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Resale activity slips due to high prices, but overall picture strong
Oct 20, 2007 04:30 AM
High prices in the third quarter led to a slight cooling of the home resale market in major Canadian markets, a trend that's expected to continue as sales level off in 2008 from this year's record levels.
Seasonally adjusted sales by real estate agents using the Multiple Listing Service totalled 89,482 units in the July-September period – the third-highest quarterly level on record, according to the Canadian Real Estate Association. Sales volume, however, was down 4.1 per cent from the record set in the April-June quarter, due to fewer unit sales in Edmonton, Calgary and Montreal.
"There's no fundamental shift in psychology. People are quite enthusiastic about making major purchases such as a house or a car, but affordability is starting to erode sales activity," says CREA chief economist Gregory Klump.
"The continued rise in prices has eroded affordability and, as a result, sales are projected to ease back to more normal levels the rest of the year and over 2008."
But while CREA expects sales to recede from the records set in the first half of this year, Klump stresses that sales "remain very strong."
In both Calgary and Edmonton, he said, the rapid increase in prices has resulted in sales activity declining from record peaks.
``They used to be very strong sellers markets and they've returned to balanced territory," Klump said.
CIBC economist Benjamin Tal also expects the market to level off.
"I think that we will see prices definitely start to level off and rise a little bit more than inflation, nothing more than that. The days of double-digit gains, especially in Central Canada, are over and we are going back to a more normal level of activity, which is just one or two percentage points higher than inflation for the next 12 months, mainly for Ontario and Quebec." The Canadian Press
Oct 20, 2007 04:30 AM
High prices in the third quarter led to a slight cooling of the home resale market in major Canadian markets, a trend that's expected to continue as sales level off in 2008 from this year's record levels.
Seasonally adjusted sales by real estate agents using the Multiple Listing Service totalled 89,482 units in the July-September period – the third-highest quarterly level on record, according to the Canadian Real Estate Association. Sales volume, however, was down 4.1 per cent from the record set in the April-June quarter, due to fewer unit sales in Edmonton, Calgary and Montreal.
"There's no fundamental shift in psychology. People are quite enthusiastic about making major purchases such as a house or a car, but affordability is starting to erode sales activity," says CREA chief economist Gregory Klump.
"The continued rise in prices has eroded affordability and, as a result, sales are projected to ease back to more normal levels the rest of the year and over 2008."
But while CREA expects sales to recede from the records set in the first half of this year, Klump stresses that sales "remain very strong."
In both Calgary and Edmonton, he said, the rapid increase in prices has resulted in sales activity declining from record peaks.
``They used to be very strong sellers markets and they've returned to balanced territory," Klump said.
CIBC economist Benjamin Tal also expects the market to level off.
"I think that we will see prices definitely start to level off and rise a little bit more than inflation, nothing more than that. The days of double-digit gains, especially in Central Canada, are over and we are going back to a more normal level of activity, which is just one or two percentage points higher than inflation for the next 12 months, mainly for Ontario and Quebec." The Canadian Press