Number of House Sales is Falling Fast, Prices Not So Much
First Published Date : February 19, 2009 ADawnJournal.com
The Canadian Real Estate Association has released its latest figures, and with them comes the news that house sales are falling in number as the housing market continues to feel the pressure of the global credit crisis. The headline of the latest figures is that sales have fallen by 41 per cent in the 12 month period from January 2008 to January 2009. With sellers reluctant to put their houses on a market that is filled with fairly anxious customers, the level of sales will naturally fall. What is positive, though, is that the prices on house sales are staying relatively constant by comparison.
While things south of the border continue to lurch while we wait for the results of President Obama’s stimulus package, Canada is showing many other countries that house prices do not need to fall anywhere near as fast nor as far as they have been elsewhere. One of the most remarkable pieces of news is that house prices have actually stabilized in recent months, with no fall since November. The good news overall is that the meltdown which has happened in the US seems unlikely to be repeated in Canada.
The Teranet-National Bank house price index – a highly technical database which uses enhanced data to compare year on year house prices – has shown an actual small rise (+0.6%) in prices between November 2007 and the same month in 2008. The same comparison for the USA has shown an eighteen percentage point fall – and a 25% fall overall since 2006. And although it is true that the figures seem to depend hugely upon the people providing them, the most reliable, respected indices are showing positive signs for the Canadian housing market.
There is certainly no disputing that numbers are falling still – houses are not being sold in such large numbers as they were before – but there are signs that the problems are being addressed. When sales fell off in 2008 this happened in Vancouver, Calgary and Toronto – where house prices are relatively high. Consequently, people in those cities are less likely to put their houses on the market in 2009, until things improve at least. Sales in Montreal, Winnipeg and Ottawa, comparatively, have remained more constant – unsurprisingly, as these are higher-priced cities.
As a rule, higher-priced houses are not being sold quite as often as before, with consumer confidence inevitably falling as a consequence of the fears over jobs – Canada, seen by many worldwide as an example of how to run an economy cautiously but positively, recently announced record job losses in one of the biggest signs yet of how global this crisis is. In the lower price cities, prices are beginning to rise while they fall in the higher priced cities. But overall the big news from the latest figures is to be summed up in one sentence: not the best news, but a lot better than some others are getting.