The Canadian housing market in 2007 set a number of MLS® sales records,and the re-sale housing market is expected toremain at near record sales levels in 2008, according to The Canadian RealEstate Association.
Annual residential MLS® sales activity totaled 520,747 units in 2007, up 7.6 percent from 2006 levels. This was the largest annual sales growth since 2002, and the first time transactions via the MLS® systems of real estate boards in Canadahave surpassed 500,000 units sold in one year.
“The results in 2007 show the strength and the affordability of the Canadian residential market,” says CREA President Ann Bosley. “The statistics again show just how different the housing markets are in Canada and the United States. Canadian REALTORS® know that Canadian mortgage lenders correctly see that home prices will continue rising. We know there is still strong competition for mortgage business in Canada.”
Three key economic ingredients will keep Canada’s housing market on a different track from the United States. One is consumer confidence, the second is employment, and third is affordable interest rates. The Bank of Canada cut interest rates on January 22nd because of weaker prospects for Canadian economic growth in 2008. “Those lower interest rates will also help temper the erosion in housing affordability due to additional home price increases,” Bosley added. The Bank of Canada is expected to cut its trend-setting rate again in March.
CREA’s Chief Economist Gregory Klump says that the Canadian housing market in 2008 will pull back from the breakneck pace set in 2007, but this is still forecast to be the second-busiest year on record in almost all provinces, with residentialunit sales reaching an estimated 512,705 units.
Average prices for MLS® home sales are expected to keep setting records in 2008, although prices will increase more slowly as the market becomes more balanced. In most provinces, the market will nevertheless remain historically tight – with the tightest markets being in Saskatchewan and Manitoba. Nationwide, the average residential price is forecast to increase 5.5 per cent to about $322,700.
According to CREA’s Chief Economist, a larger supply of listings will be one of the balancing influences in 2008. New listings are forecast to rise in all provinces except Alberta, where they’re expected to retreat after spiking in late 2007.“The challenge for the Canadian housing market will be the extent to which employment and consumer confidence may be affected by a slowdown in the U.S. economy,” Ann Bosley adds. “Slower job growth, not massive layoffs, are forecast for Canada in 2008,”
CREA’s Chief Economist Gregory Klump adds. “Consumer confidence may be sideswiped by stock market volatility, and reports that chances of a U.S. economic recession will put the brakes on the Canadian economy. With slower job growth, a low unemployment rate and the absence of widespread layoffs, consumer confidence will bounce back. The domestic economy and the housing market will weather the sub-prime fallout with the help of lower interest rates”.
CREA - January 23, 2008
Friday, January 25, 2008
Housing affordability to ease in 2008
Alberta home buyers could be in for some much needed affordability relief this year - those in Ontario, maybe not so much.
Across the country, the percentage of pre-tax income needed monthly to own a home should ease a bit in 2008, said Derek Holt, assistant chief economist at RBC.
“I think it had gotten just about as bad as it could get, and that a modest amount of relief is coming across the whole country,” said Mr. Holt, co-author of a report on housing affordability released Thursday.
A sustained increase in prices caused housing affordability across the country to hit its worst point in 17 years in 2007. But while easing price gains and mortgage rates should help homeowners in 2008, Ontarians could still be out of luck, Mr. Holt said.
That's because his numbers don't take into account the impact of provincial property taxes, which could rise dramatically in Ontario after the recent end of a three-year freeze on property value assessments.
RBC expects things to calm the most in the overheated Western provinces, where affordability has hit an all-time low. In Alberta, resale house-price gains are expected to slow dramatically, from 30 per cent in 2007 to the 9 per cent range this year. Gains in Saskatchewan should cool from the 30 per cent range to about 15 per cent, according to RBC.
Across the country, RBC is expecting a 5 to 7 per cent increase in resale prices. That compares with a 10.8 year-over-year increase in 2007, according to data from the Canadian Real Estate Association (CREA).
