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Home sales slide
Today's home sales report from the Canadian Real Estate Association shows shifts in the markets favouring buyers or sellers.

Overall, sales slipped 1.3 per cent in June, according to CREA, though what’s more important is that sales are now down from their year-earlier levels for the first time since April of 2011. The average home price is down by 0.8 per cent from year-earlier levels

Of course, there are big regional skews here. Vancouver continues to slow, while price gains are still going strong in Toronto and Calgary. Sales in Toronto did slip month over month. On an annual basis, prices in Toronto are up 6.8 per cent, while those in Calgary are 16.7 per cent higher. Vancouver is down by 13.3 per cent.

According to the real estate group, sales fell in June in just over half of the regional markets.

"Today’s report provides more evidence that the housing market is beginning to come down to earth," said economist Francis Fong of Toronto-Dominion Bank. "The pace of activity in the market over the past few years was simply unsustainable, given the economic backdrop and was mainly being fuelled by the record low level of interest rates."

TD expects both sales and prices to fall by 10 per cent to 15 per cent over the next three years.

Across the country, new listings increased by 1.3 per cent on a monthly basis.

Given the softer sales, that "helped push the market further down into balanced territory," Mr. Fong said, noting that the ratio of sales to new listings slipped to 51.7 per cent in June from 53.1 per cent in May.

"The data indicate that most markets remain in balanced territory with a few outperformers such as Calgary, Edmonton, Regina, and Saskatoon pushing into sellers’ territory," he said.

Senior economist Robert Hogue of Royal Bank of Canada agreed that most markets continue to be "balanced," though he added that Toronto "became much more balanced, whereas the Vancouver market inched closer to conditions favouring buyers." That's because sales in Toronto fell 2.3 per cent in the month, while new listings climbed 5.7 per cent. In Vancouver, the ratio of sales to new listings dipped to 0.41.

CREA’s reading of the latest numbers is that home buyers didn’t speed up in advance of the latest mortgage restrictions by the Canadian government, which went into effect early this month.

That’s a change from the last time this happened.

"It will take some time before the compound effect of previous and recent changes to regulations on Canada’s housing market becomes apparent," said Gregory Klump, CREA’s chief economist.

Deputy chief economist Douglas Porter of BMO Nesbitt Burns raised the question whether the report signals the "start of the big sleep."

"Suffice it to say, reports of the demise of price increases in Canadian housing have been greatly exaggerated, at least up to this point," he said in a report.

"What hasn’t been exaggerated are softer sales; the June swoon compares with an average 7-per-cent year-over-year rise in the first five months of 2012. The new tighter mortgage insurance rules that kicked in last week will chill a market that had already seen 16 of 26 markets post June sales drops ... Even before the new mortgage rules kicked in, all signs suggest that the Canadian housing market was already cooling - the new rules will simply pull hard on a closing door."

 

The Globe and Mail

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