Garry Marr, Financial Post · Thursday, Jul. 15, 2010
Existing home sales continued their rapid decline last month, with 70% of markets showing a drop in sales in June from May, the Canadian Real Estate Association says.
But at least one senior executive in the industry says market watchers need a little perspective about the real estate sector.
“The pace we had seen couldn’t be sustained. It’s important to have a word of caution when you talk about it slowing down,” said Michael Polzler, executive vice-president of Re/Max Ontario-Atlantic Canada.
“This is by no stretch a buyer’s market. At best it’s a balanced market in the majority of markets. People are not out there giving their houses away yet.”
Ottawa-based CREA, which represents 100 boards across the country, said sales were off 8.2% from a month ago on a seasonally adjusted basis. Toronto and Calgary led the decline.
CREA said tighter mortgage rules and rising rates were behind a 13.3% drop in sales over the past quarter.
“As expected, these two national factors contributed to a widespread decline in activity, with transactions down in all but a dozen or so smaller markets,” CREA said.
Sales activity was down 19.7% in June from a year ago, when there was a record number of sales for the month.
Actual second-quarter sales were down 2.8% from a year ago but for the year are still up 13.6%.
There was a slowdown in Canadians putting homes up for sale, which should be good for the market and prices. The number of new listings on the market in June dropped 6.8% from May.
But year-over-year price increases are starting to slow. CREA said the national average sales price rose just 4.9% from a year ago to $342,662.
CREA chief economist Gregory Klump said there could be help on the way for prices in the coming months. “While the pricing environment is becoming more challenging, a recovering economy and job market will provide support for housing activity and prices,” he said.
The number of months of inventory in the market, which represents the number of months it would take to sell current inventories at the current rate of sales activity, is also rising. It was 5.7 months across the country at the end of June, up from 4.2 months a year ago.
“The housing market is becoming more challenging for sellers,” said Georges Pahud, CREA president. “Buyers are in less of a hurry.”
Economist Adrienne Warren of the Bank of Nova Scotia said the market has peaked.
“Canada’s housing market has clearly shifted gears, with monthly sales [seasonally adjusted] now running about 25% below last December’s peak,” she said. “The sense of urgency see n last fall and winter in the lead-up to tighter mortgage-lending criteria and the introduction of the HST in Ontario and British Columbia has faded.”
Financial Post
Showing posts with label slowing market. Show all posts
Showing posts with label slowing market. Show all posts
Thursday, July 29, 2010
Thursday, July 15, 2010
Drop in home sales may be sign of peak
The Toronto Real Estate Board said sales in June were down 23% from a year ago, leaving activity for the quarter up 1% from the same period a year earlier. Garry Marr, Financial Post · Tuesday, Jul. 6, 2010
Existing home sales dropped sharply in Canada’s two most expensive markets, a further indication that the real estate market may have peaked.
The Toronto Real Estate Board said sales in June were down 23% from a year ago, leaving activity for the quarter up 1% from the same period a year earlier.
“We experienced a record number of existing home sales during the first half of 2010 but these sales were weighted more towards the beginning of the year, said Bill Johnston, president of TREB.
“The pace of home sales has moderated from record levels over the past two months with the prospect of higher mortgage rates.”
In addition to the fear of higher mortgage rates, the housing market was impacted earlier in the year by new mortgage rules that made it tougher to borrow.
The real estate industry has said many customers simply pushed forward their purchase to beat the new rules, predicting slower sales through the spring.
The industry is also now dealing with the impact of the harmonized sales tax, which was introduced in British Columbia and Ontario on July 1. Consumers trying to beat that tax — which will be newly applied to services such as real estate commissions — are said to have pushed their purchases forward, which will deprive the summer and fall of a number of sales.
Vancouver’s market is also feeling the brunt of the new real estate reality. Sales in Canada’s most expensive market were off 30.2% in June from a year ago, the Real Estate Board of Greater Vancouver said earlier this week. President Jake Moldowan noted June 2010 sales are still up 22.6% from 2008 recession levels.
The slowing market appears to be a phenomenon right across the country with Calgary also reporting last week June sales were off about 42% from a year ago. June sales were 16% from May alone.
