Canada's once-hot housing market is clearly cooling, with sales falling and the number of unsold homes on the market hitting record highs in the first quarter of the year.
Despite an uptick in sales in March from a three-year low in February, sales of existing homes were down 7.1 per cent in the first quarter from the final quarter of last year, and 15.4 per cent from the first quarter of 2007, the Canadian Real Estate Association reported yesterday in its preliminary housing market report for March.
And prices were up only 5.5 per cent from a year earlier to an average of $327,620, the smallest increase since the final quarter of 2001, which followed the Sept. 11 terrorist attacks in the U.S.
But there will not be any meltdown in the housing market here as has occurred in the U.S., the group said.
"The residential average price continues to increase, unlike conditions in many U.S. markets," said association president Cal Lindberg. "The size of the increase is returning to what we consider more normal levels for most markets in Canada, reflecting a sound but cooling market for existing homes."
Sales in the quarter were down in a number of major markets, led by Toronto, which accounts for about one-quarter of all sales in the country. The market softened in Vancouver and Calgary, but remained strong in other markets.
Meanwhile, the number of homes listed for sales swelled to a record high.
"The credit crunch has had limited impact on Canadian mortgage lending to date," said the industry association's chief economist Gregory Klump. "Resale-housing activity will continue to be supported by rising after-tax incomes, high employment, upbeat consumer sentiment and declining interest rates."
The average price increased four per cent year-over-year last month to $329,383 with new price records being set in a number of cities, including Saskatoon, Winnipeg, Hamilton, Ottawa and Halifax.
The level of sales will likely remain below last year's levels as buyers show caution in the face of the U.S. downturn, but home prices should continue to post modest gains.
© The Vancouver Province 2008 Eric Beauchesne, Canwest News ServicePublished: Friday, April 18, 2008
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