The Canadian Real Estate Association (CREA) released its latest figures on Monday, August 16, 2010. National home sales in July were down 30 percent. The Multi Listing Service (MLS) was down 6.8 percent from June 2010. Ontario and British Columbia are responsible for 85 percent of the national decrease. These two provinces generally account for 50 percent of the national home sales, and tote some of the nation’s most pricey neighborhoods. With fewer buyers competing for properties, the current inventories will take 7.3 months to sell verses 4.4 months one year ago. The longer sale time indicates a more stable market emerging between buyers and sellers.
The national average price of homes sold was $330,351 up just one per cent from the previous year. This is the smallest increase since prices began to rise in May 2009. Sales activity is still up 5.6 percent from last year, however; the gap is expected to close rapidly — to zero or below — before the end of 2010. New supply also saw its deepest decline in a decade.
All the inflated media hype in the world couldn’t keep Canada’s housing market on the rise. Economists and experts alike would have you believe the recent downturn in the market is due to the new harmonized sales tax (HST) in Ontario and British Columbia, tighter mortgage regulations and talk of higher interest rates. Truth be known, several provinces have had HST in affect for years, sub-prime mortgages are on the rise and many mortgage interest rates were decreased “again” on August 17, 2010.
What’s really the cause of Canada’s declining housing market? Could it possibly be that the Canadian consumer is sending a message, “Enough is enough; we’re not going to make the same mistake as many of our neighboring Americans made, over the past decade. We’re not paying these ridiculous prices for homes that aren’t worth anywhere near the asking prices. We’re not willing to find ourselves upside down in a home when it comes time to renew the mortgage.”
It might do economists and experts a little good to step out from behind their desks and take a break from the number crunching to speak with local citizens on the street. They might be surprised to find the consumer has been predicting a decline in the market since the listing peak in April 2010. Many Canadian home buyers have been disgruntled for months over the inflated prices of real estate. The market has declined six out of the last seven months with a 25 per cent decline in the last three months alone. The savvy buyer took a seat on the sidelines months ago. As the market continues to cool, it looks like their perseverance will pay off.
Could it be that what main-steam media is selling as a Canadian housing bubble is really the downward effects of an industry that became inundated with greed?
Enjoy this article? Receive e-mail alerts when new articles are available. Just hit “Subscribe” at the top of this page.