The five-year posted mortgage rate in Canada is also set to decline by one half to three quarters of a percentage point by the end of the year, Mr. Holt said. Variable mortgage rates should also continue to fall, with the Bank of Canada expected to drop the overnight rate a further percentage point this year.
“A long string of house price gains that have outstripped income gains has been the prime culprit,” Mr. Holt said of last year's deterioration in housing affordability. That's unlike the last time owning a home was this tough – in the late 1980s and early 1990s when both unemployment and interest rates were in the double digits, he added.
In the third quarter of 2007, the last period for which data are available, almost every housing class in every major city got pricier, with the exception of Alberta condos and detached bungalows in Edmonton.
The priciest home was a detached two-storey in Vancouver, which ate up 72.4 per cent of pre-tax income. The most affordable residence to own was a Manitoba condo, which cost 18.9 per cent of monthly pre-tax income.
LORI MCLEOD Globe and Mail Update January 24, 2008 at 3:05 PM EST
Across the country, the percentage of pre-tax income needed monthly to own a home should ease a bit in 2008, said Derek Holt, assistant chief economist at RBC.
“I think it had gotten just about as bad as it could get, and that a modest amount of relief is coming across the whole country,” said Mr. Holt, co-author of a report on housing affordability released Thursday.
A sustained increase in prices caused housing affordability across the country to hit its worst point in 17 years in 2007. But while easing price gains and mortgage rates should help homeowners in 2008, Ontarians could still be out of luck, Mr. Holt said.
That's because his numbers don't take into account the impact of provincial property taxes, which could rise dramatically in Ontario after the recent end of a three-year freeze on property value assessments.
RBC expects things to calm the most in the overheated Western provinces, where affordability has hit an all-time low. In Alberta, resale house-price gains are expected to slow dramatically, from 30 per cent in 2007 to the 9 per cent range this year. Gains in Saskatchewan should cool from the 30 per cent range to about 15 per cent, according to RBC.
Across the country, RBC is expecting a 5 to 7 per cent increase in resale prices. That compares with a 10.8 year-over-year increase in 2007, according to data from the Canadian Real Estate Association (CREA).
The five-year posted mortgage rate in Canada is also set to decline by one half to three quarters of a percentage point by the end of the year, Mr. Holt said. Variable mortgage rates should also continue to fall, with the Bank of Canada expected to drop the overnight rate a further percentage point this year.
“A long string of house price gains that have outstripped income gains has been the prime culprit,” Mr. Holt said of last year's deterioration in housing affordability. That's unlike the last time owning a home was this tough – in the late 1980s and early 1990s when both unemployment and interest rates were in the double digits, he added.
In the third quarter of 2007, the last period for which data are available, almost every housing class in every major city got pricier, with the exception of Alberta condos and detached bungalows in Edmonton.
The priciest home was a detached two-storey in Vancouver, which ate up 72.4 per cent of pre-tax income. The most affordable residence to own was a Manitoba condo, which cost 18.9 per cent of monthly pre-tax income.
LORI MCLEOD Globe and Mail Update January 24, 2008 at 3:05 PM EST
Wednesday, January 23, 2008
2007 MLS® Dollar Volume Beats the Billion Mark!
Nelson, BC January 21, 2008 – MLS® Dollar Volume of all sales processed through the Kootenay Real Estate Board broke through the billion-dollar barrier for the first time ever exceeding $1.13 Billion Dollars in 2007. The $1.13 Billion figure from 2007 represents a 34% increase over the total value of all MLS® Sales in 2006 of $842 Million dollars.
Kootenay Real Estate Board President Andrew Smith says: “REALTORS® in the Kootenay’s expected that the dollar volume would reach these levels due to the market increases of the last few years, but I’m sure more than a few of our real estate professionals are surprised at the speed of which we hit this new benchmark.”
MLS® Unit Sales finished 2007 showing a moderate increase in comparison to total MLS® Unit Sales in 2006, up 6% comparing year to year.
