Canada-wide," he says.
"I think the more important thing is there's much more stability in sales, relative to the rest of the country and new listings actually falling quite a bit, year-over-year, which helps to balance the market."
From July 2009 to July 2010, existing home sales in Moncton were down 13.8 per cent. Prices were down 0.3 per cent and the number of new listings were down 7.9 per cent
By comparison, Canadian residential sales were down 30 per cent. The average price rose one per cent during the year, but that amount was dampened by low sales in the country's biggest markets.
"It's a situation where the market is soft and if the sellers aren't getting what they had hoped for, they seem to be in a position to just pull the listing and not sell the house," Kavcic says, adding that the Canadian market is in a different position than that south of the border.
"It's a much different situation than in the U.S., where a lot of those sales are forced. Here that's simply not the case and that's probably one of the reasons we saw such strength in prices during the past year."
At five per cent, new Brunswick had the fifth-largest increase of any province from July 2009 to 2010, while Nova Scotia and Prince Edward Island were the only provinces to show a decline in average residential price.
Canadian home sales were down 6.8 per cent from June to July. About 85 per cent of July's decline can be traced to fewer sales in B.C. and Ontario - which generally account for more than half of national sales - as the new harmonized sales tax prompted many buyers to push sales into the first half of the year, CREA president Georges Pahud says.
"The soft sales figures we're seeing right now can be attributed in part to accelerated home purchases earlier in the year," he says.
Sales activity peaked in December 2009 and hovered near record levels during the first quarter of this year as buyers rushed into the housing market ahead of changes to mortgage rules, interest rate hikes and the HST.
British Columbia had the biggest drop-off at 14.1 per cent, followed by Ontario with an eight per cent decline. Meanwhile, sales in the Prairies and Quebec were on par with June levels.
The average price of homes sold through CREA's Multiple Listing Service in July was $330,351, up one per cent from a year ago - the smallest increase since prices began to rise in May 2009.
Meanwhile, July saw the steepest decline of new listings in over a decade - down 7.2 per cent from June.
* with files from the Canadian Press.
Tuesday, August 17, 2010
Homebuyers shouldn't expect hot deals: experts
The Canadian Press
Date: Sunday Aug. 15, 2010 9:10 AM ET
TORONTO — Sellers are facing more empty open houses and fewer bids on their homes, but experts say buyers shouldn't expect to see a retreat from record-high home prices when July housing data is released Monday.
Home sales have fallen 25 per cent since reaching a peak at the beginning of the year as demand slows and more houses come onto the market.
But it will take much longer for sky-high home prices to fall and the market to enter buyer-friendly territory. And history is on the side of the seller.
"Over time, if you were to look at the last 40 years, it's much more common to see sellers' markets than buyers' markets," said Phil Soper, president of Royal LePage.
"It comes down to the different psychology that exists between buyers and sellers. Buyers are very quick to adjust to a down market and sellers are very slow to adjust to a down market. Sellers stubbornly hold onto their perception of what their home is worth, whereas buyers turn on a dime."
Soper expects to see sales decline dramatically from last July's near-record activity, but predicts there will be little change in home prices when the Canadian Real Estate Association releases its monthly sales figures Monday.
Seasonally-adjusted home sales fell 8.2 per cent in June from the month before and shrunk 19.7 per cent compared to June 2009. However, the average Canadian home price sat at $342,662 compared to $326,689 in 2009.
"You would think prices would come down more rapidly given the drop in sales," said Sal Guatieri, senior economist with BMO Capital Markets.
Guatieri expects to see as much as a 35 per cent year-over-year drop in July home sales. He projects monthly sales figures will be around 32,600 homes, which would represent the weakest July since 2001. However, he says price increases will weaken just slightly, and only because they were so high last year.
"It's only in a so-called buyers' market, where there are lot more listings on the market than sales, that buyers have some bargaining power and sellers are more willing to ease up on price, that we would see prices actually falling," he said.
But Mark Weisleder, a real estate author and lawyer, says real estate agents are beginning to notice some discernable changes as the Canadian housing market cools off.
Buyers are not as rushed to make an offer and are becoming more aggressive in negotiations, while sellers are beginning to accept less than asking price for homes as interest wanes.
