First Quarter Sales Decline Across Canada

In the wake of all of the economic and real estate turmoil emerging out of the U.S. the first quarter of 2008 has seen activity in Canada’s housing market decline in most major markets across the country. Despite the negative effects of the slowing U.S. economy, a recent study by Ipsos Reid reflected that 84% of Canadians are not concerned with the economic recession south of the border. Further, most Canadians view their equity in real estate as a safe investment during times when the stock market and other investment venues are so volatile.
In February, seasonally adjusted MLS® sales activity across Canada edged downwards 6.4% while sales in March declined 18.7%. This decrease in March was the largest year-to-year monthly decline in sales since January 1998. The main contributor to this decreased sales activity is due in part to weaker sales in Toronto which represents about 25% of the major markets across the country. Sales in Toronto peaked in late 2007 prior to Toronto’s “municipal” land transfer tax kicking in, a tax that has added a significant cost to the purchase of a home. Further the heavy snowfall in Toronto this winter made both listing and showing properties very difficult.
For 2008 the Canadian Real Estate Association is forecasting a shortfall in sales to last year’s record levels. In March seasonally adjusted sales for the quarter declined by 7.1 % as compared to the last quarter of 2007. Further the number of new MLS® listings climbed during the first quarter by a seasonally adjusted rate of 4.8% over the last quarter of 2007 which marks the highest quarterly level ever recorded. Notwithstanding a decrease in sales with a sharpm increase in new listings, the average residential price increased nationally by 4% to $329,383. Locally, market activity throughout the Georgian Triangle in the first quarter displayed considerably more strength than many markets across the country and I will detail these in my next posting.