Susan Thompson
Smoky River Express
The booming real estate market that saw sale prices soar over the past few years is slowing down due to economic uncertainty, but that’s good news for buyers looking to purchase a home this year.
On March 9, Canada Mortgage and Housing Corporation (CMHC) announced that the seasonally adjusted annual rate of housing starts declined to 134,600 units in February from 153,500 units in January nationally.
According to CMHC, new home construction is slowing to more sustainable levels and starts are forecast to come in at 160,250 units, within a range of 141,000 to 180,000 units in 2009, which is not such bad news considering that over the past seven years these starts have been exceptionally strong, exceeding 200,000 units per year.
“The new home market is moderating due to a number of key factors,” said Bob Dugan, Chief Economist for CMHC. “The economic downturn will result in a decrease in demand for home ownership leading to a decline in housing starts and existing home sales in 2009.”
“Housing market activity will begin to strengthen as the Canadian economy rebounds in 2010 and the level of housing starts over the forecast period will be more in line with demographic fundamentals.”
Meanwhile, existing home sales, as measured by the Multiple Listing Service, are expected to decline 14.6 per cent across the country during 2009 to 370,500 units, recovering in 2010 to increase by 9.3 per cent to 405,000 units.
The average price of an existing home is also expected to decrease over the course of 2009 nationally, and remain about the same in 2010.
Local Exit Realty realtor Garth Rondeau points out despite decline in starts and prices, the Canadian housing market is in much better shape than the U.S. market.
“Everything is working itself out nicely in Canada. I’m selling houses now, banks are giving money again.”
In fact, Rondeau expects to have a better year this year than last year, despite the general economic slowdown.
Rondeau says that it’s CMHC that has likely made the difference between Canada’s housing market and the U.S.
“We didn’t get carried away like the States did. There was only a very short time that we were giving houses away for no money down, and very few of these 35 year amoritizations, where the States were doing them for two or three years, and giving houses away to people who should have never ever have qualified in the first place. Canada didn’t get into that. We’re not in near the pickle the States are in.”
Rondeau adds the correction in the market means now is a good time to look for a new home.
“Interest rates are really incredible,” he says. “It is a good time to buy.”
Prices have already started to come down in the region.
“Prices have softened from what they were in 2007, which is good because they should have never been where they were in ’07,” Rondeau says. “Definitely the prices aren’t going to be what they were. We might not see those prices here for another 15 years.”
As an example, he says, “I’ve got a house in McLennan appraised for $150,000, and it has been listed for $120,000 for a year, and it’s still not selling. So it might be another 15 years before it’s worth $150,000 again.”
That’s more good news for buyers, who may not have been able to afford the inflated house prices of the past.
But what’s really needed, according to Rondeau, is for more people to list their houses for sale.
“The problem is right at the moment there’s not a lot of inventory out there, not a lot of choice for people to buy. One of the theories on that is a lot of sellers were hoping prices would come back up, so they’re just waiting.”
Rondeau says it may depend whether reluctant sellers are able to wait for prices to rebound or not. If not, then more inventory may be available in spring.
Meanwhile, he says its important for sellers to realize while prices won’t be what they were, there are a lot of people looking to buy, so it’s worthwhile to consider listing.
“There are a lot of people thinking there’s no point in putting it up for sale because there’s nobody buying, but there are buyers out there.”