"(Agents) are going to open houses, sitting there for three hours, and two people come in at the most. Right now there doesn't seem to be that level of stampede mentality to go see a house," Weisleder said.
"I do believe there is a disconnect between some of the data that people are throwing out there every day in the numbers, and slowly you're going to see prices come down."
Many buyers hurried to close in late 2009 and the first half of this year ahead of the new harmonized sales tax in B.C. and Ontario, new mortgage requirements, and to take advantage of record-low interest rates.
That pulled ahead sales that might otherwise have occurred in the second half of 2010, increasing demand and leading to bidding wars in which buyers were willing to overpay to secure a property.
As home prices crept higher and consumers became more confident about an economic recovery, more sellers put their homes on the market, which increased inventory.
Now fewer buyers are shopping for homes just as more listings flood onto the market. That has shifted the housing balance away from the seller-friendly market into neutral territory, but it's still shy of a buyers' market.
Weisleder says the market isn't poised to enter buyers' territory any time soon, as historically low interest rates and a stable economy continue to make buying a Canadian home attractive.
"Because of the interest rates being so cheap to borrow money, prices may not fall too much because people can still afford (to borrow) probably more than they should," he said.
"But it doesn't mean the house is worth that much," he said, adding that if rates go up it could be catastrophic for homeowners who have taken on more debt than they will be able to afford.
Meanwhile, sellers have become accustomed to fetching high home prices and want to hang onto their properties for as long as it takes to get those prices -- although that window has stretched from a couple of weeks to a few months.
"No seller wants to jump the gun, so a lot of people are sitting on the fence and trying to hold on," Weisleder said. "A lot of people are very upset they didn't sell six months ago."
Date: Sunday Aug. 15, 2010 9:10 AM ET
TORONTO — Sellers are facing more empty open houses and fewer bids on their homes, but experts say buyers shouldn't expect to see a retreat from record-high home prices when July housing data is released Monday.
Home sales have fallen 25 per cent since reaching a peak at the beginning of the year as demand slows and more houses come onto the market.
But it will take much longer for sky-high home prices to fall and the market to enter buyer-friendly territory. And history is on the side of the seller.
"Over time, if you were to look at the last 40 years, it's much more common to see sellers' markets than buyers' markets," said Phil Soper, president of Royal LePage.
"It comes down to the different psychology that exists between buyers and sellers. Buyers are very quick to adjust to a down market and sellers are very slow to adjust to a down market. Sellers stubbornly hold onto their perception of what their home is worth, whereas buyers turn on a dime."
Soper expects to see sales decline dramatically from last July's near-record activity, but predicts there will be little change in home prices when the Canadian Real Estate Association releases its monthly sales figures Monday.
Seasonally-adjusted home sales fell 8.2 per cent in June from the month before and shrunk 19.7 per cent compared to June 2009. However, the average Canadian home price sat at $342,662 compared to $326,689 in 2009.
"You would think prices would come down more rapidly given the drop in sales," said Sal Guatieri, senior economist with BMO Capital Markets.
Guatieri expects to see as much as a 35 per cent year-over-year drop in July home sales. He projects monthly sales figures will be around 32,600 homes, which would represent the weakest July since 2001. However, he says price increases will weaken just slightly, and only because they were so high last year.
"It's only in a so-called buyers' market, where there are lot more listings on the market than sales, that buyers have some bargaining power and sellers are more willing to ease up on price, that we would see prices actually falling," he said.
But Mark Weisleder, a real estate author and lawyer, says real estate agents are beginning to notice some discernable changes as the Canadian housing market cools off.
Buyers are not as rushed to make an offer and are becoming more aggressive in negotiations, while sellers are beginning to accept less than asking price for homes as interest wanes.
"(Agents) are going to open houses, sitting there for three hours, and two people come in at the most. Right now there doesn't seem to be that level of stampede mentality to go see a house," Weisleder said.
"I do believe there is a disconnect between some of the data that people are throwing out there every day in the numbers, and slowly you're going to see prices come down."
Many buyers hurried to close in late 2009 and the first half of this year ahead of the new harmonized sales tax in B.C. and Ontario, new mortgage requirements, and to take advantage of record-low interest rates.
That pulled ahead sales that might otherwise have occurred in the second half of 2010, increasing demand and leading to bidding wars in which buyers were willing to overpay to secure a property.
