Certain markets across Canada have avoided much of the steep downturn experienced in the US. However the majority of our markets have slipped by 10-20% over the highs experienced just a year ago. There are a few small exceptions to this but they are few and far between. We still have a surplus of spec build houses, investor owned flips that failed to sell, estate sales, and the odd bank repo. The inventory of houses continues to grow each month as forced and motivated sellers enter the market and investors and motivated buyers are tougher to find. Month by month the inventory grows and demand has slipped, taking prices lower with it.
Want to know when it will turn around? Want to know when the best time to get back into the real estate market it? Watch the number of buyers and sellers, not interest rates or Government bailouts. When the number of sellers slows down and the number of buyers increases it will signal that the bottom has come. Watch it yourself or call me and I will let you know when it happens.
(my contact info is at the bottom of this post and at the top right of the page)
February 2, 2009
Economy at a Glance — February 3, 2009
Canada’s housing starts sink to a new lower level
Analysts in Canada have become used to seeing monthly housing starts well above 200,000 units on a seasonally adjusted annualized basis. The average over the past seven years, beginning in 2002, has been 223,000 units. According to the latest numbers from Canada Mortgage and Housing Corporation (CMHC), this scenario has changed and November and December 2008 marked the turning point.
In both of those months, national housing starts dropped below 180,000 units. Be prepared for this to be the new normal level for quite some time, at least through 2010. In fact, it may well turn out that 180,000 units would be more than acceptable given what is transpiring in the overall economy.
People stopped shopping for real estate and started worrying about their finances in the fourth quarter of last year. This change in thinking was initiated by September’s nosedive in stock market values. It is an unfortunate corollary of cycles that a decline in one asset class rarely happens in isolation. It is usually accompanied by declines in others as well. Hence, home prices fall at the same time as equity prices in a generalized slowdown.
The unsold inventory of singles is too high, versus its long-term average, by about 75%. But this market has been adjusting in other ways. For example, the volume of singles and semis under construction has been falling month over month for the past half year. The unsold inventory of multiples is too high by 90%. Furthermore, that excess has existed for many years and this has hardly put a dent in the number of units under construction.
Canada Monthly Housing Starts
(seasonally adjusted at annual rates)
Inventory of Completed but Unoccupied Dwelling Units
(Centres in Canada with Populations of 50,000 or More)
Data source for both charts: Canada Mortgage and Housing Corporation (CMHC).
Charts: Reed Construction Data – CanaData.
Here are a few of my favorite past articles from my Lethbridge real estate and mortgage blog you might have missed or wish to recommend them to a friend.
Common Financial Problems - Avoid these financial mistakes
Get Your Credit Score UP - Invaluable insight into your credit score
Mortgage Guidelines Get Tighter - Harder and harder to borrow money
Is Your Mortgage Company Out of Business in 2009? - What to do when your bank goes broke
What is wrong with MLS - Is your info being abused?
Survivor - Real Estate Edition - Let's vote a few more off the island
Robert May is a Realtor, as well as the broker and owner of Rainbow Realty of Lethbridge Alberta. He is also a licensed mortgage associate and financing expert with Canada First Mortgage of Calgary Alberta. He has been in the real estate industry since 1993 and offers full MLS real estate services to Lethbridge and surrounding area, as well as mortgage financing, refinancing/renewals, preapprovals, and home equity financing to Lethbridge and Southern Alberta. He can be found online at www.LethbridgeLoans.com
Let me share my 15 years experience in the local Lethbridge real estate and financing market with you! It is the first step towards making a profitable real estate decision.