The price of the average residential detached house sold on the Multiple Listing Service® (MLS®) in 2007 rose by 21% to $291,532 compared to the amount of $240,959 reported in 2006 further indicating consumer confidence in Kootenay Real Estate markets.
Kootenay Real Estate Board MLS® statistics for 2007 show residential detached housing listings down 6% over 2006 with MLS® unit sales for detached residential housing showing a similar small decline of 5% over amounts reported last year.
Overall, the number of MLS® listings in 2007 increased 9% over 2006, with overall MLS® unit sales remaining positive with a moderate of 6% increase in MLS® Unit Sales reported in 2006.
MLS® Land Sales remain strong with 2007 continuing to show MLS® Land sales popular with a 26% increase in number of MLS® Units sold and an 11% increase in numbers of MLS® Land Listings offered over 2006.
The MLS® Dollar Volume of Land sales remained impressive with a 46% increase in MLS® Dollar Volume of Land Sales over amounts reported in 2006.
When asked to comment on what residents of the Kootenays should expect for their real estate markets in 2008 President Andrew Smith had this to say:
“All indications are that our real estate markets should be heading towards more balance in 2008. Recent past markets have favoured sellers. Industry experts indicate that the markets will level to favour neither the buyer or the seller.”
Smith also adds: “REALTORS® in the Kootenays are experienced in representing buyers and sellers in real estate transactions and know how to adjust to changing market conditions to benefit their clients. For expert advice on local real estate market conditions, consumers should call a REALTOR®.”
Major Kootenay markets showing increases in MLS® unit sales in 2007 in comparison to 2006 are: Cranbrook – up 19%, Elkford – up 12%, Greenwood – up 9%, Golden – up 44%, Invermere – up 3%, Kaslo – up 16%, Kimberley – up 1%, Nakusp – up 78%, Nelson – up 30%, Radium – up 27%, Rossland – up 72%, Sparwood – up 11%, and Warfield – up 36%.
Kootenay Real Estate Board President Andrew Smith says: “REALTORS® in the Kootenay’s expected that the dollar volume would reach these levels due to the market increases of the last few years, but I’m sure more than a few of our real estate professionals are surprised at the speed of which we hit this new benchmark.”
MLS® Unit Sales finished 2007 showing a moderate increase in comparison to total MLS® Unit Sales in 2006, up 6% comparing year to year.
The price of the average residential detached house sold on the Multiple Listing Service® (MLS®) in 2007 rose by 21% to $291,532 compared to the amount of $240,959 reported in 2006 further indicating consumer confidence in Kootenay Real Estate markets.
Kootenay Real Estate Board MLS® statistics for 2007 show residential detached housing listings down 6% over 2006 with MLS® unit sales for detached residential housing showing a similar small decline of 5% over amounts reported last year.
Overall, the number of MLS® listings in 2007 increased 9% over 2006, with overall MLS® unit sales remaining positive with a moderate of 6% increase in MLS® Unit Sales reported in 2006.
MLS® Land Sales remain strong with 2007 continuing to show MLS® Land sales popular with a 26% increase in number of MLS® Units sold and an 11% increase in numbers of MLS® Land Listings offered over 2006.
The MLS® Dollar Volume of Land sales remained impressive with a 46% increase in MLS® Dollar Volume of Land Sales over amounts reported in 2006.
When asked to comment on what residents of the Kootenays should expect for their real estate markets in 2008 President Andrew Smith had this to say:
“All indications are that our real estate markets should be heading towards more balance in 2008. Recent past markets have favoured sellers. Industry experts indicate that the markets will level to favour neither the buyer or the seller.”
Smith also adds: “REALTORS® in the Kootenays are experienced in representing buyers and sellers in real estate transactions and know how to adjust to changing market conditions to benefit their clients. For expert advice on local real estate market conditions, consumers should call a REALTOR®.”