As home prices crept higher and consumers became more confident about an economic recovery, more sellers put their homes on the market, which increased inventory.
Now fewer buyers are shopping for homes just as more listings flood onto the market. That has shifted the housing balance away from the seller-friendly market into neutral territory, but it's still shy of a buyers' market.
Weisleder says the market isn't poised to enter buyers' territory any time soon, as historically low interest rates and a stable economy continue to make buying a Canadian home attractive.
"Because of the interest rates being so cheap to borrow money, prices may not fall too much because people can still afford (to borrow) probably more than they should," he said.
"But it doesn't mean the house is worth that much," he said, adding that if rates go up it could be catastrophic for homeowners who have taken on more debt than they will be able to afford.
Meanwhile, sellers have become accustomed to fetching high home prices and want to hang onto their properties for as long as it takes to get those prices -- although that window has stretched from a couple of weeks to a few months.
"No seller wants to jump the gun, so a lot of people are sitting on the fence and trying to hold on," Weisleder said. "A lot of people are very upset they didn't sell six months ago."
Monday, August 16, 2010
Housing market feels impact of HST introduction
TORONTO -- The new harmonized sales tax introduced in British Columbia and Ontario last month had an immediate impact on the housing market, according to the Canadian Real Estate Association.
The Ottawa-based group, which represents 100 boards across the country, said July sales plunged 6.8% on a seasonally adjusted basis from a month ago, a decline “almost entirely the result of fewer sales in British Columbia and Ontario.”
The slowdown had been expected as consumers rushed to buy homes ahead of the July 1 implementation in those provinces. The HST only applies to services used in purchasing and selling an existing home, such as real estate commission, and not the actual sale price.
In British Columbia sales dropped 14.1% from a month ago on a seasonally adjusted basis and Ontario the decline was 8%. The two provinces accounted for 85% of the the change in national activity.
“The soft sales figures we’re seeing right now can be attributed in part to accelerated home purchases earlier in the year,” said Georges Pahud, CREA president.
The group noted the drops in sales was smaller than in previous months with the Prairie provinces and Quebec staying even with June levels.
However, sales are showing they cannot keep pace with the blistering activity of the second half of 2009. Actual July sales dropped 30% from a year ago when activity set a record for the month. Still, for the first seven months of this year sales remain up 5.6% from a year ago. CREA warned activity will be off for the rest of of 2010 on a year-over-year basis.
“Activity may remain at lower levels for some time, but ultimately we expect a more stable market to emerge, with demand coming back into line with economic fundamentals, said Mr. Pahud. “While the outlook for economic and job growth remains generally positive nationally and in all provinces, the pace of the recovery will vary by region.”
The housing market continues to get a boost from supply dropping which is expected to keep prices stable. The seasonally adjusted number of new residential listings fell 7.2% in July from June — the third consecutive month-over-month decrease and the steepest drop in more than a decade.
But the impact on prices, which are the now relatively flat, was minimal. The average price of a homes sold in July was $330,351, just a 1% increase from a year. Again, CREA said the lack of activity in B.C. and Ontario, which included two of the country’s most expensive marketed, likely skewed average prices down.
On province-by-province basis, prices also dropped in Nova Scotia and Prince Edward Island but every other province had gains above the national average.
Overall inventory is climbing. The number of months of inventory, which represents the number of months it would take to sell current inventories at the current rate of sales activity, was seven month in July. A year ago the number was 4.4 months.
© Copyright (c) National Post
The Ottawa-based group, which represents 100 boards across the country, said July sales plunged 6.8% on a seasonally adjusted basis from a month ago, a decline “almost entirely the result of fewer sales in British Columbia and Ontario.”
The slowdown had been expected as consumers rushed to buy homes ahead of the July 1 implementation in those provinces. The HST only applies to services used in purchasing and selling an existing home, such as real estate commission, and not the actual sale price.
In British Columbia sales dropped 14.1% from a month ago on a seasonally adjusted basis and Ontario the decline was 8%. The two provinces accounted for 85% of the the change in national activity.
“The soft sales figures we’re seeing right now can be attributed in part to accelerated home purchases earlier in the year,” said Georges Pahud, CREA president.
The group noted the drops in sales was smaller than in previous months with the Prairie provinces and Quebec staying even with June levels.
