Canada’s housing boom ends…again
Canada’s housing boom has ended for the second time since Douglas Porter; deputy chief economist at BMO Nesbitt Burns officially declared it “over” in mid-April. Stay tuned for further endings as we move through summer and into the fall. 
In a report released this week by TD Economics, economists Craig Alexander and Pascal Gauthier said, “The long-awaited end of the Canadian housing boom has occurred, reflecting more moderate demand and increased supply of properties for sale.”
In May, year-over-year price gains for existing home sales in Canada’s major markets fell to 1.1%, down from 8.6% just four months ago.
The report says that the cooling market is “nowhere as evident as in Alberta, with prices continuing to fall this year by eight to ten per cent from their peak.”
“The combination of significantly higher listings, reflecting the desire of homeowners to take advantage of the past increase in prices, and weaker demand, due to the past erosion in affordability, are leading to declining sales and softer price performance across the country, particularly in the west.”
“…Saskatchewan’s major markets offer an exception to the cooling trend on an annual basis, but this is mostly a question of timing. The price surge above 30% growth came late last year and much of the momentum is being carried into this year. But, if Regina and Saskatoon follow the path just recently threaded by Calgary and later Edmonton – and we think they will – Saskatchewan’s price growth will have come back down to earth by early next year. We are looking for 2-3% price growth in 2009, with a risk of a mild price correction.”
Not to be outdone, BMO economist Douglas Porter was quoted as saying, “Hey, I called it first!”
Well, not really, but he did throw this little gem forward in an interview with the Globe and Mail on June 27.
“It’s a bit unnerving to see how Canadian performance is beginning to look like that of the U.S. two years down the line.”
As disturbing as it is to see a “deputy chief economist” write reports in Comic Sans font, you have to admit that his graph is rather compelling.
“There is a litany of reasons why the Canadian market is different, but even a pale version of what we saw in the U.S. would not be good news,” said Porter.
The First “End” of Canada’s Housing Boom
TD Economics – Canada’s Housing Boom Comes to an End
Star Phoenix – Canada’s housing boom ends
Star Phoenix – National housing boom has come to an end
Globe and Mail – Housing Drop Looming in Canada?
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Norm Fisher
Royal LePage Saskatoon Real Estate
9 comments so far. We'd love to hear your thoughts.
May 4th, 2009 at 1:17 PM
So “Alberta, with prices continuing to fall this year by eight to ten per cent from their peak” according to TD economics?
I’m surprised they wouldn’t predict the same for a currently fairly similarly priced Saskatchewan housing market. I bet a lot of it is because Regina and some rural areas had less of a run up in price. I would fully expect Saskatoon, with its unprecedented increase in housing prices, despite low wages and wage growth below Alberta, and now constantly increasing housing inventory to follow the Alberta housing market and shed at least 8 to 10% in value over the next year.
Norm’s “June 16-20″ post graph of the huge and constant increase in inventory since February demonstrates prices need to fall in order for sales to hope of catching up to all the new listings.
May 4th, 2009 at 1:23 PM
So apparently Canada’s economy rebounded a bit, with growth in the automotive and clothing. Both Ontario sectors. This was offset by drops in: energy, oil and gas exploration and housing …
http://www.bnn.ca/news/1974.html
Good random news article of the day.
BNN reports that the Canadian economy is in a weaker position than we’d think, masked by temporarily elevated commodities…
May 4th, 2009 at 1:23 PM
Jim’s really working the downturn. Maybe it will work out for him one day.
May 4th, 2009 at 1:29 PM
Maybe as a whole Canada’s Housing Boom has ended but in Newfoundland we are seeing quite the opposite trend.
Listings are at all time lows, buyers are numerous and multiple offers on houses are a common trend now.
We’ve seen the average price for a single family bungalow in east end St. John’s jump from $160,000 to $190,000 in about 12 months.
No signs of letting up yet either.
May 4th, 2009 at 1:29 PM
Stephen,
Wow! Hope you’re having a great spring!
May 4th, 2009 at 1:30 PM
Found this from last year in the US
Yearly Income, $14,000. Purchase of House, $720,000
http://drhousingbubble.blogspot.com/2007/05/yearly-income-14000-purchase-of-house.html
May 4th, 2009 at 1:31 PM
Norm,
Porter’s graph is not an apples to apples presentation. US is MEDIAN prices versus Canadian AVERAGE price.
Don’t you think that one of these is more easily scewed than the other and therefore misleading?
May 4th, 2009 at 1:33 PM
Larry,
I’m still more bothered by the Comic Sans thing.
I agree that comparing the median to the average is probably not valid. I hadn’t noticed that. Thanks for pointing it out.
May 4th, 2009 at 1:33 PM
Norm,
No worries and welcome as always.
As for the Comic Sans, not the most popular font to be sure but, it comes down to two choices – we whack over the head for bad form or just pretend that he had a bad hair day.
Since he also messed up the graph I vote for both as he will have bad hair after he gets whacked.