Major Kootenay markets showing increases in MLS® unit sales in 2007 in comparison to 2006 are: Cranbrook – up 19%, Elkford – up 12%, Greenwood – up 9%, Golden – up 44%, Invermere – up 3%, Kaslo – up 16%, Kimberley – up 1%, Nakusp – up 78%, Nelson – up 30%, Radium – up 27%, Rossland – up 72%, Sparwood – up 11%, and Warfield – up 36%.
MLS® sales have strong economic impact
A recent study by Clayton Research indicates secondary spending from BC residential MLS® sales contributed more than $4 billion to the provincial economy between 2004and 2006. In addition, a total of 39,115 Direct and Indirect jobs were available as a result of MLS® sales. This accounts for nearly one in 55 jobs within BC’s economy, the largest impact of any province in Canada.
A total of $30,200 in additional spending was generated by the average housing transaction in Canada during the same period. A total of 476,063 homes changed hands in Canada within the two-year period as a result of MLS® listings—an influx of $15.3 billion into the national economy. The study indicates about 158,600 direct and indirect jobs were created across Canada as a result of MLS® home sales. These jobs include the finance, insurance and real estate sectors, as well as trade, manufacturing, construction and other related industries.
BC experiences the highest relative job impact of any province. Sales and purchases of MLS® homes in BC generate almost 39,115 direct and indirect jobs – nearly 1 in 55 jobs across the entire BC economy. Nation-wide, the jobs impact from home sales – 158,600 jobs – accounts for about 1 in full-time equivalent 100 jobs across the entire economy.
Clearly, good business within the real estate profession means good things for the economy.
· Real estate is among the top five sectors in the provincial economy.
· Economic impact of Home Sales. Real estate purchases and sales translate into additional consumer spending, which drive the economy. A recent study by Clayton Research Associates Limited for the Canadian Real Estate Association estimated the average BC home sold on the MLS® in 2005 triggered $40,450 in additional spending, including legal fees, property appraisals, moving expenses, utility connections, home renovations, furniture and appliance purchases and taxes—all of which fuel the economy.
· Based on that figure, between 2004 and 2006 MLS® home sales in BC generated over $4 billion in related spending and created 39,115 jobs.
· In 2007 MLS® homes sales within the Kootenay Real Estate Board have generated over $130 million in related spending.
The Kootenay Real Estate Board
A total of $30,200 in additional spending was generated by the average housing transaction in Canada during the same period. A total of 476,063 homes changed hands in Canada within the two-year period as a result of MLS® listings—an influx of $15.3 billion into the national economy. The study indicates about 158,600 direct and indirect jobs were created across Canada as a result of MLS® home sales. These jobs include the finance, insurance and real estate sectors, as well as trade, manufacturing, construction and other related industries.
BC experiences the highest relative job impact of any province. Sales and purchases of MLS® homes in BC generate almost 39,115 direct and indirect jobs – nearly 1 in 55 jobs across the entire BC economy. Nation-wide, the jobs impact from home sales – 158,600 jobs – accounts for about 1 in full-time equivalent 100 jobs across the entire economy.
Clearly, good business within the real estate profession means good things for the economy.
· Real estate is among the top five sectors in the provincial economy.
· Economic impact of Home Sales. Real estate purchases and sales translate into additional consumer spending, which drive the economy. A recent study by Clayton Research Associates Limited for the Canadian Real Estate Association estimated the average BC home sold on the MLS® in 2005 triggered $40,450 in additional spending, including legal fees, property appraisals, moving expenses, utility connections, home renovations, furniture and appliance purchases and taxes—all of which fuel the economy.
· Based on that figure, between 2004 and 2006 MLS® home sales in BC generated over $4 billion in related spending and created 39,115 jobs.
· In 2007 MLS® homes sales within the Kootenay Real Estate Board have generated over $130 million in related spending.
