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Sales slump, listings jump as Canadian housing market cools

The Canadian Press

Latest comment posted at 3:31 PM EST 01/08/08

After record year in 2007, home sales fall 13.1 per cent in the first half of 2008 compared to a year go ...Read the full article

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  1. Alistair McLaughlin from Canada writes: 'bout bloody time.
  2. bill k from Canada writes: They can try to spin it all they want but the market has stalled and will start to crash hard. Nothing but for sales sign all through the GTA as mortgages get harder to get and job losses continue to increase. Prices are now falling but are going to dip hard as sales are starting to stall as we follow the US into a housing bust not seen since the great depression. RE agents can scream all they want but nothing is going to stop this housing crash.
  3. CallofDuty . from Toronto, Canada writes: I blame the winter weather for the months of May,June and July.
  4. Soon To Be Returning Expat from North Carolina, United States writes: Anyone watching the RE market knew this was happening for a few months now.

    I have no idea where it'll head, but I suspect it'll track most of the world's major RE markets (a decline steeper than a "cooling off").
  5. B C from Toronto, Canada writes: Wow! Bill K, guess you have that crystal ball all polished up.
  6. Silver Standard (Used to be gold) from Canada writes: Well I said not too long ago I can't wait till I can buy a house for less than 30,000. It will be happening soon. I for one am glad because with our new economy service job wages the house prices will have to be VERY LOW. What I am not looking forward to is when the government has to start raising taxes on everyone because of the "new economy" to cover costs that higher wage jobs used to cover. GREAT living in the NAFTA economy isn't it.
  7. Brad Bender from Calgary, Canada writes: I'm not worried. Housing prices never go down. I forecast that Calgary houses will cost infinity dollars in 2040.

    "Never a better time to buy!". LOL.
  8. Stude Ham from Canada writes:

    in some cities, like millerville, the greedy little scums who run that sub-country dumped on the buyers a so-called land transfer tax, in addition to the already existing provincial load. they were warned that such a tax could lead to market downturns... and sure enough... then the ottawa brainless mindlesslessly misled by the flake went ahead and changed the mortgage engagement rules in the belief that this would avoid a US style meltdown. well... the stats pretty much indicate the effects of such arbitrary decisions...

    we can of course all sweep these rotten government decisions under the carpet by suggesting anything that sounds like 'US housing crisis' and so on.

    nope ... stupidity coupled to greed over and over again leads to these economic disasters.
  9. globefan Eh from Canada writes: I often read the British papers, the decline there is likely to be greater than that in the US. Up to 50% in some areas, The UK market looks very bleak and little regulation of building societies is in large part responsible.
  10. Good Times, my Ladies. from Toronto, Canada writes: The air is out of the balloon and come Oct 15th there won't be any more 1st time home purchasers due to the cancellation of the 40 year amortization mortgage.

    What a folly to allow that in the first place!

    I am a first time home buyer and will wait for a few years, when there will be quite the sale unfortunately at some other's expense.
  11. steven threndyle from Kelowna, Canada writes: Ironically, though, a real estate development here in Kelowna (which has no short of resale listings right now, i can tell you) sold 38 out of 48 units in its Copper Sky project over the weekeend. people were attracted by a buy-in prices of $220K, which is about half the median home value in the Okanagan right now. It certainly is a buyer's market, but a lot of people would likely see that as a good thing. I talked with a real estate agent in North Vancouver last week and she told me that the high end and low end are moving, but nothing in the middle. which makes sense when you think about it - chances are that if you can afford a $1.5 million home, that you likely can afford a $2.5 million home. however, if you are a double income family grinding along trying to get a mortgage on an $800K home that you KNOW is just a lousy teardown, well, you're likely to be stepping away from the sidelines. the bidding war 'madness' has ended, and this is a good thing.
  12. PETER T from Toronto, Canada writes: PUMPERS of the real estates will say " Hmm..Sales decline is because of the BAD Weather, Raining has been a main cause of sales decline and housing market is still very healthy, we anticipated a 0.5 % price increases in the following months..." = LISTINGS UP, PRICES UP & NO BUYERS UNLESS The guy and the gal is willing to take a LOSS....
  13. Chuck Berry from Canada writes: Prices go up and prices go down. What's the big deal? Is the sky falling? I bought a house in Saskatchewan two years ago and the value doubled, with no improvements. This year we made a few renovations and the value tripled. This is the new normal in Saskatchewan and we are still less expensive than other major centres. There are more jobs than people to fill them. Sell your $500 000 house in Toronto, buy a $200 000 house in Saskatchewan, and be debtfree. Makes sense to me. What do you think?
  14. robert roels from Canada writes: It is more than real estate, it is about disposable income reduction to the point where people are having a tough time paying their bills.

