Resale Market Declined In Ontario

Statistics provided by CMHC, CREA,
Ontario existing home sales decline Ontario existing home sales moderated for a second  consecutive quarter. Ontario seasonally adjusted annualized home sales declined by nearly 15 per cent from second quarter levels. However, most of the decline in the quarter was based on weaker July activity. By August and September Ontario home sales began to stabilize across the province. Ontario resale volumes are now off 27 per cent from peak levels in the first quarter.

Talk of a “double dip” in the North American economy, less pent-up demand and fewer first time buyers dampened demand for existing housing in the third quarter. In response to rising home prices, listings grew in the first and second quarters. However, Ontario new home listings settled down in the third quarter. Still, the gap between sales and listings narrowed further in the third quarter - indicating more accommodating supply conditions for prospective home buyers. More choice helped limit bidding wars – positioning buyers on better terms to negotiate price. While sales moderated, the decline in listings helped stem further declines in home prices, particularly in August and September.

 Nevertheless by the third quarter, Ontario housing prices were off about 4 per cent from their peak levels in early 2010. Based on the balance between demandand supply as per the sales to new listings ratio, St. Catharines-Niagara, London and Windsor maintained their ranking as the coolest markets in the province. While confidence was restored in Ontario’s goods-producing industry, a high Canadian dollar and talk of a possible double dip recession re-emerging in the US during the third quarter may have impacted consumer appetites. Meanwhile, Northern Ontario markets remain the tightest across the province. Less labour unrest and improving commodity prices will provide ongoing support to Northern Ontario labour and housing markets.

I believe this spring market will be a good indicator of where house prices will be going this year. We have many factors that prevent people from buying homes, or specifically buying expensive homes. New mortgage rules, higher interest rates and high debt rations will prevent many Canadians from entering housing market this year, which will decrease demand. With lower demand we should expect lower prices.
This might be offset by lesser amount of people that are willing to sell, due to same factors described above. Due to high confidence levels in Canada I expect stable market this year with a moderate slow down.

New homes market review is coming up shortly. Feel free to comment and share with others.

Dmitri Ivanov