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MLS® home sales hit eight-year December (monthly) low

The number of properties sold via the MLS® systems of real estate boards in Canada edged down further in December 2008 to reach the lowest level for the month since December 2000, according to statistics released by The Canadian Real Estate Association (CREA). Seasonally adjusted residential MLS® sales activity numbered 27,357 units in December 2008, a decline of 1.8 per cent compared to the previous month. However, seasonally adjusted activity was up in more than half of Canadian housing markets. Activity declines in Montreal, Calgary and Edmonton more than offset a rebound in the number of transactions in Vancouver, resulting in a small monthly decline in national sales activity. The small month-over-month decline in national MLS® seasonally adjusted sales activity in December followed double digit declines in September (-14.9 per cent) and October (-12.1 per cent). Activity plummeted 22.2 per cent in the fourth quarter of 2008 to 86,879 units, with seasonally adjusted quarterly declines in activity in all provinces. The sharp drop in fourth quarter activity accounted for over half of the decline in transactions since the peak in 2007. Year-over-year declines in the MLS® average home price were reported in about half of local markets in December. Lower activity and average prices compared to one year ago remain most pronounced in Canada’s more expensive housing markets. This continues to weigh on the national MLS® residential average price. The national average price of homes sold via the MLS® in December 2008 declined by 11 per cent from where it stood a year ago. The major market price trend was similar to the national trend, down by 9.9 per cent year over year in December 2008. The price trend is similar but less dramatic for the weighted national MLS® average price, which compensates for changes in provincial sales activity by taking into account provincial proportions of privately owned housing stock. The weighted national MLS® average price dropped 6.2 per cent year-over-year in December 2008, while the weighted major market average price declined 2.9 per cent. “Moderating home prices in Canada should not be confused with the downturn in the U.S. housing market,” says CREA President Calvin Lindberg. “But any local real estate market is not immune to global economic challenges, and that is what we face today. Low prices are not the concern as much as the perception of doom and gloom. Buyers are waiting to see if the real estate market has hit bottom, and that is a very complex thing to try and calculate. Most of us will only be affected by the market correction psychologically, because the majority of Canadians will not buy or sell property in the coming year.” Seasonally adjusted new MLS® residential listings numbered 72,931 units in December, down three per cent from levels recorded in November. New listings are trending lower. In December, they stood 8.1 per cent below the peak reached in May 2008. Resale housing market balance is represented by sales as a percentage of new listings. The rise in the number of new listings in the first half of last year along with declining sales activity, particularly in the fourth quarter, resulted in an increasingly balanced resale housing market over the course of 2008. Sales as a percentage of new listings in the fourth quarter of 2008 fell to the lowest level since the mid 1990s. New listings are trending down from the peak reached in the second quarter of 2008. If this trend continues, the balance of supply and demand will stabilize in 2009. “Average prices will remain under downward pressure during the Canadian economic recession,” said CREA Chief Economist Gregory Klump. “Shaky financial market confidence is pulling down business and consumer confidence. The consensus economic forecast predicts the economy will rebound in the second half of 2009, so housing market trends should strengthen next year.” “There has been a fundamental shift in consumer confidence, with job insecurities prevailing in every region of Canada,” CREA’s Chief Economist added. ”That is unlikely to change until the worst of the recession is behind us.” More detailed information is available at the following links: Unit sales Dollar volume Average price New listings A full PDF version of this news release is available here. [CREA 15/01/09]

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