    Fuel and food contribute to this. We supply the USA with oil and we, the producers pay a dollar more a gallon than they.

    Our own government chooses this over cutting the price. For what reason? Other oil producing countries give their own a break.

    We should kick everyone out of government and start anew.
  15. garlick toast from Canada writes: Wait 'till interest rates go up.
  16. aniphylactic shock troops from Canada writes: Chuck Berry writes: I bought a house in Saskatchewan two years ago and the value doubled, with no improvements. This year we made a few renovations and the value tripled. This is the new normal in Saskatchewan. Sell your $500 000 house in Toronto, buy a $200 000 house in Saskatchewan, and be debtfree. Makes sense to me. What do you think?

    I think you're in for a very rude awakening.
  17. Super Soaker from Vancouver, Canada writes: Another spin by CREA. I've come to learn that if CREA denies something, it means its in the mail in a big bad way (re: gas prices and re-location.)
    I suppose CREA hasn't heard of the enormous increase in fares BC Ferries are implementing due to gas prices. Less traffic, less business for islanders, more expensive goods. Doesn't take a RE genius to figure out what that means for RE prices on the islands.
    CREA's motto must be "If you don't make eye contact, they won't see you".
  18. Scotia Rae from Canada writes: Chuck Berry from Canada writes: Sell your $500 000 house in Toronto, buy a $200 000 house in Saskatchewan, and be debtfree. Makes sense to me. What do you think?

    $500,000 is not buying you much of a house in Toronto. Condo yes but house you're quickly headed towards hoodsville! The $200k house in Saskatoon or Regina is pretty much history as well.
  19. Ori Ben Zion from Vancouver, Canada writes: The higher they go the harder they fall. Vancouver is poised to become the worst performing market in Canada. Listings in the Metro Vancouver area recently surpassed 20,000, sales have absolutely fallen off a cliff, starts of new homes (mostly condos) are at record levels, and lenders have turned off the tap with respect to new development (thanfully they can see what is coming). CMHC insurance (backed by you and I), is the only reason lenders fund mortgages with less than 20% down. A very typical two bedroom SFH in an average working class neighbourhood in Vancouver is between $600k and $800K. That's a very average house on a very average lot. You can pay more ($1.1M to $1.3M) for a decent, newly renovate home in the same average working class neighbourhood). Salaries here are typically lower than Toronto and Calgary but prices are about twice as much. While there has always been a premium to live here in lotus land, the current market is well beyond that premium. Prices have not started to fall here significantly (they have started though) but we are early in this downward cycle. Assuming the current trends continue here, the law of supply and demand will soon lead to material price declines. It's unfortunate for families who bought into the hype that last few years. They will soon be "priced into the market".
  20. Y M from Toronto, Canada writes: Don't worry folks...there won't be a housing downturn here in the Great White North...wealthy immigrants from Hong Kong, China, India, Russia and other emerging countries are going to keep the demand for Canadian real estate very strong for years to come, because it's "different" here in Canada! We are the cosmopolitan envy of the world and everyone will want to live here in the future!

    LOL x 10
  21. garlick toast from Canada writes: In the U.S., one in thirty-five houses is empty.It's the higheest vacancy rate ever.
  22. Green Dragon from Ottawa, Canada writes: The housing market crashed in the United States because banks gave mortgages to people who could not afford mortgages. This was called the sub-prime mortgage market. After the teaser rates expired, these homeowners couldn't make their payments and the houses went into foreclosure causing prices to drop across the housing market.

    This won't happen in Canada because of the conservative lending practices of our financial institutions. We have no sub-prime mortgage market in Canada. So there is nothing to drive the prices down.
  23. Yvonne Wackernagel from Woodville, Canada writes: People should not get carried away. Your home is your castle and if you are living comfortably and have no or little debt, you are still better off to continue living in 'your castle'. Money does not make for happiness and can cause terrible stress. Having said that, houses will NOT sell for $30,000 ever again; get that round your head. But prices will diminish and I predict that you will see a real difference by this time next year. As well, if you got value for money when you purchased, then that should suffice. Value for Money is what it is all about and, in a lot of cases, a lot of people did NOT get value for money because the developers made over 133% profit last year. What I think everyone should try and do is Get Out of Debt because, if you do not have big debt, you will survive and could even prosper during this period or, better yet, help your kids get over the crisis caused by YOUR generation.
  24. R. M. from Regina, Canada writes: They need to cool here in Regina because it was pure and simple speculators from outside of the province who collared the market and pushed it up to ridiculous levels.
  25. garlick toast from Canada writes: The Bank of Canada rate is "sub-prime".Inflation needs to be eliminated by raising the loonie.
  26. Yvonne Wackernagel from Woodville, Canada writes: Green Dragon from Ottawa, Canada writes: The housing market crashed in the United States because banks gave mortgages to people who could not afford mortgages...............This won't happen in Canada because of the conservative lending practices of our financial institutions. We have no sub-prime mortgage market in Canada. So there is nothing to drive the prices down. '