However, sales are showing they cannot keep pace with the blistering activity of the second half of 2009. Actual July sales dropped 30% from a year ago when activity set a record for the month. Still, for the first seven months of this year sales remain up 5.6% from a year ago. CREA warned activity will be off for the rest of of 2010 on a year-over-year basis.
“Activity may remain at lower levels for some time, but ultimately we expect a more stable market to emerge, with demand coming back into line with economic fundamentals, said Mr. Pahud. “While the outlook for economic and job growth remains generally positive nationally and in all provinces, the pace of the recovery will vary by region.”
The housing market continues to get a boost from supply dropping which is expected to keep prices stable. The seasonally adjusted number of new residential listings fell 7.2% in July from June — the third consecutive month-over-month decrease and the steepest drop in more than a decade.
But the impact on prices, which are the now relatively flat, was minimal. The average price of a homes sold in July was $330,351, just a 1% increase from a year. Again, CREA said the lack of activity in B.C. and Ontario, which included two of the country’s most expensive marketed, likely skewed average prices down.
On province-by-province basis, prices also dropped in Nova Scotia and Prince Edward Island but every other province had gains above the national average.
Overall inventory is climbing. The number of months of inventory, which represents the number of months it would take to sell current inventories at the current rate of sales activity, was seven month in July. A year ago the number was 4.4 months.
© Copyright (c) National Post
Monday, August 9, 2010
Misconceptions about HST slowing home sales: poll
Realtors say the new tax -- which does not apply to the purchase price of resale homes -- is a bigger threat than rising interest rates
By Garry Marr, Postmedia News August 6, 2010
Royal LePage Real Estate Services says almost half of its agents believe the main reason for the cooling housing market is a public misconception about how the harmonized sales tax affects home sales.
The company conducted an online-only poll of its realtors at the end of July -- almost a month after the HST went into effect in British Columbia and Ontario -- and found that 43.9 per cent of the 769 respondents in those provinces blamed the new tax for the downturn. The HST was considered a bigger threat than rising interest rates despite two recent quarter-point hikes, Royal LePage said.
Even before the HST was introduced in B.C. and Ontario, sales in the second quarter of this year were down 13.3 per cent from the first quarter, on a seasonally adjusted basis, according to the Canadian Real Estate Association. June sales dropped 8.2 per cent from May.
CREA said the national average sales price rose just 4.9 per cent from a year ago to $342,662 in June.
"We wanted to understand the impact HST has had since it was introduced, and what we found is that there is a need to better educate home buyers and sellers to ensure they understand when the HST is applicable," said Phil Soper, chief executive of Royal LePage. "According to our realtors who work in B.C. and Ontario communities every day, misconceptions about the HST are having an effect on the market in both provinces."
The HST applies to newly built homes with exemptions up to a certain amount in both provinces. But it does not apply to the purchase price of resale homes. It does apply to the fees for services and commissions associated with any real estate transaction. New homes represent less than 10 per cent of business, says Royal LePage.
Agents indicated consumers don't seem to understand how the tax works. When asked to provide examples of comments heard from buyers and sellers regarding the HST and its effect on the housing market, 46.7 per cent of agents indicated that confusion about HST remains more than one month after its introduction.
"Among the most common responses to the survey's open-ended questions were that many home buyers incorrectly believe HST applies to the sale price of resale properties," says LePage.
Interest rates were only cited by 28.4 per cent of agents as the biggest threat to the housing market. Overall, 86 per cent of agents reported the HST is affecting their business some way.
"While we predicted that the prospect of rising interest rates would put a damper on the housing market, our agents are finding that the HST is actually having the greater impact on buyer behaviour, at least in the short-term," said Soper. "Our take-away from this survey is that we need to do more as an industry to educate consumers about the HST."
The Vancouver Sun
By Garry Marr, Postmedia News August 6, 2010
Royal LePage Real Estate Services says almost half of its agents believe the main reason for the cooling housing market is a public misconception about how the harmonized sales tax affects home sales.
The company conducted an online-only poll of its realtors at the end of July -- almost a month after the HST went into effect in British Columbia and Ontario -- and found that 43.9 per cent of the 769 respondents in those provinces blamed the new tax for the downturn. The HST was considered a bigger threat than rising interest rates despite two recent quarter-point hikes, Royal LePage said.
