Toms-SC
06-27-2008, 01:59 PM
National housing boom has come to an end
Mario Toneguzzi
Canwest News Service
Evidence of the national downturn is evident in year-over-year price growth for existing homes in Canada's major markets, which fell to only 1.1 per cent in May, down from 8.6 per cent just four months earlier, the report said.
Canada's housing boom has come to an end and that is no more evident than in Alberta - with prices continuing to fall this year by eight to 10 per cent from their peak, says a national real-estate report.
The report released Thursday by TD Economics says "the long-awaited end of the Canadian housing boom has occurred, reflecting more moderate demand and increased supply of properties for sale" and it is a trend that is broadly based "but it has been particularly sharp in some of the markets that had experienced the most dramatic price growth."
Evidence of the national downturn is evident in year-over-year price growth for existing homes in Canada's major markets, which fell to only 1.1 per cent in May, down from 8.6 per cent just four months earlier, the report said.
"The combination of significantly higher listings . . . and weaker demand, due to the past erosion in affordability, are leading to declining sales and softer price performance across the country, particularly in the West," said the report authored by Craig Alexander, vice-president and deputy chief economist, and Pascal Gauthier, economist, of the TD Bank Financial Group.
Home prices in the formerly red-hot markets in Calgary and Edmonton performed worse than the slowing national average, falling below levels reached one year ago in April and May.
"Alberta will have further weakness in the near term, as Calgary and Edmonton will likely see prices continue to fall for another three or four quarters, dropping eight per cent to 10 per cent from their peak, after which prices should stabilize and start rising at a low single-digit pace," the report said.
National sales are likely to continue to decline in the coming quarters and price growth will slip to two per cent on a countrywide average basis in 2008 and rise only to 3.5 per cent in 2009.
Most markets will see low to mid single-digit gains, but Saskatchewan and Manitoba will continue to post double-digit gains in the near term followed by a significant cooling in 2009, "with the risk of a mild price correction in the major cities that have recently experienced extraordinary price growth."
The report noted several caveats that distinguish the Canadian housing decline with that in the U.S.
"It should be stressed that the rise in listings does not reflect homeowners of principal dwellings desperate to sell. . . . In Canada, speculators may be quickly dumping properties on the market to get out while the times are good, but individuals that have a principal dwelling are not under financial duress."
Equally, the report said, more conservative Canadian lending practices mean the market is not tainted by the excesses that have marked America's sub-prime crisis, and which have caused the worst housing correction since the Great Depression.
And while year-to-date sales have fallen by 12.5 per cent, sales are only returning to levels typically experienced in the three year (2004-2006) prior to the 2007 sales boom, the report said.
Nevertheless, "sales are also weaker in other parts of the country, with British Columbia and Ontario sales down by more than 10 per cent."
"Resale activity in Vancouver is tracking significantly below last year's levels and we expect sales for 2008 as a whole to end up almost 20 per cent lower than 2007. Toronto is expected to experience 10-per-cent lower sales."
Ontario and Quebec homes, which have appreciated at a steady six to seven per cent rate over the last three years, will now only appreciate at half that pace through 2008 and 2009.
Even Saskatchewan won't remain unscathed, the report predicts. While price gains have mirrored those in Alberta as the province's potash, uranium and agriculture industries have thrived, the report forecasts only two to three per cent price growth in 2009, with the risk of a mild price correction.
http://www.househunting.ca/buying-homes/story.html?id=caf6e11c-bba4-48cd-bde0-cf28075ec652
Mario Toneguzzi
Canwest News Service
Evidence of the national downturn is evident in year-over-year price growth for existing homes in Canada's major markets, which fell to only 1.1 per cent in May, down from 8.6 per cent just four months earlier, the report said.
Canada's housing boom has come to an end and that is no more evident than in Alberta - with prices continuing to fall this year by eight to 10 per cent from their peak, says a national real-estate report.
The report released Thursday by TD Economics says "the long-awaited end of the Canadian housing boom has occurred, reflecting more moderate demand and increased supply of properties for sale" and it is a trend that is broadly based "but it has been particularly sharp in some of the markets that had experienced the most dramatic price growth."
Evidence of the national downturn is evident in year-over-year price growth for existing homes in Canada's major markets, which fell to only 1.1 per cent in May, down from 8.6 per cent just four months earlier, the report said.
"The combination of significantly higher listings . . . and weaker demand, due to the past erosion in affordability, are leading to declining sales and softer price performance across the country, particularly in the West," said the report authored by Craig Alexander, vice-president and deputy chief economist, and Pascal Gauthier, economist, of the TD Bank Financial Group.
Home prices in the formerly red-hot markets in Calgary and Edmonton performed worse than the slowing national average, falling below levels reached one year ago in April and May.
"Alberta will have further weakness in the near term, as Calgary and Edmonton will likely see prices continue to fall for another three or four quarters, dropping eight per cent to 10 per cent from their peak, after which prices should stabilize and start rising at a low single-digit pace," the report said.
National sales are likely to continue to decline in the coming quarters and price growth will slip to two per cent on a countrywide average basis in 2008 and rise only to 3.5 per cent in 2009.
Most markets will see low to mid single-digit gains, but Saskatchewan and Manitoba will continue to post double-digit gains in the near term followed by a significant cooling in 2009, "with the risk of a mild price correction in the major cities that have recently experienced extraordinary price growth."
The report noted several caveats that distinguish the Canadian housing decline with that in the U.S.
"It should be stressed that the rise in listings does not reflect homeowners of principal dwellings desperate to sell. . . . In Canada, speculators may be quickly dumping properties on the market to get out while the times are good, but individuals that have a principal dwelling are not under financial duress."
Equally, the report said, more conservative Canadian lending practices mean the market is not tainted by the excesses that have marked America's sub-prime crisis, and which have caused the worst housing correction since the Great Depression.
And while year-to-date sales have fallen by 12.5 per cent, sales are only returning to levels typically experienced in the three year (2004-2006) prior to the 2007 sales boom, the report said.
Nevertheless, "sales are also weaker in other parts of the country, with British Columbia and Ontario sales down by more than 10 per cent."
"Resale activity in Vancouver is tracking significantly below last year's levels and we expect sales for 2008 as a whole to end up almost 20 per cent lower than 2007. Toronto is expected to experience 10-per-cent lower sales."
Ontario and Quebec homes, which have appreciated at a steady six to seven per cent rate over the last three years, will now only appreciate at half that pace through 2008 and 2009.
Even Saskatchewan won't remain unscathed, the report predicts. While price gains have mirrored those in Alberta as the province's potash, uranium and agriculture industries have thrived, the report forecasts only two to three per cent price growth in 2009, with the risk of a mild price correction.
http://www.househunting.ca/buying-homes/story.html?id=caf6e11c-bba4-48cd-bde0-cf28075ec652