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Canada's real estate markets cooling

Prices of resale homes edged up in Canada last month, but at a more moderate pace, signalling further cooling in the once red-hot sector, the Canadian Real Estate Association said this week. The average price of a resale home in Canada's major markets was $329,383 in March (up from $327,477 in February and $325,183 in January). That leaves the average sale price up 4.0 per cent from March of last year.

For the first three months of the year, average prices realized through MLS sales were up 5.5 per cent from the first quarter of 2007. That's the smallest year-over-year price increase in seven years.

CREA figures show that overall sales fell last month by 18.7 per cent from a year earlier, while new listings grew in the first quarter. "Many major markets are becoming more balanced and price gains are becoming more modest as a result," said CREA chief economist Gregory Klump. "This trend is forecast to continue as rising mortgage carrying costs and property taxes erode affordability," he said.

Housing boom officially over

CREA president Cal Lindberg said the days of constantly setting price records are over. Economists agreed. "Canada’s six-year housing market boom is officially over," declared Doug Porter of BMO Capital Markets.

Still, the latest figures show that five major markets managed to set price records in March — Saskatoon, Winnipeg, Hamilton-Burlington, Ottawa and Halifax.

As usual, the most expensive real estate could be found in Greater Vancouver, where the average resale last month cost $616,496, up 11.1 per cent in a year.

The next most expensive markets were:

  1. Victoria - $504,194 (up 13.3 per cent)
  2. Calgary - $419,396 (up 1.0 per cent)
  3. Toronto - $380,338 (up 4.1 per cent)
  4. Edmonton - 343,760 (up 5.6 per cent)

The cooling trend in Canada still stands out from the situation south of the border, where average house prices have fallen 10 per cent in the past year amid a meltdown in the U.S. subprime mortgage market.

Not a single major Canadian market that CREA tracks reported lower year-over-year prices in the first quarter.

Sources: CREA and CBC News

April 20, 2008 in Canadian Real Estate Market | Permalink


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Posted by: torontohomeandhouse123 | Jun 11, 2010 4:56:16 AM

Well saying the market is 'different' here really doesn't hold water and you'll see soon enough.

Price increases are lagging downward sales at the moment but that should balance mid summer and the price decrease will start slowly and pick up steam.

Toronto in particular has yet to see the US downturn hit our shores but will - GM, Quebecor etc. layoffs are the thin edge of the wedge.

Mortgage rates are already starting to squeeze people stateside -- slowly renewals there will be affected and their slide will continue.

As Robert Schiller has said the US is only half way through the subprime crisis and some major cities have already been walloped - who knows what year's prices that time machine will end up at.

We have our own bubble due to the no money down extended amortization scam. It likely won't be as harsh but a return to 2005 prices [the year CMHC introduced the scam] at the very least is a reasonable correction considering that Tdot average prices went from $337k April 05 to $399 mid April 08 -- 18% -- in that time[TREB numbers]. If you want debate the effects of coming stagflation and boomer bust on top of that well we're talking more.

In the end, when you consider the average Toronto home price is up exactly 40% since Nov 02, when the market was already pretty good, a drop of anywhere between 18% and 40% in the face of a possible nasty flat economic period isn't all that nuts.

But then again, I'm not vested in the real estate sector's success, so I'll just be quiet ...


Posted by: Rob M | May 2, 2008 5:29:12 PM

I take offense at this story. I sell in Toronto for almost 8 years since coming to Canada, so I know 'good' and 'bad' areas. Actually, there are no 'bad' ones.

I learned word "prestige" in Real Estate College (College and Parliament - where I make sexytime). Is good word. It turns areas like C7, C6, N15 (near Tibet?) - where rich people have so much that they put car on blocks, keep old boats on lawn with ATV, and visit relatives in Metro West Detention Centre on Sundays - into 'prestige' areas. Remember First Rule: "Location, Location, every Location is good as any other" (especially if you are Uzbek builder)

Listen, pussycat, I am living here over 8 years. So I think I can tell you that all areas are 'prestige', and real estate values will never go down. Ever. Only go up. Natural Law.

Now, they tell us to always put on our blogs and newsletters (next to our happy smiling faces) that you must buy now or sky will fall and Gypsy tears will kill your Yuppie Yuppie future. And don't forget, 100-year amortization now make it all easier to overpay and "make market" (like old established agents do).

But this winter and spring, like meteor hit city. Vendor want me to split my commission with David Miller (2% for him - for what? Crazy rapist man like in my old village). Very rude. So I try to put in blog that "no big deal - another 2% to pay on top of big prices just part of fun of living in Toronto". Not many purchasers falling for my Rasputin hypnotism. This is strange.

And my only clients left are from Russia, Persia and the South Korean Army (lots of Corporals there with $5M or more to invest in GTA). I think reason why is that those not so smart to become agents (like some bankers, lawyers, etc.) don't like to take foreign cash for turn it into nice clean Toronto bricks (or stucco - stucco better - more "prestige"). But I say to my clients - "so you pay $2M for this house - called "shitbox" style - you no care, you sell if 20-30% decline (if happens - never happens) in 2009 and take your $1.5M cash. Mafia charge 40% at least to do laundry - why not pay commission and do legal way? But I think this not working for non-foreign buyers going to bank to buy same house, using some of their own money.

Lots of Yuppie Yuppie still come to properties where I raise 'ask' price when stay on List for more than 100 days.They think 'new listing' or fall victim to evil spirit, and still bid on 'Offer Day' to pay premiums for house in "prestige" area. Canada great, great country.

No worry. Just read more and more by Chief Economists for 'major lenders'. They are great deal - they know prices never come down, as long as you keep borrowing. I call one yesterday, but he was not there. Downsized.

Posted by: Borat | Apr 24, 2008 8:42:00 PM

I currently live in a 2-year old corner townhome in Burlington. I'm potentially looking to purchase a 4 bedroom detached in East Brampton in a development that won't be ready till summer 2010. I know when you buy and sell in the same period you're hedging your risk because you're either buying high and selling high or buying low and selling low. But in my situation I would be selling 2 years from when I buy.

I was wondering if anyone could give me their thoughts on whether they think this could be a risky play or not. Essentially, if my home price stays flat I should be alright...but if my home's selling price drops over the next 2 years...the mortgage I need my surpass my affordability.

Posted by: Thomas | Apr 21, 2008 10:47:53 PM

It was good info, thanks.

Posted by: Pinder | Apr 21, 2008 4:36:05 AM

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