Even before the HST was introduced in B.C. and Ontario, sales in the second quarter of this year were down 13.3 per cent from the first quarter, on a seasonally adjusted basis, according to the Canadian Real Estate Association. June sales dropped 8.2 per cent from May.
CREA said the national average sales price rose just 4.9 per cent from a year ago to $342,662 in June.
"We wanted to understand the impact HST has had since it was introduced, and what we found is that there is a need to better educate home buyers and sellers to ensure they understand when the HST is applicable," said Phil Soper, chief executive of Royal LePage. "According to our realtors who work in B.C. and Ontario communities every day, misconceptions about the HST are having an effect on the market in both provinces."
The HST applies to newly built homes with exemptions up to a certain amount in both provinces. But it does not apply to the purchase price of resale homes. It does apply to the fees for services and commissions associated with any real estate transaction. New homes represent less than 10 per cent of business, says Royal LePage.
Agents indicated consumers don't seem to understand how the tax works. When asked to provide examples of comments heard from buyers and sellers regarding the HST and its effect on the housing market, 46.7 per cent of agents indicated that confusion about HST remains more than one month after its introduction.
"Among the most common responses to the survey's open-ended questions were that many home buyers incorrectly believe HST applies to the sale price of resale properties," says LePage.
Interest rates were only cited by 28.4 per cent of agents as the biggest threat to the housing market. Overall, 86 per cent of agents reported the HST is affecting their business some way.
"While we predicted that the prospect of rising interest rates would put a damper on the housing market, our agents are finding that the HST is actually having the greater impact on buyer behaviour, at least in the short-term," said Soper. "Our take-away from this survey is that we need to do more as an industry to educate consumers about the HST."
The Vancouver Sun
Wednesday, August 4, 2010
House prices now 4.2% over peak: A regional breakdown
John WoodsTHE GLOBE AND MAIL
House prices still strong
Canadian house prices rose 1.3 per cent in May from a month earlier, and now stand 4.2 per cent above their pre-recession peak, according to a Teranet-National Bank composite house price index. It marked the 13th straight month of increases and the second that prices rose in each of the six regions it covers. National Bank economist Marc Pinsonneault contrasted that to the real estate market in the United States, where prices are down almost 30 per cent from their peak. In Canada, year over year, the index is up 13.6 per cent. The index differs from the measure used by the Canadian Real Estate Association.
"But we do not believe that acceleration in the Teranet-National Bank index will be sustained," he said in a research note. "... The number of existing homes sold has declined in each of the three months ending last June, and it did so to a much larger extent than the number of new listings. This heralds a deceleration in home price inflation, especially since a harmonized sales tax (HST) was introduced on July 1 in Ontario and B.C."
Among the gains:
•Ottawa, 2.3 per cent month over month, 11.4 per cent year over year
•Montreal, 1.8 per cent and 8.5 per cent
•Vancouver, 1.2 per cent and 17.1 per cent
•Calgary, 1.2 per cent and 7.8 per cent
•Toronto, 1.1 per cent and 16 per cent
•Halifax, 0.7 per cent and 5.6 per cent
•Ottawa, 2.3 per cent month over month, 11.4 per cent year over year
•Montreal, 1.8 per cent and 8.5 per cent
•Vancouver, 1.2 per cent and 17.1 per cent
•Calgary, 1.2 per cent and 7.8 per cent
•Toronto, 1.1 per cent and 16 per cent
•Halifax, 0.7 per cent and 5.6 per cent
Monday, August 2, 2010
CREA lowers housing forecast again
Last Updated: Friday, July 30, 2010 12:04 PM ETCBC News
The number of resale homes sold in Canada is forecast to hit 459,600 in 2010, a 1.2 per cent decline from 2009.
A real estate agent puts up a sold sign in front of a house in Toronto in April. The Canadian Real Estate Association expects home prices to decrease in 2011. (Darren Calabrese/Canadian Press)
In its latest housing forecast Friday, the Canadian Real Estate Association said weaker sales activity in the key spring homebuying season in Canada's four most populous provinces prompted the downgrade.
"The jump in national sales activity earlier this year likely borrowed from the future," CREA president George Pahud said.
