Annual MLS® home sales activity declines in 2008

National MLS® resale housing activity in Canada in 2008 pulled back from the record setting levels of the previous five years and fell to the lowest level since 2002, according to statistics released by The Canadian Real Estate Association (CREA). By contrast, the number of new MLS® residential listings broke all previous annual records in 2008, making the resale housing market significantly more balanced. Lower sales activity in Canada’s priciest markets combined with higher inventories ended MLS® residential average price growth in 2008 after nine consecutive years of price gains. Some 434,477 homes traded hands via the MLS® systems of real estate boards in Canada in 2008, down 17.1 per cent from the record 523,855 properties sold in 2007. “There is a difference between a dead market and a quiet market, and residential real estate markets in Canada are anything but dead,” notes Calvin Lindberg, President of The Canadian Real Estate Association. “These results represent the sixth highest annual sales totals for MLS® residential properties on record, just half a percent below 2003 levels.” Seasonally adjusted national MLS® resale housing activity declined in every quarter last year, marked by a sharp drop in the fourth quarter. Sinking activity in the fourth quarter accounted for over half of the decline in transactions since the peak in 2007. Newfoundland and Labrador bucked the national trend in 2008, with MLS® home sales climbing to a new annual record. Activity was down on a year-over-year basis in every other province. British Columbia and Alberta posted the largest activity declines, with transactions down 33 and 21 per cent, respectively. Annual activity also declined just over 15 per cent in Ontario and Saskatchewan. Lower activity in Canada’s priciest housing markets, particularly British Columbia and Alberta, weighed heavily on the national MLS® residential average price in 2008. This caused the national MLS® average price to edge lower, despite average prices having set new annual records in every province except Alberta. The national MLS® residential average price edged lower by seven tenths of one per cent in 2008, to $303,594. Average price posted year-over-year gains in the first six months of the year before declining throughout the second half of 2008. “Sellers are asking why the market value of their home is declining. Buyers want to know if they should make an offer now, or wait for prices to drop even more. Homeowners not in the market want help understanding the impact the current market has on their equity. It can affect things like renovations or retirement plans. First-time buyers want to know how much they need for a down-payment, whether they can afford the monthly mortgage payment, and wonder if they can even get financing,” the CREA President adds. “There are no easy answers. Real estate is local, and markets are different.” A weighted national MLS® average price compensates for changes in provincial sales activity by taking into account provincial proportions of privately owned housing stock. Weighted average price trends are similar but less dramatic compared to trends for the conventionally calculated unweighted average price. The weighted national MLS® average price was up by 2.9 per cent in 2008, with year-over-year declines posted in every month from September onward. New MLS® residential listings rose 7.7 per cent to 919,863 units in 2008 – a new annual record. Seasonally adjusted new listings peaked in the second quarter of the year and have since been trending downward. Resale housing market balance is represented by sales as a percentage of new listings. The rise in the number of new listings last year combined with lower sales activity resulted in a considerably more balanced resale housing market in 2008. In line with the trend in sales activity, MLS® residential dollar volume declined 17.7 per cent to $132 billion in 2008. Annual dollar volume set new records in Saskatchewan, Manitoba, and Newfoundland and Labrador last year. “The beginnings of a Canadian economic recession and a dramatic downturn in consumer confidence late last year means that the housing market is facing significant headwinds in 2009,” said CREA Chief Economist Gregory Klump. “Sales activity dropped sharply and price declines accelerated in the fourth quarter of 2008. The consensus economic forecast calls for an economic rebound in the second half of 2009, so an improvement in housing market trends is likely to wait until next year.” A study prepared for CREA by Altus Clayton shows that each residential MLS® transaction generates an average of $32,200 in ancillary spending by consumers, on everything from moving costs to renovations and appliance purchases. The 89,378-unit difference in the number of units sold between 2007 and 2008 meant $2.9 billion less in domestic economic activity from real estate transactions. The report is also available on www.crea.ca. PLEASE NOTE: You can also view the podcast with CREA President Calvin Lindberg dealing with today’s real estate market on www.crea.ca. A full PDF version of this news release is available here. [CREA 15/01/09]

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