Canada's Housing Bubble

Sep 07, 2010 Steve Ladurantaye Globe and Mail

Data show Vancouver sales were down 36% from August, 2009; Toronto sales 22% lower

Anyone hoping that the real estate market turned around for the better in August probably won’t want to hear the latest news from Vancouver and Toronto. The real estate boards in each city are among the first to release their monthly sales data, and tend to foreshadow the broader national data that will be released on Sept. 15 by the Canadian Real Estate Association. Here’s what they’re seeing:

SALES

The two cities released their August data late last week, and real estate boards in both cities have conceded that the heady days of the seller’s market are over. In Vancouver, sales were down 36 per cent from August, 2009. In Toronto, sales were 22 per cent lower.

“The prospect of interest rate hikes and new mortgage lending rules prompted some households to purchase a home sooner than they otherwise would have this year. The result has been a larger than normal dip in sales over the summer months,” Toronto Real Estate Board president Bill Johnston said.

PRICES

After peaking earlier this year, average sale prices in both cities have fallen back as well. In Vancouver, prices are down 2.8 per cent from April’s peak and ended August at $576,803. In Toronto, the average price in August was $411,012 – 8.6 per cent lower than May’s high of $446,593.

“We’re seeing moderate demand, low interest rates and a healthy but slowing stream of supply in our marketplace, all variables that favour those looking to purchase a home,” said Jake Moldowan, president of the Vancouver board.

“The last few months have also shown some stability when it comes to price fluctuations in the region, which is a welcome trend after reaching record highs in April.”

THE GOOD NEWS

In both cities, prices are still higher than they were last year. In Vancouver, prices are 6 per cent higher than August, 2009. In Toronto, prices are up 5.6 per cent.

“Market conditions have remained tight enough to support higher home prices in comparison to last year. Market conditions and the affordability picture would have to change dramatically before a sustained drop in the average selling price would take place,” said Jason Mercer, the Toronto Real Estate Board’s senior manager of market analysis.