Canada's Housing Bubble

Jul 21, 2010 Rob Marak castanet.net

Statistics released by The Canadian Real Estate Association (CREA) show that home sales activity and new listings in Canada declined in June. Seasonally adjusted home sales activity via the Multiple Listing Service) Systems of Canadian real estate Boards declined nationally by 9.5 per cent in June from near-record level activity the previous month. While activity declined in more than 70 per cent of local markets, the lower national figure resulted largely from fewer sales in Toronto, Vancouver and Ottawa. Actual (not seasonally adjusted) national sales activity was down 4.3 per cent in June from the same month last year. In a departure from the normal seasonal pattern, national activity levels in June were also down from May levels. This suggests that the combination of changes to mortgage regulations and rising mortgage rates pulled forward a number of sales into May that would have otherwise taken place at a later date.

“June was the first full month in which sales activity was affected by these changes,” said CREA President Georges Pahud. “An accompanying decline in new listings and housing starts means these changes are also affecting the supply side, which will keep the market balanced and Canadian home prices stable.” The seasonally adjusted number of homes that were new listings on Canadian MLS® Systems in June 2010 declined by four per cent from the previous month. This marks the first monthly decline in new listings in eight months. New listings had been climbing sharply, rising from a four-year low last September to the second highest level ever last month.

The number of homes listed for sale on Boards’ MLS® Systems at the end of June was up 5.4 per cent from levels at the same time last year, when the supply of homes for sale on the market had started declining. The national average price of homes sold via Canadian MLS® Systems rose 8.5 per cent in June from a year ago. This is a smaller increase compared to those recorded over the past nine months.

“Supply and demand has become more balanced in a number of major markets,” said CREA Chief Economist Gregory Klump. “Homebuyers now have more choice and are likely to be in less of a rush to purchase than they were recently, so the amount of time it takes to sell a home is expected to rise in the coming months.”

With last year’s string of downwardly skewed average price values having now mostly passed, year-over-year national average price comparisons are coming back into line with changes in the national weighted average price.

A Few More Real Estate Stats

Average House Price in June 2010: $ 480,216
Median House Price in June 2010: $ 455,000
Number of houses listed last month: 507
Number of lakeshore homes sold last month: 6
Average Mobile Home Price: $ 102,467
Dollar value of sales in June 2010: $149,958,000
Dollar value of sales in June 2009: $171,098,832