    WELL, I disagree with you. Lending money to people to buy houses with nothing down or 5% down is just asking for trouble because it was obvious that there would be a natural inflation for at least municipal services, energy costs, workers wages, etc. before even the increase in mortgage rates after you have become accustomed to your low starter rate. No one else is to be blamed but YOU : no one held your hand and made you sign
  27. Jill Smith from Amherst, United States writes: Garlic Toast - don't know where you get your statistics from! 'One in 35 houses in the US is empty. ' Why dont you come down and take a look? In our area, because we weren't part of the bubble, it takes approximately less than a month to sell a house and real estate prices are going up! The 'bubble' applied to certain areas in CA, FL, etc. but NOT all of USA.
  28. Luc Delorme from Ottawa, Canada writes: garlick toast: what's the source of that stat? I find it hard that there are so many vacant houses. Citizens have to live somewhere? Or did builders build so many homes to sell as investment properties that there are more houses than households?

    This whole thing is no big news. Markets where prices have increased dramatically over the past years will drop just as quickly. Stable markets that enjoyed moderate growth will not plummet that way. Just this past month, two houses in my Ottawa neighbourhood sold in under 10 days. Price increases here have been under 6% for a long time. At that rate affordability is not really compromized, first time buyers can still buy nice houses without neding a 40-year mortgage, and the market goes on without crashing. If your market sounds like this (which is probably the case if you live anywhere east of our nation's capital), there's not much to worry about. Prices might be flat for a while, but they're not going to crash.
  29. Bryce Richards from Calgary, Canada writes: He you Dorkwards out there. Houses never really went up in the last 7 or 8 years or so. All that happened was the US pumped 2 Trillion $ / year of liquid equity money into the real estate markets of the world. Your home only looks like it doubled in the last 5 years. What actually happened is it now takes twice as many $dollars to buy the same home. The mortgage doubled, the payments doubles, the taxes doubled. But did you wages double. To make ends meet most Canadians who mortgaged in the last few years took out long amortizations like 30 or 40 years and will never see a dime of real equity over the next 40 years.

    MORTGAGE SLAVES TO THE BANKS.

    What goes up can really come down.
  30. red marabunta from Barbados writes: OMG panic... I must sell..but wait a minute? where will I live?
  31. R C from Vancouver, Canada writes: As per usual no one understands what sub-prime really means. Google it, educate yourself before you use that term in a sentence.
  32. Carl Hansen from Canada writes: Well raise my rent! That's unpossible, housing only goes up. By the way, they did raise my rent by 6% which is an outrage.
  33. P cheng from ottawa, Canada writes: Yvonne Wackernagel from Woodville, Canada writes:
    WELL, I disagree with you. Lending money to people to buy houses with nothing down or 5% down is just asking for trouble because it was obvious that there would be a natural inflation for at least municipal services, energy costs, workers wages, etc. before even the increase in mortgage rates after you have become accustomed to your low starter rate. No one else is to be blamed but YOU : no one held your hand and made you sign
    ===============>
    I just got my investment property remortgage. The bank drive me nuts. It is also partly my fault. I have a single house with the "in-law" address. All my existing mortgage anad insurance uses the "in-law" address. I try to switch the bank and I need to line-up my address to the correct address. I spend 3 weeks and a lot of call on this. Also, they make sure that you need to paid off the property tax (I paid on-line and does not have the receipt). I need to pay city $30 for the confirmation.
    My point here is that they tight up the process and apply strict rule on all the new mortgage application.
  34. Y M from Toronto, Canada writes: Interesting rebuttal to this piece from MP, Garth Turner:

    http://www.greaterfool.ca/2008/07/28/four-years/
  35. Voltaire's Distant Cousin from Toronto, Canada writes: Definition of a bubble: When buyers buy houses based largely or entirely on the expectation of future appreciation. When a market is widely expected to appreciate, then more and more buyers flood the market, which in turn forces prices upwards. It is a self fulfilling prophecy. But the high prices cannot last. In a bubble, because so many purchasers made the decision to buy based on appreciation expectations, and NOT ON THE RENT THAT THEY MIGHT RECEIVE FROM THE PROPERTY, once the expectation of increasing values disappears, there is no reason to enter the market. Buyers dry up, and values plummet. Declines bring more declines, and once the general public realizes what is happening, the bubble bursts.

