CREA releases December sales data
I’m just on my way out of town for the weekend, so this post will be missing much of my usual commentary.
I will draw your attention to CREA’s final December sales numbers which were released today:
Nothing much to get either the bears or the bulls excited in this report. Home sales registered 14% lower than 2009 and dropped on month-over-month basis for the first time in four months. Sales registered only slightly below the 10 year average.
New listings remain sparse. Evidently buyers are still reluctant to relist until they see a sales rebound. There was a slight increase in new listings, up 0.6% over November. Months of inventory remained unchanged at 5.8.
Average price finished December up 4.2% (2.1% median), but month-over-month prices fell 0.3% seasonally adjusted. Additionally, the trend in sales-to-new listings rolled over and turned negative for the first time since May.
Said Gregory Klump, chief economist at Crea:
“Sales may be starting to plateau in some of Canada’s most active and expensive housing markets. Combined with a pickup in new listings and further interest rate increases, the stage is being set for smaller price gains and a further deceleration in the growth of mortgage debt.”
Just how much of a deceleration is the big question. Certainly inventory is hiding in the wings. Without a rebound in demand, expect downward price pressures on a year-over-year basis through 2011.
Condo rule changes?
Interesting article today in the Post:
“The federal government’s efforts to get tough on borrowing are now focused on the condominium sector, with new rules in the works to make it more difficult to qualify for a loan on a high-rise apartment, the National Post has learned.”
“Sources say rules now being discussed would add 100% of condominium fees to the list of expenses that is measured against income to decide whether a buyer can afford a mortgage. Currently, only 50% of the fee is considered. The move has the potential to squeeze thousands of consumers out of the market.”
“It is almost a guarantee that the government will once again lower the maximum length of amortizations for a mortgage, down to 30 years from 35”
The rest of the article is quite interesting as it explores the impact this rule change would have on some of the country’s larger condo markets. As I’ve said before, the Toronto condo market in particular looks ripe for a fall.
Perhaps this has not been lost on Mr. Stephen Dupuis, chief executive of the Toronto-based Building Industry and Land Development Association, who made the following statement:
“There seems to be a fatal obsession with real estate and engineering the real estate market which may be an unhealthy obsession.”
I agree there’s an unhealthy obsession with real estate, but I think we have different interpretations of that statement. Of course the second part of that statement is referring to ‘engineering’ a return to more normal lending standards as were the norm during the 60+ year history of CMHC. To someone who works for a land development association, this would seem ‘unhealthy’. Taxpayers and first time home buyers might have a different perspective on tightening requirements for mortgage insurance backed ultimately by the taxpayers and offered to private, profit-seeking institutions.
I for one welcome any change that would stem the tide of loosening credit requirements and finally begin to rein in Canada’s growing credit bubble.