Down goes the housing market -

Down goes the housing market

Prices hold but home sales plummet


Nathan Denette/The Canadian Press

To recap:

  • Sales of existing homes in Canada dipped 0.5 per cent nationally in December from November in seasonally adjusted terms, the Canadian Real Estate Association said today. It was the the third consecutive month of declines.
  • Actual, non-seasonally adjusted sales, dropped 17.4 per cent compared to December 2011.
  • CREA’s MLS home-price index rose 3.3 per cent on a year-over-year basis, the smallest gain since April 2011.
  • The number of homes newly listed for sale in December fell 1.3 per cent from November. Greater Toronto recorded the largest drop in new listings.
  • Four of every five local markets recorded sales declines in December on a year-over-year basis. Calgary was the great exception, with December sales up seven per cent year-over-year.


  • Sales numbers are moving exactly the way Finance Minister Jim Flaherty wants them to. “I don’t mind prices coming down a bit, too,” he told the Globe and Mail.
  • There’s little doubt the sales plunge reflects the impact of the mortgage-tighnening rules introduced by the federal government in July, TD Economics’ Sonya Gulati wrote in a note to clients this morning. Still, it might be too early to say whether the finance minister has effectively tamed the housing market: Gulati notes that the impact of the new mortgage legislation is now likely fully priced in, and that the cooling effects of similar tightenings in the past have been only temporary.



Down goes the housing market

  1. Housing has been a mess in Canada for at least twenty, thirty years now. Many people got into the market before it exploded upwards into the six, seven-digit realms we see now and conceive it to be normal.

    People need secure places to live their lives and it shouldn’t be costing them their entire incomes to survive…

    • …it exploded upwards into the six, seven-digit realms we see now…”

      You’re not suggesting that a five-digit home price would still be reasonable in 2013, are you?

      • I bought a place in Winnipeg in 2003 for $73K, sold it last spring for just over $200K. There’s no way its worth that much. Bad foundation, semi-sketchy neighbourhood. I did get it rewired though.

        • Interesting.

          Still, would you argue that it’s worth less than $100,000 today?

          • Intrinsically? It would be awfully close. I suppose the answer to that question depends if you think there’s a housing bubble or not. I do happen to, and I think if you look at analogous US markets, they had a huge run up, then crashed to well below where they were. I remember one article about a house in Cleveland that was at one point purchased for $200K (and it was kind of a ringer for my old place) that the bank couldn’t find a buyer for at $20K. If a $73K house appreciated at 3 per cent, compounded per annum, for the 8 years I owned that house, which is actually generous because the COLA has been more like 2%, it would be worth $94K and change. Add another $10K for the absent knob and tube and fresh certificate (you’re welcome, tobyornotoby, I try to do the right thing and more importantly my kid lived in that house) and it would probably be worth $104K if there had been no bubble.

        • Thanks for at least removing the knob and tube Gordeaux.

  2. Sales dropped 0.5%. New listings dropped 1.3%.
    The market therefore, got tighter, as sales cut deeper into old inventory.

    How does this indicate the housing market going down? If anything, it indicates that demand is outstripping supply — still.

    • Seasonally adjusted sales. CREAs seasonal adjustments are a black box.

  3. Horrors! Almost half the markets have the same amount of demand as supply! The consequences of this will be disastrous and crazy:

    Home-buyers will put reasonable conditions, such as home inspections, on their offers!
    Sellers will fix what’s wrong with their houses, rather than painting over it with “earth colours!”
    Real estate agents won’t be able to torque price wars from both ends to run up the sale price!

    However will Canadians cope?

  4. I’m just going to file this as story number 1,446,895 of the now roughly five year old “the real estate market’s coming down” narrative.

    I realize that the risk of wolves is real, and arguably increasing, but there’s a reason people stopped listening to that kid.

    • Great post. Funny, and so true.

  5. Interesting aside: Yesterday on the Globe and Mail site I noted no less than FIVE stories in their real estate section about bidding wars in Toronto, and houses going for between $60-80,000 above asking.

    • Which is a bigger threat to the economy than house prices leveling out. If buyers are pushed past their max budget to get a house they could be in trouble if interest rates rise or their income goes down, even temporarily.

  6. It’s surprising how much talk there is of a real estate bubble at this point in time. it’s a correction, and it’s only in certain markets at that. It’s hard to convince a population that everything is going downhill when you have repeated and rampant headlines reading “Calgary best performing real estate market in Canada.”