    Evidence of a bubble (especially in Vancouver): The best way of testing whether there is a real estate bubble is to look at the rental rates in a city. Historically in the US, the ratio of house price to annual rent was 14. During the recent American housing boom, the ratio was closer to 25 (source: New York Times). In Vancouver, the average price of West Side homes is 1.45 million dollars! A quick browse of housingmaps.com indicates that typical rents in the West Side are around $3000 for a house. Using that comparison, the ratio of house price to annual rent is 40.3! If the ratio was 14 in the West Side, then the average monthly rent would be $8630. Vancouverites simply don't make enough money to support these crazy real estate prices.

    While it is true that Vancouver's market has soared due to Asian investment, if the market begins to decline, then that investment may slow. If you had a 1.5 million dollars to invest, would you put it into a declining market? Or would you use it to pick up bargains in markets that have already crashed?
  36. Misery Lastname from Angus, Canada writes: I have trouble with the CMHC mortgages moving up from 75% to no down payment and 40yr terms. Well if ur gonna sell homes with no dp, and little scrutiny of earnings and bloated appraisals, disaster is the result. But when u look close u can see the greed and the plunder from all the agents and appraisers also lawyers. They all fed at the trough. There r few sub prime mortgage because CMHC got greedy an wanted that too. And who can blame them. We the tax payer guaranteed their risk. Now wouldn't u like to have a bet on that horse.
  37. Mr. Andrew Toth from Oliver, B.C., Canada writes: This is going to get a whole lot worse.......for a prolonged period of time. 10 years.
  38. Don Portz from Trochu AB, Canada writes: To Yvonne - While I have disagreed with you on some other aspects, I certainly do find your comments relative.
    I suspect over the last few years that many people looked towards purchasing a home as an investment. A long time ago, I was cautioned against that concept unless the house would be the last one. If it is not you can only consider that the next property will cost more in relation to inflation, size amenities etc. However once you are out of the RE market then the equity is tax free cash for your use.
  39. David Gibson from Canada writes: The market is good right now. The fact that it is slower than April 2007, that there are some houses for a buyer to look at, and we have dropped about 5% this year, does not mean that things are "bad." However, simplistic views will always sell, for obvious reasons.
  40. Michael Kalus from Canada writes: Green Dragon from Ottawa, Canada writes:

    [...]

    This won't happen in Canada because of the conservative lending practices of our financial institutions. We have no sub-prime mortgage market in Canada. So there is nothing to drive the prices down.

    --------------------

    That's a good one, around five years ago I was talking with a guy who was a developer. He told me flat out that "no money down" is not a problem because there are "ways" to get around these stupid limitations that the banks had to prevent people with no credit / bad credit to buy.

    The CIBC already got burned in the US housing crisis, Canada so far hasn't been hit (at least not officially), but wait another six months and the picture may change.

    Here in the area I see a LOT more "For Sale" signs go up, and STAY up, that alone is a goo dindication that for one reason or another people aren't willing or able to buy these properties anymore.
  41. Charles Smith from United Kingdom writes: Is it only returning to normal?
  42. Charles Smith from United Kingdom writes: How many part-time investors do we have out there that have been following the "no money down - negative gearing" strategy, with about 10 houses mortgaged to the limit? This bunch might get stung!
  43. Chuck Berry from Canada writes: The housing prices in Saskatchewan are less than Alberta, British Columbia, and Ontario. There are also jobs in Saskatchewan. If you can't afford to live in another part of Canada, you can prosper in Saskatchewan. It's a no-brainer, dude.
  44. Roop Misir from Toronto, Canada writes: "Canada's red-hot housing market cooled considerably in the first half of this year, with sales recorded by the Canadian Real Estate Association slumping by 13.1 per cent from the same period last year."

    No longer red hot, eh?

    But prices are expected to increase--by how much by 2050? That's when action is going to be taken on "climate change".

    Real Estate is a long term investment. The problem is when people with zero down payment 'buy' real estate, and when "speculators" get carried away!

    Did I say the "S" word?... Sorry I mean "investors"!
  45. Kman Willi from Canada writes: Green Dragon from Ottawa, Canada writes: The housing market crashed in the United States because banks gave mortgages to people who could not afford mortgages. This was called the sub-prime mortgage market. After the teaser rates expired, these homeowners couldn't make their payments and the houses went into foreclosure causing prices to drop across the housing market.

