Housing sales swoon

Global turmoil takes toll on real estate; Alberta MLS numbers fall 35 per cent

By Mario ToneguzziDecember 16, 2008

The MLS residential market is continuing to reflect the grim economic reality in the country.

Sales have plunged from a year ago, average sale prices have dropped and a forecast calls for the housing funk to remain for several more months.

According to data released Monday by the Canadian Real Estate Association, sales plunged by 42.2 per cent in November--the second consecutive steep monthly decline -- across the country compared with November 2007. Every province witnessed a sharp drop led by British Columbia at 62 per cent and Ontario at 43.5 per cent. Alberta experienced a year-over-year sales decline of 34.6 per cent.

Average sale prices also took a hit during the month, falling by 9.8 per cent nationally to$280,880 compared with$311,485 in November 2007.

In Alberta, prices dropped by 4.2 per cent to $338,354 compared with $353,125 a year ago. British Columbia registered the steepest drop in prices--12.5 per cent -- to $395,687 from $451,991 in November 2007.

September MLS numbers were higher year-over-year in Alberta and it appeared the market was taking a turn for the better, but October coincided with the elimination of 40-year mortgages and zero-down mortgages, said Richard Corriveau, regional economist for Canada Mortgage and Housing Corp.

"With that, we've seen a decline in overall activity. It's not a surprise given the current economic turmoil," he said, adding the province remains in buyer's market conditions.

Corriveau said the prospect of further price reductions is helping to postpone people's decisions on buying residential property as they take a wait-and-see approach and are in no rush to buy.

"We think this type of market will prevail heading into the first six months of 2009," said Corriveau. "And only when buyers really gain confidence that prices have stabilized, and of course economic conditions are improving as well, only then will we see higher sales. On a year-over-year basis, we don't think that will occur until perhaps the second half of 2009 or even into 2010."

New listings across the country were also down by 4.6 per cent compared with a year ago, while in Alberta they were off by 18.8 per cent.

"The housing market reflects the economic reality of Canada,"said real estate association president Calvin Lindberg in a news release. The association also said research shows the decline in housing activity so far this year translates into $2.8 billion less in spinoff consumer spending in Canada.

On a year-to-date basis to the end of November, sales in Alberta are down by 20.3 per cent from a year ago and national sales are off 16.3 per cent.The average MLS sale price for the period is down by 0.7 per cent in Alberta($353,712) and by 0.3 per cent across the country ($304,462).

"These changes in the Canadian housing market reflect a broader and weakened picture of both the economy and buyer sentiment," said real estate association chief economist Gregory Klump in a news release. "National sales activity and price trends will continue reflecting increased cautiousness on the part of lenders and buyers, as the economy works its way."