So far, the drop in demand has not hit prices dramatically, but coupled with increased supply, the double-digit year-over-year price increases we saw for most of 2010 have ended. The average sale price of a home in Toronto last month was $435,034, an 8% increase from a year earlier.
“With more to choose from in the second quarter, many home buyers have been making less-aggressive offers. This has resulted in less upward pressure in the average selling price,” said Jason Mercer, senior manager of market analysis for TREB, who said price increases will remain in single-digit territory for the rest of 2010.
New listings continue to put pressure on the Toronto market. New listings were up 13% in June from a year ago while total active listings climbed 28% during the same period.
In Vancouver, the total number of properties for sale is up 32% from a year ago. Prices in Vancouver were up 11.8% from a year ago with the board’s housing price index benchmark price climbing to $580,237 from $518,855. In Calgary, the average price of a home sold in June was $483,240, an increase of 8% from a year earlier.
The existing home market may get a break from the fact it looks likes builders are ramping down on construction. Statistics Canada said the value of building permits applied for in May was off 10.8% from a month earlier. Housing permits were off 4.4% from a month earlier.
“If there is hope for house prices in Canada, it lies in curtailing supply. That’s where any room for optimism lies in an otherwise bleak report that displayed widespread losses in value and volume terms within both the non-residential and residential categories,” said Derek Holt, an economist with Bank of Nova Scotia.
Financial Post
The Toronto Real Estate Board said sales in June were down 23% from a year ago, leaving activity for the quarter up 1% from the same period a year earlier.
“We experienced a record number of existing home sales during the first half of 2010 but these sales were weighted more towards the beginning of the year, said Bill Johnston, president of TREB.
“The pace of home sales has moderated from record levels over the past two months with the prospect of higher mortgage rates.”
In addition to the fear of higher mortgage rates, the housing market was impacted earlier in the year by new mortgage rules that made it tougher to borrow.
The real estate industry has said many customers simply pushed forward their purchase to beat the new rules, predicting slower sales through the spring.
The industry is also now dealing with the impact of the harmonized sales tax, which was introduced in British Columbia and Ontario on July 1. Consumers trying to beat that tax — which will be newly applied to services such as real estate commissions — are said to have pushed their purchases forward, which will deprive the summer and fall of a number of sales.
Vancouver’s market is also feeling the brunt of the new real estate reality. Sales in Canada’s most expensive market were off 30.2% in June from a year ago, the Real Estate Board of Greater Vancouver said earlier this week. President Jake Moldowan noted June 2010 sales are still up 22.6% from 2008 recession levels.
The slowing market appears to be a phenomenon right across the country with Calgary also reporting last week June sales were off about 42% from a year ago. June sales were 16% from May alone.
So far, the drop in demand has not hit prices dramatically, but coupled with increased supply, the double-digit year-over-year price increases we saw for most of 2010 have ended. The average sale price of a home in Toronto last month was $435,034, an 8% increase from a year earlier.
“With more to choose from in the second quarter, many home buyers have been making less-aggressive offers. This has resulted in less upward pressure in the average selling price,” said Jason Mercer, senior manager of market analysis for TREB, who said price increases will remain in single-digit territory for the rest of 2010.
New listings continue to put pressure on the Toronto market. New listings were up 13% in June from a year ago while total active listings climbed 28% during the same period.
In Vancouver, the total number of properties for sale is up 32% from a year ago. Prices in Vancouver were up 11.8% from a year ago with the board’s housing price index benchmark price climbing to $580,237 from $518,855. In Calgary, the average price of a home sold in June was $483,240, an increase of 8% from a year earlier.
The existing home market may get a break from the fact it looks likes builders are ramping down on construction. Statistics Canada said the value of building permits applied for in May was off 10.8% from a month earlier. Housing permits were off 4.4% from a month earlier.
“If there is hope for house prices in Canada, it lies in curtailing supply. That’s where any room for optimism lies in an otherwise bleak report that displayed widespread losses in value and volume terms within both the non-residential and residential categories,” said Derek Holt, an economist with Bank of Nova Scotia.
Financial Post
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