And expected interest rate increases to come will do nothing to stoke the real estate fire that burned brightly during the tail end of the recession.
Sales are projected to drop even further, by 7.3 per cent, to 426,100 units in 2011.
The national average home price is forecast to rise 3.5 per cent in 2010 to $331,600, with increases in all provinces. The national average price is then forecast to ease by 0.9 per cent to $328,600 in 2011.
The agency already lowered its 2010 sales forecast at the start of June. At that time, the agency was expecting 490,600 units to be sold this year.
Thursday, July 15, 2010
Home sales cool further in June
Last Updated: Thursday, July 15, 2010 | 9:22 AM ET
CBC News
A real estate slowdown appears well underway, as home resales fell by 8.2 per cent in June compared to May, the Canadian Real Estate Association said Thursday.
Home sales slowed in June, the Canadian Real Estate Association says. (Darren Calabrese/Canadian Press)
"The housing market is becoming more challenging for sellers," CREA president George Pahud said.
It's the second consecutive month of major sales declines, as sales were 9.5 per cent lower in May than they were in April. Just as was the case in May, sales were lower in 70 per cent of surveyed markets in June.
On an annual basis, sales declined by 19.7 per cent compared to June 2009, while prices were 4.9 per cent higher.
As sales declined, the nation's housing stock increased, with inventory hitting 6.9 months on a seasonally adjusted basis. Inventory is the number of months it would take to sell all the houses on the market at the current sales pace.
Inventory is now at its highest level since March 2009.
Prices also cooled but less so, with the average price of a home decreasing by 1.2 per cent to $342,662. In May, the average price of a resale Canadian home was $346,881.
There are fewer buyers now, and those who do buy are becoming more cautious, CREA economist Gregory Klump said.
"With interest rates on the rise, housing affordability and home sales activity are expected to continue to erode over the second half of 2010."
CBC News
Home sales slowed in June, the Canadian Real Estate Association says. (Darren Calabrese/Canadian Press)
"The housing market is becoming more challenging for sellers," CREA president George Pahud said.
It's the second consecutive month of major sales declines, as sales were 9.5 per cent lower in May than they were in April. Just as was the case in May, sales were lower in 70 per cent of surveyed markets in June.
On an annual basis, sales declined by 19.7 per cent compared to June 2009, while prices were 4.9 per cent higher.
As sales declined, the nation's housing stock increased, with inventory hitting 6.9 months on a seasonally adjusted basis. Inventory is the number of months it would take to sell all the houses on the market at the current sales pace.
Inventory is now at its highest level since March 2009.
Prices also cooled but less so, with the average price of a home decreasing by 1.2 per cent to $342,662. In May, the average price of a resale Canadian home was $346,881.
There are fewer buyers now, and those who do buy are becoming more cautious, CREA economist Gregory Klump said.
"With interest rates on the rise, housing affordability and home sales activity are expected to continue to erode over the second half of 2010."
Tuesday, July 13, 2010
Property Values Could Plummet If the Canadian Real Estate Bubble Bursts
The real estate market in Canada has performed well over the last few years but it could have resulted in a bubble that is ready to burst.
The Canadian residential sector has continued healthy despite the economic mortgage crisis that affected the US, and the forecasted nationwide real estate market bubble has yet to materialize. The Canada Mortgage and Housing Corporation's (CMHC) program to stimulate credit by approving high-risk mortgages had concerned experts because it pushed the ratio of housing values to a 7.4:1 ratio, which was over 50% more than American consumers experienced prior to their housing bubble collapse. As a consequence of the CMHC's policy shift, the average Canadian family debt experienced a 9.3 percent increase in only one year.
Some analysts, like the 84-year-old investment advisor Stephen Jarislowsky -- who has an estimated worth $1.85 billion -- said earlier this year that he believed that the strategy used by the CMHC would backfire. Jarislowsky flatly contradicted the statements made by Finance Minister Jim Flaherty claiming that the indications did not point to a future real estate bubble. Jarislowsky firmly believed that the government's programs were not going to strengthen the economy. During a phone conversation, he said that the CMHC "..has created the reverse effect of what was acceptable. " They have basically persuaded people to buy houses based on cheap mortgages. Evidence can be witnessed in the City of Toronto where the value of Toronto properties as increased by quite a bit over the years as purchasers rushed into the market.
