Down goes the housing market - Macleans.ca

Down goes the housing market

Prices hold but home sales plummet

by

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.

Commentary:

  • 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.