Mike Gas

TORONTO (Reuters) - Canadian home prices accelerated their decline in February, down 4.1 percent from a year ago, according to a report issued on Wednesday.
The Teranet-National Bank National Composite House Price Index, which measures the rate of change of prices for single-family homes in six metropolitan areas, also showed prices were down 7.4 percent nationally from the peak hit in August last year. Home prices fell 2.4 percent in January from a year earlier.
"The disinflation that began in February 2008 is now a year old. The retreat means that, on the whole, Canadian housing has become a buyer's market after five years of seller's-market conditions from 2002 to 2007," said Marc Pinsonneault, senior economist at National Bank Financial.
"Will home price deflation worsen in Canada to the extent it did in the U.S.? We do not believe so."
Home prices in Calgary, Alberta, suffered the biggest year over year drop, falling 8.1 percent in February from the same month a year ago. That was followed by a 6.4 percent slide in Vancouver, British Columbia, and a 5 percent decline in Toronto.
Halifax, Nova Scotia, joined the list of markets with falling home prices, with a 0.5 percent dip.
Meanwhile, home prices rose 3.2 percent in Montreal from a year earlier, and were up 2.8 percent in Ottawa.
Market watchers say current price declines are part of an ongoing retreat since the market hit its peak in 2007.
Housing activity, including resales and ground-breakings, is generally seeing a period of softness in Canada, though the sector has not experienced the same sort of plunge that has been seen in the United States.
Higher existing home sales in February and March, which have been supported by historically low mortgage rates, are seen as an encouraging sign that the sector is stabilizing.
"The report was further confirmation that the Canadian housing market is continuing to weaken, as the worsening economic and labor market conditions continue to sap the life from the once-booming housing sector," Millan Mulraine, an economics strategist at TD Securities, said in a research note.
"Nevertheless, it is clear that the pace of correction in the sector remains measured and orderly, and appears to be a milder correction than the sharp and prolonged adjustment seen in the U.S. housing sector."
On a month-to-month basis, national house prices were off 2 percent in February following a 1.6 percent decline in January.
The index showed month-to-month declines in the composite index have now spread to all six markets, with declines from the index's peak ranging from 1.6 percent in Montreal to 12 percent in Calgary.
(Reporting by Ka Yan Ng; editing by Rob Wilson)
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Just trying to add some balance to the postings from realtors on this site

Alan2005

Reported in the Vancouver sun

http://www.vancouversun.com/Business...251/story.html

Supposedly the index gives a better picture than the ones normally quoted as it compares like for like sales.

MB-Realtor

What a stupid survey, it calls itself Canada but only includes 6 Cities, 3 of them with the highest loss rates in Canada.

I quote:-

"The index showed month-to-month declines in the composite index have now spread to all six markets

Geographical Index Composition and Weighting by City

Vancouver: 23.6% Toronto: 42% Montréal: 17% Calgary: 10% Ottawa: 5.6% Halifax: 1.8%"


Thats it, no smaller Cities, no Rural, totally ignores the Prairies.

MB-Realtor

The survey is very good though, for the markets that it covers, and each market should be looked at selectively, but the information should only be used for judging trends.

In any area there are going to be some market segments that rise even as others are falling, some areas may only fall a small amount and other a large amount all within the same City. Here in Winnipeg expensive, over $500,000 house prices are falling, but under $250,000 are still rising.

Alan2005

Yeah - talk about it.

I assume it's a new index that will be aimed at people who are interested in the real estate derivatives market. They've obviously just issued a press release and are trying to make their mark - will be an interesting one to follow.

Serious question: How does real estate inflation get calculated in Canada. Is it based on the simple average of sale prices achieved? Is their any seasonal adjustment? Is there any mix adjustment (i.e. so that a lot of activity at one end of the market doesn't skew the average).

I actually think the only data of value a the moment is the sales volumes; as these are so low - it makes the other indexes too noisy to be of much use on a month-to-month basis.

On a side note - according to my banking friend a very significant chunk of real estate transactions are now 100% cash - not sure what effect this has on the market however.

MB-Realtor

CREA figures, which incidentally cover ALL MLS sales nationwide are normally given as: Volume, $ Value and also as seasonally adjusted.

In my market I do not recall any mention of mix adjustments, nor in the CREA figures.

MB-Realtor

I wonder if this is due to the `Boomer` generation downsizing, and so able to fund the new purchase entirely from the sale of their former family home.

MB-Realtor

I agree with that, it really is the only scale that matters to show the trend, but lower volumes can also push up prices, we are seeing that at the moment in the sub $250,000 market in Winnipeg, few properties = multiple offers = increasing prices. The classic market law of Supply and Demand.

Tangram

You must learn to multi reply.

Alan2005

If so, then they will be the lucky ones who bought before the madness really started or managed to sell in late 07/early 08. I can understand anyone who's got cash stashed away wanting to buy something with it given the returns on cash are so low atm.

Right now - I'm basing my predictions about the real estate market (down another 15-20% in the areas I'm looking) on unemployment statistics. If we get a few months of rising employment rates I will take this as a leading indicator for real estate price rises. While GDP is falling and unemployment is rising I have to wonder where the money to buy property is actually coming from, as ultimately it needs to be earned by doing actual work.

The major risk to this strategy is the government and it's misguided attempts to reflate the economy - and I do wonder if buying now (taking the likely 20% hit and forgetting about it) might be the best approach.

Settlers_Unlimited

NO. For when boomers really start downsizing, en masse, and they will one day, the market will take even bigger hit than from the current economy slowdown.

Souvenir

Houses in my area are on sale for prices a fair bit higher than last year. I don't know what actual selling prices are but there doesn't appear to be a downturn.

MB-Realtor

Remember there is a spread of about 20 years for the "Boomers" so I doubt they will all be selling at once.

Though they do have an effect on the market, especially for retirement properties.

Steve_P

According to an article in today's Calgary Herald: http://www.calgaryherald.com/busines...309/story.html

MB-Realtor

People still buy Real Estate in the worst of times, even in the recession of the 70's when employment was higher than now, as were interest rates, the market was still active, slower but active.

Donald Trump made his "real" money by buying Manhattan real estate when everyone else was selling.

In my time we have had 3 major downturns, 1970, 1980-1983, 1989-1996. How long will this one last, no one knows, but never before have we seen such a determined and united effort by governments to reverse it. Will it work? Your guess is as good as mine.

All I know is the Winnipeg market, which varies all over the place from boom to slump depending on where your looking.