An in-depth study of the Canadian real estate sector performed by the Wall Street Journal in February 2010 pointed out that the 2008 failure of the Lehman Brothers in the U.S. could have built a housing bubble backfire if the Canadian government did not change their lending tactics. But as early as January 2010, a representative of the Bank of Canada explained that "if the Bank were to increase interest rates to cool the housing market" that the result would be like "dousing the entire Canadian economy with cold water, just as it comes out from recession".
The Canadian Real Estate Association numbers that were released for the first half of 2010 does show that the start of the recession in 2008 translated into a sharp decline in residential real estate sales. But this did not last long, and the recovery has not been as dramatic as anticipated. Even though the May 2010 sales figures indicated a 9.5% drop, the year-over-year price increases actually balanced it to 8.4 percent. This stabilization in the housing market is a normal result of buyers not being quite as anxious to invest as the supply of properties increases and prices climb slowly, but proportionately.
Pascal Gauthier of the Toronto-Dominion Bank mentioned that the bubble scenario "made a lot of people nervous," fearing a huge crash comparable to the 30% decline in U.S. housing values. This summer, however, he is observing that the short-term elements that elevated property values resulted in only a modest decline in a clearly overpriced market and the attitude is a "180-degree change from six months ago". Gauthier believes that the national average may feel a 7 percent drop, but that the areas such as Toronto and Vancouver will bear the brunt of that decrease, and some areas such as The Prairies and Maritimes could even begin to realize gains by the end of the year.
By Stefan Hyross
Published: 7/13/2010
The Canadian residential sector has continued healthy despite the economic mortgage crisis that affected the US, and the forecasted nationwide real estate market bubble has yet to materialize. The Canada Mortgage and Housing Corporation's (CMHC) program to stimulate credit by approving high-risk mortgages had concerned experts because it pushed the ratio of housing values to a 7.4:1 ratio, which was over 50% more than American consumers experienced prior to their housing bubble collapse. As a consequence of the CMHC's policy shift, the average Canadian family debt experienced a 9.3 percent increase in only one year.
Some analysts, like the 84-year-old investment advisor Stephen Jarislowsky -- who has an estimated worth $1.85 billion -- said earlier this year that he believed that the strategy used by the CMHC would backfire. Jarislowsky flatly contradicted the statements made by Finance Minister Jim Flaherty claiming that the indications did not point to a future real estate bubble. Jarislowsky firmly believed that the government's programs were not going to strengthen the economy. During a phone conversation, he said that the CMHC "..has created the reverse effect of what was acceptable. " They have basically persuaded people to buy houses based on cheap mortgages. Evidence can be witnessed in the City of Toronto where the value of Toronto properties as increased by quite a bit over the years as purchasers rushed into the market.
An in-depth study of the Canadian real estate sector performed by the Wall Street Journal in February 2010 pointed out that the 2008 failure of the Lehman Brothers in the U.S. could have built a housing bubble backfire if the Canadian government did not change their lending tactics. But as early as January 2010, a representative of the Bank of Canada explained that "if the Bank were to increase interest rates to cool the housing market" that the result would be like "dousing the entire Canadian economy with cold water, just as it comes out from recession".
The Canadian Real Estate Association numbers that were released for the first half of 2010 does show that the start of the recession in 2008 translated into a sharp decline in residential real estate sales. But this did not last long, and the recovery has not been as dramatic as anticipated. Even though the May 2010 sales figures indicated a 9.5% drop, the year-over-year price increases actually balanced it to 8.4 percent. This stabilization in the housing market is a normal result of buyers not being quite as anxious to invest as the supply of properties increases and prices climb slowly, but proportionately.
Pascal Gauthier of the Toronto-Dominion Bank mentioned that the bubble scenario "made a lot of people nervous," fearing a huge crash comparable to the 30% decline in U.S. housing values. This summer, however, he is observing that the short-term elements that elevated property values resulted in only a modest decline in a clearly overpriced market and the attitude is a "180-degree change from six months ago". Gauthier believes that the national average may feel a 7 percent drop, but that the areas such as Toronto and Vancouver will bear the brunt of that decrease, and some areas such as The Prairies and Maritimes could even begin to realize gains by the end of the year.
By Stefan Hyross
Published: 7/13/2010
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