House sales may be plunging in many Canadian cities, but prices are still holding up as sellers retreat rather than opt for less.
Observers expect to learn that national sales dropped by about 12 per cent in November from a year earlier, when the Canadian Real Estate Association releases its monthly report, expected Monday.
Certain local real estate boards, such as those in Toronto, Vancouver, Montreal and Calgary, have already reported, with all but the latter showing broad declines.
The early reports have led Douglas Porter of BMO Nesbitt Burns Inc. to estimate the 12-per-cent drop on a national basis. He also expects the MLS home price index, released the same day, to show an increase of more than 3 per cent from a year earlier.
“After a deceptively mild result in October, the descent in Canadian home sales looks to have resumed in earnest in November,” Mr. Porter said.
Among the major centres he monitors, Calgary alone registered a rise in sales, of almost 10 per cent.
“So far, the drop in sales has not translated in a broad slide in prices, as sellers are choosing to pull their house from the market,” Mr. Porter said.
The Real Estate Board of Greater Vancouver said earlier this month that, while sales plunged almost 29 per cent in November, prices slipped just 1.7 per cent as “home sellers appear more inclined to remove their properties from the market today rather than lower prices to sell their properties.”
In Toronto, the other city that has troubled observers, particularly where the condo market is concerned, sales fell 16 per cent in November, and average prices rose 1.6 per cent.
At least some of the cooling has been attributed to new mortgage restrictions from Finance Minister Jim Flaherty, which came into effect in July. He wanted to engineer a soft landing for Canada’s housing market, and most observers believe that will be the outcome.
Canada’s real estate market is cooling as the U.S. market picks up after its protracted slump.
“Real home prices are rising moderately on [a year-over-year] basis, though are still down roughly 30 per cent from their 2005-06 peak,” said Adrienne Warren of Bank of Nova Scotia, referring to the United States.
“At the same time, Canadian housing activity has geared down, with average inflation-adjusted home prices moderately below year-ago levels for a third consecutive quarter in Q3.”