Across Canada the housing market took a beating in July, but the only thing more prevalent than the “for sale” signs gathering dust everywhere were excuses for why buyers have suddenly vanished.
In Toronto, July sales fell 34 per cent. They were down by 42 per cent in Calgary. And in Vancouver and the lower mainland sales plunged by around 45 per cent. If those watching the housing market thought sky-high prices were to blame, though, realtors were quick to correct them.
The Fraser Valley Real Estate Board said “beautiful weather” across B.C.’s lower mainland last month kept buyers away. That was apparently also the case in Winnipeg, where sales fell 13 per cent from the year before. “With the weather way better than last July—and maybe people thinking more about some sun, sand and surf rather than listing and selling—the numbers don’t look all that bad,” the city’s real estate board said. It wasn’t just Mother Nature conspiring to cool the market. Many realtors blamed rising interest rates for the slowdown. Meanwhile, realtors in Calgary said sales fell because the province is “lagging” the rest of the country in its recovery, despite the fact Alberta has the third-lowest unemployment rate in Canada.
But in the eyes of realtors in B.C. and Ontario, the biggest culprit by far was the new Harmonized Sales Tax, introduced at the start of July. A Royal LePage survey of 765 realtors in the two provinces found 46.7 per cent had heard comments from buyers and sellers about the tax, leading it to conclude the HST has done the most damage—despite the fact the HST doesn’t apply to resale homes.
Even as the Canadian Real Estate Association is forced to backtrack on its sales predictions for 2010—in February it said Canada would end the year up 13.3 per cent, it now says sales will fall 1.2 per cent—the industry has spun the declines as a return to a more balanced market. But with buyers nowhere to be found, and prices still at record highs, chances are it’s going to get a lot harder for realtors to find excuses in the months to come.