Monday, June 16, 2008

"Canada's housing boom is over"

Tony Wong
Business Reporter

Toronto Star

The number of new listings of homes for sale set a consecutive monthly nationwide record in May, while prices rose by 1.1% annually – the smallest increase in seven years according to the Canadian Real Estate Association.
“Rising food, fuel and home process are denting consumer confidence” association economist Gregory Klump said.
New listings on the Multiple Listing Service hit 54,029 units on a seasonally adjusted basis in May, the most on record and a 2.2 % increase over the previous peak in April, according to the real estate association.
“The six-year housing boom has indeed fizzled and the poor winter results were not just weather and holiday related.” BMO Capital Markets analyst Robert Kavic said in a note. “The breadth of the declines is eye-catching.”
Nationally, the average price of a home is $337,071. With an increase of 1.1% prices are rising at a pace below the inflation rate.
Sales were also down by a significant 16.9% from last May at 35,040 units.
The association says western provinces, which have seen blistering price appreciation, have finally begun to cool.
“Canada’s housing boom is over, and the days of 40% plus price appreciation in Alberta are behind us,,” says Kavic.
In Edmonton, average house prices are down 4.8%, while Calgary house prices are down 2.4% year over year. House prices were also down 5.5% in hard-hit Windsor, where auto layoffs have taken a toll.
In the Toronto market, listings were up 15% in May, as sales continued a five-month slide. However, prices are still up a moderate 4% year over year.
Meanwhile, an uncertain economy means the market is not expected to pick up anytime soon.
“Increasingly cautious homebuyers may keep listings on the market longer before being sold, which increases the importance of realistic pricing,” Klump warned.

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