Home sales in August rose by 4 per cent from July's weak results. Good news, average resale home prices gained 3.3 per cent from the same period in 2009.
The Real Estate Markets across Canada are now stabilizing after homeowners read scary stories in the press about declines of 40 perecent and more!
Below is a great "balanced article" on how this year unfolded in the Canadian Real Estate Markets.
Read the article:There's no housing bubble, no bust -just a summer squall
By JAY BRYAN, The Gazette September 16, 2010
Canada's market for existing homes was kind of boring in August, which will come as a big relief to those who had been braced for a crash.
For the past few months, the imposition of new sales taxes that affected real estate in the country's two biggest and costliest markets, Vancouver and Toronto, had driven what looked like a bubble and bust in the national housing sector.
Now that's over and it turns out there's no bubble and no bust -just a predictable pattern of gradual softening in what had become an overheated market.
The number of home sales in August actually rose by a bit more than four per cent from July's scary weakness. Average prices remained soft but fairly stable, about 3.3 per cent above the year-earlier level. That's down, though, from gains of about 15 per cent early this year.
To get to these stabilizing conditions, nervous homeowners have endured months of scare stories on what sounded like the market from hell.
First, there was a spring land rush in British Columbia and Ontario, driving up transactions and prices as buyers raced to avoid being affected by the introduction of new harmonized sales taxes in July.
These two markets have a double impact on national averages. First, they are very big, making up more than half the national market. Second, their prices are far above average, so a wave of transactions there distorts the national average price upward.
Then came July, which looked like a bust as the number of home sales in Canada fell by nearly seven per cent from June -and a whopping 30 per cent compared with one year earlier.
This, of course, reflected the reluctance of buyers in these two big, costly markets to pay the new taxes.
Much as the earlier wave of beat-the-tax sales had pushed up national transactions, the July drop in these big markets -by 8.4 per cent in Ontario and a whopping 13.8 per cent in B.C. -pulled them down.
So the August numbers are the first in a while to give us a fairly undistorted look at Canada's real estate market. And guess what: it's unfolding just about the way that forecasters had been predicting early this year.
"Prices have levelled off, maybe cooled somewhat in some cities, but they're hardly collapsing," says Robert Kavcic, an economist with BMO Capital Markets. Indeed, the ratio of new listings to sales was about two-to one in August, which suggests we've arrived at a balanced market that favours neither buyers nor sellers.
Nevertheless, it's entirely likely prices will give up some of the outsized gains of late 2009 and early 2010. Kavcic and his colleagues at BMO Capital Markets envision continued softness in the housing market this autumn and winter, likely erasing year-over year price gains within several months.
In some cities, recent gains will turn into modest declines, with such weakness probably focused more in the high-priced markets of Ontario and British Columbia.
Another view, from Toronto- Dominion Bank economist Francis Fong, is that Canada will see a drop in the national average home price of about seven per cent in 2011, slightly outweighing the gain of about 5.5 per cent he expects this year. Then prices stabilize in 2012 and later begin rising slowly. All Fong's numbers are annual averages.
As you track the market, keep in mind a note of caution: there are so many ways to look at home prices that it's possible to see very different patterns in the very same market.
If you follow the Canadian Real Estate Association numbers, its most reliable measures are those that adjust national prices to eliminate the sometimes-huge distortions caused by gyrations in high-priced markets.
It's also good to measure prices based on year-over-year comparisons or, better still, annual averages, which help eliminate seasonal ups and downs and short-term hiccups.
Best of all, keep an eye on Canada's most carefully compiled yardstick: the Teranet-National Bank house price index.
The disadvantage is that it takes about two months to calculate this index, which matches resales of identical homes and likely provides the most precise measure of your home's price gain or loss.
As of now, the index goes up only to June, showing a year-over-year average gain of 13.6 per cent because it doesn't yet capture the current softening in prices.
Its advantage, though, is very important. When you do get the numbers from this index, you can be pretty sure they're accurate and meaningful.
To consult the Teranet- National Bank index, go to www.housepriceindex.ca/Default.aspx
jbryan@montrealgazette.com
© Copyright (c) The Montreal Gazette
Related:Toronto Real Estate Housing Market Charts August 2010 
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