The Kootenay Real Estate Board
Tuesday, January 22, 2008
Mortgage Rates January 22, 2008
Terms-Posted-Best
6 MONTHS - 7.05% - 6.50%
1 YEAR - 7.35% - 5.65%
2 YEARS - 7.50% - 6.05%
3 YEARS - 7.50% - 6.09%
4 YEARS - 7.34% - 6.09%
5 YEARS - 7.49% - 5.99%
7 YEARS - 7.80% - 6.25%
10 YEARS - 8.15% - 6.30%
Mortgage Rates January 22, 2008
Prime Rate is 5.75%.
6 MONTHS - 7.05% - 6.50%
1 YEAR - 7.35% - 5.65%
2 YEARS - 7.50% - 6.05%
3 YEARS - 7.50% - 6.09%
4 YEARS - 7.34% - 6.09%
5 YEARS - 7.49% - 5.99%
7 YEARS - 7.80% - 6.25%
10 YEARS - 8.15% - 6.30%
Mortgage Rates January 22, 2008
Prime Rate is 5.75%.
Bank of Canada cuts rates by 25 basis points
The Bank of Canada has cut its key interest rate by a quarter of a percentage point, and is indicating there are further cuts to come, in order to help Canada deal with a brutal U.S. slowdown.
The central bank said it is lowering its target rate to 4 per cent – the second month in a row for looser monetary policy – and said it was slashing its growth forecasts for the United States and Canada, for this year.
Major commercial banks followed suit, cutting their prime rate to 5.75 per cent from 6 per cent, effective Wednesday.
Inflation in Canada is also proving to be less of a threat than the Bank of Canada expected in its last forecast in October, the bank said, suggesting that prices will remain suppressed until the end of 2009.
Still, the central bank resisted calls for a steeper rate cut of half a percentage point, saying the Canadian economy continues to operate in overdrive for now, despite the clouds on the horizon.
The U.S. Federal Reserve announced its surprise massive interest rate cut of three-quarters of a percentage point about an hour before the Bank of Canada officially issued its own announcement on Tuesday morning. By that time, however, the Canadian central bank had already handed over its statement to journalists in a lock-up – essentially leaving the Bank of Canada with little choice but to stick with its plan to cut by a quarter of a percentage point, regardless of the Fed's move. (A Canadian official said the Fed did not give the Canadian central bank any advance notice of its surprise cut.)
“Financial market conditions have deteriorated since October, leading to a tightening of credit conditions in industrial countries,” the Bank of Canada said in a one-page statement accompanying its rate announcement. “Given this, and a deeper, more prolonged decline in the U.S. residential housing sector, the 2008 outlook for the U.S. economy is now significantly weaker than at the time of the October [forecast].”
Canada's economy will be hit hard, the central bank said, especially in the export sector. But because commodity prices have risen in the past few months, Canadian businesses and consumers have seen their incomes grow, and domestic demand is expected to hold up relatively well.
All told, Canada's economy will slow this year, and begin gradually recovering in 2009, the bank said. But in order to get there, more rate cuts will likely be necessary.
“In line with this outlook, the bank has decided to lower the target for the overnight rate and further monetary stimulus is likely to be required in the near term to keep aggregate supply and demand in balance and to return inflation to target over the medium term,” the bank concluded.
The Bank of Canada will publish full details of its projections and analysis on Thursday.
It did not say on Tuesday by how much it would slash its growth forecasts for the United States and Canada, and merely indicated that the changes would be significant.
In October, the central bank projected that the Canadian economy would expand by 2.3 per cent in 2008, and 2.5 per cent in 2009. Now, the bank believes 2008 will be weaker than that, but 2009 will be stronger. Private-sector forecasters expect, on average, that the Canadian economy will grow by about 2.1 per cent, but they are in the midst of revising that number down, given the rapid deterioration in the United States.
The central bank's last official projection for inflation in Canada was that it would fall below its 2 per cent target this year but return to target by the second half of 2008. On Tuesday, however, the Bank of Canada extended this timeline by an entire year, saying inflation would not return to target until the end of 2009 – suggesting it sees weakness in the North American economy for some time to come.
