Monday, December 15, 2008

Housing Bubble - Canada Style

TORONTO, Dec 15 (Reuters) - Existing home sales in Canada fell to their lowest level in nearly eight years in November, as the economic slowdown squeezed housing markets across the country, the Canadian Real Estate Association said on Monday.

Existing home sales were down 12.3 percent to a seasonally adjusted 27,743 units in November from October, CREA said, which marked the lowest level for monthly activity since January 2001.

The average price was down 9.8 percent at C$280,880 ($226,516), compared with the level recorded in the same month last year.

CREA said the housing market reflected the economic reality of the country, which the Bank of Canada said last week was entering a recession.

"These changes in the Canadian housing market reflect a broader and weakened picture of both the economy and buyer sentiment," said CREA Chief Economist Gregory Klump.

"National sales activity and price trends will continue reflecting increased cautiousness on the part of lenders and buyers, as the economy works its way through and out of the current recession."

The drop in existing home sales for the month was not as sharp as the 14 percent skid recorded in October, but the latest decline reinforced the view that consumers were growing more cautious and spending less as fears of a recession mount.

"The report underscores that the Canadian housing correction continued in earnest in November as sales activity continues to moderate at a fairly brisk pace," Millan Mulraine, economics strategist at TD Securities, wrote in a note.

Home sales dropped by double digits in most provinces. Sales skidded 14.0 percent in Alberta, 13.1 percent in British Columbia, 12.4 percent in Quebec and 12.1 percent in Ontario, said the association, which represents about 97,000 brokers and agents across the country.

($1=$1.24 Canadian) (Reporting by Frank Pingue; editing by Rob Wilson)


But there is no subprime in Canada and we don't have all those 'risky' mortgages here in Canada so I guess we won't see the kind of problems the US is having.

........

Oh wait a sec. . . . . . we did have risky mortgages and . . . . what's that . . . . . our house prices are falling extremely fast. . . . . hmmmmm. What do you mean . . . the Canadian economy is extremely vulnerable?

12 comments:

patriotz said...

"These changes in the Canadian housing market reflect a broader and weakened picture of both the economy and buyer sentiment," said CREA Chief Economist Gregory Klump.

How about prices reverting to fundamental value? Oh sorry Greg, I forgot we're not supposed to talk about that for RE.

jesse said...

Yeah, patriotz. Klump doesn't think much of home buyers when he thinks they're driven by "sentiment". Maybe it's... I don't know... high prices? Klumpie no likie when The Greed works the other way.

tulip-Mania2 said...

Mr. Klump, this summer:
http://finance.sympatico.msn.ca/banking/mortgages/article.aspx?cp-documentid=7847016

"As for that perennial bogeyman, the condo glut in Vancouver and Toronto, people have been expecting a crash for years, "and they've been wrong," Klump says. And he believes they'll continue to be wrong, because condos will remain more affordable than houses, and are likely to grow more appealing as rising gas prices spur people to eschew commutes for staying close to downtown."

Tick Tock

tulip-Mania2 said...

Klump said this fall:


"“We want to draw attention to the fact that despite some recent stories that suggest the Canadian housing market is heading for a crash similar to the States, that just isn't in the cards,” Gregory Klump, chief economist at the Canadian Real Estate Association (CREA), said on the call."

http://www.theglobeandmail.com/servlet/story/RTGAM.20081009.wcreacall1009/BNStory/Business/

Tick To

patriotz said...

Could someone please explain to me why this house in Grand Forks should cost more than this house in Toronto?

Ryan said...

“We want to draw attention to the fact that despite some recent stories that suggest the Canadian housing market is heading for a crash similar to the States, that just isn't in the cards,”

That's an awesome arguement. "You may think that current prices are unsustainable based on income and rent multiples, but I'd like to draw your attention to this fact: nuh uh."

Elegant Homes in West Toronto said...

The only forecast or projection that can be ACCURATELY made is hindsight.

We will see what the market brings. The issue is confidence, job stability and interest rates.

Rates are the lowest in 50 years, 93% have jobs and CMHC is calling for a net gain of 1.2% in growth.

But... Many prefer to see the glass half empty.

Toronto Condo said...

The HM Land Registry data relates to actual sales in the period up to September 2000. The paragraphs below set out the results of the Estate Agent consultation exercise, from which property details were obtained for over 150 dwellings currently for sale (January 2001) in the study area. Prices recorded by HM Land registry are usually lower than Estate Agent derived prices. This is because dwellings are not usually sold at the advertised prices due to both the negative equity trap outlined above and the usual negotiating process operating in a relatively static market such as that in the Study Area. Table 6.3 below shows average advertised house prices by area.Condominiums Toronto

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paula said...

Thanks for the great read. Now I know what is happening on the place.

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