    This won't happen in Canada because of the conservative lending practices of our financial institutions. We have no sub-prime mortgage market in Canada. So there is nothing to drive the prices down.
    _____________________

    Sorry, but I have LOTS of friends in the US who locked in for 25 years! How many Canadians have 25 year fixed interest loans?

    The subprime market were people who had their mortgages re-set after a few years! How many Canadians are on variable mortgages, or are about to have their mortgages re-set after a few years? We have no subprime market in Canada? The entire Canadian market is a sub-prime marketplace!
  46. Dick Garneau from Canada writes: I am presently a home seller. It's a good thing the market has cooled off as home buying should not be a panic decision by either buyer or seller. The changing mortgage rules of 5% down and 35 years to pay is also a good thing. Even better 10% over 25 years.
    Also every market in Canada or North America is different so we shouldn't generalize. Even sub-markets with in cities are different.
    .
  47. Jay G from Ottawa, Canada writes: I've read in several articles that almost 50% of millionaires attribute their wealth to real estate.

    It must be luck though so I won't follow their advice. Instead, I'll listen to "Bill K" and "Silver Standard" and live with my parents until I'm 40 and housing prices drop back down to 30K.
  48. Chris Williams from Canada writes: There is indeed a sub-prime mortgage market in Canada. It is small, but it is here. Sub-prime refers not to the mortgage product, but to the buyer. It is normally a buyer with no verifiable income or very poor credit. It is someone who normally would never qualify for a mortgage.

    The interest only and partial payment mortgages of the US refer to a specific mortgage product. I am not aware of whether there are such products available here. But, I can see why so many people bought into them into the US. Their mortgage interest is tax deductible - so you pay interest only and then deduct it and you erroneously believe that your house isn't costing you anything. Throw in the fact that house prices were rising so fast you again erroneously believe that you are sitting on a pot of gold and not the biggest financial liability of your life.

    There is no doubt that some markets in Canada are over priced. Vancouver is destined to fall hard. I am glad that I got out of it. Made a bag of money in 3 short years and left.
  49. g c from Toronto, Canada writes: US sub-prime ARM = CDN conventional mortgage

    Alot of incorrect information about 'sub-prime'.

    Canada: typical mortgage term from 1-5 yrs based on 25 yr amortization and refinanced after each term.

    US: conventional mortgage term is 15/20/30 yrs FIXED rate on 25-40 yrs amortization.
    US sub-prime ARM (Adj. Rate Mortgage) are 3/5/7 yrs FIXED and last yr rate increases, then have to refinance/qualify for mortgage.

    US problems are the following:
    - ppl were maxed loan based upon ARM rate;
    - rate for ARM lower than 15/20/30 yr FIXED;
    - little or NO downpayment;
    - house value declined and come renewal after 3/5/7 yrs they would have to qualify/refinance for a 'conventional' mortgage at higher rate.

    A reduction in market value of more than the down-payment amount means that your mortgage is backed by an asset worth less than the value of the mortgage.

    If you put down 5% and there's a 10% correction, you then owe more on the house that it's worth. 0% is even worse.

    That will be the shock that ppl who purchased with less than 25% downpayment and amortizations that are greater than 25 years.

    Remember that in the first 5 years, the majority of your mortgage payment (~95%) goes toward the interest and NOT principal.

    But 25% downpayment provides much more of a buffer to the lender... which is why they won't lend to you without insurance if you put down less than 20%.
  50. Canuck in the village from NYC, United States writes: It seems all those whining here in the comments seem to be the ones that didn't profit from the overvalued real estate prices. Canadian real estate is still a bargain compared with the rest of the world. Did people not learn how the market is played the last time we went through this cycle (12yrs ago).
    To the curious few that seem to make comparisons about the CDN and US real estate markets the real difference between the 2 is the way the markets operate. In a nutshell most CDNs buy real estate and sit on it for growth and security. In the US they buy and then flip within a few years because t is the only way you will ever be able to truly own your own home. After doing this sufficient times will you have enough money to buy a place you can actually afford. US markets are so way overvalued hence the fancy mortgage vehicles used to get people to buy.
    Once the fear mongering from the media dies down it will be business as usual for the market.
  51. bill k from Canada writes: Sorry Canuck in the village from NYC the fact is the Canadian RE bubble has popped and there is nothing you can do to stop it. Many RE agents like yourself are in fear of looking for a real job. Many flippers in Canada are looking for a greater fool but alas no more suckers remain. The free lunch is over and now the bill must be paid. www.greaterfool.ca will help you get a better understanding of reality. Reality will be a bitter pill to swallow for all those who are now and going to be upside down on their mortgage. POP....what was that?

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