As for the United States, the Bank of Canada's old growth expectations in October were for 2.1 per cent in 2008 and 3.0 per cent in 2009. Many private-sector analysts say the United States is skating close to a recession, while some believe the recession is already here.
With the Fed's 75-basis-point cut on Tuesday morning, there is now an appreciable gap between the American's key interest rate of 3.5 per cent and the Canadian key interest rate of 4.0 per cent. Talk of such gaps in the past has led to significant strengthening of the Canadian dollar – something Canadian exporters would no doubt have serious trouble dealing with right now.
By HEATHER SCOFFIELD, Globe and Mail UpdateMonday, January 21, 2008
U.S. slowdown may boost Canada's real estate market
The prospect of a U.S. recession has some homeowners and prospective buyers nervous about the impact on the real estate market in Canada, but one economist says a slowdown could actually boost activity in Canada's housing sector.
It's not surprising that economic uncertainty in the U.S. has been the focus of much discussion and speculation in recent days, since Canada has followed the American lead during four of the last six U.S. recessions.
But Gregory Klump, chief economist for the Canadian Real Estate Association, said it's still an "open question" whether the U.S. slowdown will turn into a recession -- as defined by two consecutive quarters of negative economic growth.
"The chances are about 40 per cent, but the U.S. Federal Reserve is expected to cut interest rates and do so very aggressively to prop up their growth and keep them out of recession," Klump told CTV.ca.
"So while they're heading for a soft patch of growth it's an open question whether they'll enter a recession. My own thought is no, they won't."
There is a direct link between the economies of the two nations, which are each other's largest trading partner. If the U.S. demand for Canadian exports declines -- as the result of the strong loonie or a limping U.S. economy, for example -- the Canadian economy usually follows suit.
But even if the U.S. does slip into a recession, there's no guarantee Canada's strong real estate market will lose any steam. In fact it might do the opposite, Klump said.
That's because prospects for softer economic growth -- which is "the current sentiment in financial markets and the Bank of Canada" -- usually prompt the central bank to lower interest rates, which can make home ownership more affordable and more attractive, Klump said.
"Softer growth means lower interest rates and lower interest rates are positive for the housing market," he said.
Possibility of interest rate cuts
With that in mind, Klump said he expects the Bank of Canada to cut the interest rate by a quarter-point on Jan. 22, and again when they meet in March, he said.
However, he conceded, with the U.S. slowdown expected to continue to reduce Americans' demand for Canadian manufactured exports, housing markets in single-industry towns and regions in Canada that rely heavily on trade with the U.S. are likely to feel the pinch.
Cities like Toronto that have a wide diversity of industries, however, are better insulated to weather the storm, he said.
Avery Shenfeld, senior economist and managing director of CIBC World Markets, agrees the negative effects of a U.S. recession would likely be localized.
"Real estate markets in areas of the country that are heavily weighted to manufacturing could see softening up but national house prices may not be affected much," he told CTV.ca.
He added: "We would see some weakness in house prices, we could see some softening in house prices in areas of the country that are dependent on manufacturing."
Market in Canada's largest city
Andrew la Fleur, a Toronto real-estate agent and BlogTO.com's resident writer on the subject, told CTV.ca he hasn't seen any impact on the Toronto housing market yet. His clients, he said, aren't rushing to buy or sell and he hasn't heard any convincing arguments that a slowdown is likely to hit Canada's largest city.
That being said, he has noticed an increased level of trepidation among people looking to get into the real estate market for the first time -- a sentiment he said is at least partly linked to U.S. economic uncertainty.
"I am seeing the issues in the U.S. creeping into the conversation when it comes to 'should we enter into the market or not' or 'what happens if we buy and then the entire market collapses?'" la Fleur said.
"But it's nothing new. First time buyers always run all the nightmare scenarios through their minds before making a decision to buy. It's just that right now the hot-button topics seem to be the U.S. economy as well as the usual one heard in Toronto over the past decade -- there are too many condos going up therefore the market is about to crash."
In step with Klump and Shenfeld, la Fleur suggested Toronto and other major cities in Canada are insulated, and the impact of a recession will first be felt in manufacturing and export-based regions.
"Toronto is primarily a finance-based city and our economy is doing very well, and as long as that continues, the real estate market here should continue to be healthy," he said.
Andy Johnson, CTV.ca News January 20, 2008
It's not surprising that economic uncertainty in the U.S. has been the focus of much discussion and speculation in recent days, since Canada has followed the American lead during four of the last six U.S. recessions.
But Gregory Klump, chief economist for the Canadian Real Estate Association, said it's still an "open question" whether the U.S. slowdown will turn into a recession -- as defined by two consecutive quarters of negative economic growth.
"The chances are about 40 per cent, but the U.S. Federal Reserve is expected to cut interest rates and do so very aggressively to prop up their growth and keep them out of recession," Klump told CTV.ca.
"So while they're heading for a soft patch of growth it's an open question whether they'll enter a recession. My own thought is no, they won't."
There is a direct link between the economies of the two nations, which are each other's largest trading partner. If the U.S. demand for Canadian exports declines -- as the result of the strong loonie or a limping U.S. economy, for example -- the Canadian economy usually follows suit.
But even if the U.S. does slip into a recession, there's no guarantee Canada's strong real estate market will lose any steam. In fact it might do the opposite, Klump said.
That's because prospects for softer economic growth -- which is "the current sentiment in financial markets and the Bank of Canada" -- usually prompt the central bank to lower interest rates, which can make home ownership more affordable and more attractive, Klump said.
"Softer growth means lower interest rates and lower interest rates are positive for the housing market," he said.
Possibility of interest rate cuts
With that in mind, Klump said he expects the Bank of Canada to cut the interest rate by a quarter-point on Jan. 22, and again when they meet in March, he said.
However, he conceded, with the U.S. slowdown expected to continue to reduce Americans' demand for Canadian manufactured exports, housing markets in single-industry towns and regions in Canada that rely heavily on trade with the U.S. are likely to feel the pinch.
Cities like Toronto that have a wide diversity of industries, however, are better insulated to weather the storm, he said.
Avery Shenfeld, senior economist and managing director of CIBC World Markets, agrees the negative effects of a U.S. recession would likely be localized.
"Real estate markets in areas of the country that are heavily weighted to manufacturing could see softening up but national house prices may not be affected much," he told CTV.ca.
He added: "We would see some weakness in house prices, we could see some softening in house prices in areas of the country that are dependent on manufacturing."
Market in Canada's largest city
Andrew la Fleur, a Toronto real-estate agent and BlogTO.com's resident writer on the subject, told CTV.ca he hasn't seen any impact on the Toronto housing market yet. His clients, he said, aren't rushing to buy or sell and he hasn't heard any convincing arguments that a slowdown is likely to hit Canada's largest city.
That being said, he has noticed an increased level of trepidation among people looking to get into the real estate market for the first time -- a sentiment he said is at least partly linked to U.S. economic uncertainty.
"I am seeing the issues in the U.S. creeping into the conversation when it comes to 'should we enter into the market or not' or 'what happens if we buy and then the entire market collapses?'" la Fleur said.
"But it's nothing new. First time buyers always run all the nightmare scenarios through their minds before making a decision to buy. It's just that right now the hot-button topics seem to be the U.S. economy as well as the usual one heard in Toronto over the past decade -- there are too many condos going up therefore the market is about to crash."
In step with Klump and Shenfeld, la Fleur suggested Toronto and other major cities in Canada are insulated, and the impact of a recession will first be felt in manufacturing and export-based regions.
"Toronto is primarily a finance-based city and our economy is doing very well, and as long as that continues, the real estate market here should continue to be healthy," he said.
Andy Johnson, CTV.ca News January 20, 2008
What slowdown? Real estate has record year in Canada
The resale housing market in Canada's major cities enjoyed a record year for sales and prices in 2007, the Canadian Real Estate Association said Tuesday.
The industry group said a record 362,934 homes were sold through the MLS system last year. For the year as a whole, the average price realized was $326,055 — up 10.8 per cent from 2006 levels.
"Resale housing demand remained high throughout 2007 due to job and income growth, the continuation of attractive financing, and upbeat consumer confidence," said CREA chief economist Gregory Klump.
He forecast that sales in 2008 would slip from last year's record levels, but would still remain strong. Average prices are expected to rise, but "at a slower pace," he said.
In December, the average resale home in 24 major markets sold for $332,836. That's a rise of 13.1 per cent from the previous December — the largest year-over-year gain in more than three years.
No fewer than 13 of the 24 markets reported double-digit price increases, led by the two biggest cities in Saskatchewan. Both Regina and Saskatoon reported that home prices were more than 45 per cent higher than they were a year earlier.
Those gains showed again that Alberta has been overtaken as the price boom leader. Average price increases in Calgary and Edmonton barely made it into the double-digit arena in December, with year-over-year gains of 10.7 per cent and 12.1 per cent, respectively.
The most expensive real estate continues to be located in Vancouver. The average resale home in that city was $566,192 in December, a gain of 9.0 per cent from the previous December.
Home prices in many centres in central Canada held up well, with prices in Toronto, Sudbury, Thunder Bay and Quebec City all recording double-digit year-over-year growth.
The manufacturing slump clearly weighed only in Windsor-Essex and St. Catharines, Ont. Average prices rose by just 1.3 per cent in St. Catharines, while prices in Windsor fell 3.4 per cent from the previous December — the only major market in Canada to report price declines.
The healthy Canadian housing market stands in sharp contrast to the "deepening trauma south of the border," noted BMO Capital Markets economist Doug Porter.
"Housing is very unlikely to provide as much support to Canadian growth in 2008, but it's also unlikely to follow the U.S. market's due-south lead either," he said.
CBC News January 15, 2008
The industry group said a record 362,934 homes were sold through the MLS system last year. For the year as a whole, the average price realized was $326,055 — up 10.8 per cent from 2006 levels.
"Resale housing demand remained high throughout 2007 due to job and income growth, the continuation of attractive financing, and upbeat consumer confidence," said CREA chief economist Gregory Klump.
He forecast that sales in 2008 would slip from last year's record levels, but would still remain strong. Average prices are expected to rise, but "at a slower pace," he said.
In December, the average resale home in 24 major markets sold for $332,836. That's a rise of 13.1 per cent from the previous December — the largest year-over-year gain in more than three years.
No fewer than 13 of the 24 markets reported double-digit price increases, led by the two biggest cities in Saskatchewan. Both Regina and Saskatoon reported that home prices were more than 45 per cent higher than they were a year earlier.
Those gains showed again that Alberta has been overtaken as the price boom leader. Average price increases in Calgary and Edmonton barely made it into the double-digit arena in December, with year-over-year gains of 10.7 per cent and 12.1 per cent, respectively.
The most expensive real estate continues to be located in Vancouver. The average resale home in that city was $566,192 in December, a gain of 9.0 per cent from the previous December.
Home prices in many centres in central Canada held up well, with prices in Toronto, Sudbury, Thunder Bay and Quebec City all recording double-digit year-over-year growth.
The manufacturing slump clearly weighed only in Windsor-Essex and St. Catharines, Ont. Average prices rose by just 1.3 per cent in St. Catharines, while prices in Windsor fell 3.4 per cent from the previous December — the only major market in Canada to report price declines.
The healthy Canadian housing market stands in sharp contrast to the "deepening trauma south of the border," noted BMO Capital Markets economist Doug Porter.
"Housing is very unlikely to provide as much support to Canadian growth in 2008, but it's also unlikely to follow the U.S. market's due-south lead either," he said.
CBC News January 15, 2008
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