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If Canadian prices follow U.S. trends, certain cities will experience a major slide in house prices Some experts are predicting a U.S. style housing crash here in Canada, saying that we're only a year or so behind them. So what would that mean for us? We decided to take a look at how much the average U.S. housing prices rose in the last ten years, and discovered that prices in October 2008 were 54% higher than in October 1998.Since U.S. prices peaked in April 2007 and Canadian prices peaked roughly a year later, we've calculated what a 10-year, 54% increase would add up to here - 18 months past our peak. That would mean that most Canadian cities are headed for a fall in housing prices, especially those out west. The full statistics on average house prices are below: U.S. Housing Prices Start date (Oct. 1998): US$184,300 Peak (April 2007): US$322,100 Current (Oct. 2008): US$283,400
Vancouver Start date: (Oct. 1999): $283,957 Peak (May 2008): $624,639 Current (Oct. 2008): $556,682 Predicted (Oct. 2009): $436,726 |
Alberta's housing conditions have softened since prices peaked in 2007, with declining prices restoring some of the affordability lost during the boom, according to the latest housing report released today by RBC Economics.
The RBC Affordability measure for Alberta, which captures the proportion of pre-tax household income needed to service the costs of owning a home, improved across all home segments with the benchmark detached bungalow dropping to 43 per cent, the standard townhouse to 32.1 per cent, the standard condo to 28.2 per cent, and the standard two-storey home to 46.4 per cent.
The report said peak prices led to a rush of new sellers and a move to the sidelines by would-be buyers, loosening Alberta's market conditions considerably since the summer of 2007. Sales-to-new listings ratios are lower, demonstrating a better balance between buyers and sellers. In the third quarter, further price declines in most housing segments contributed to affordability conditions improving between 0.8 and 2.2 percentage points. However, affordability measures still remain high, suggesting the province's housing markets remain overvalued, at least relative to household income, said the RBC report.
The report said housing markets have "retreated significantly" since the start of the year. In the first 10 months of 2008, sales of existing homes have plummeted 26 per cent in Calgary and 14 per cent in Edmonton. Compared to the third quarter last year, the market value of all four housing types RBC tracks has dropped between six and 11 per cent in Calgary and nine and 17 per cent in Edmonton. "Sellers are no longer in the driver's seat."
In Alberta, "as stiff headwinds blow on the provincial economy and erode consumer confidence, homebuyers will be reluctant to step into play until affordability improves more significantly," said Robert Hogue, senior economist at RBC. "The province's housing affordability conditions still have a fair way to go before returning to long-term averages."
"As concerns mount about the economy, spurred by the sharp drop in energy prices that sent shivers down homeowners' spines, the housing markets in both Calgary and Edmonton are expected to retreat even further in 2009."
RBC's Affordability measure for a detached bungalow for Canada's largest cities is as follows: Vancouver 74.8 per cent, Toronto 53.3 per cent, Calgary 47.3 per cent, Ottawa 43.3 per cent and Montreal 40.4 per cent.
The Housing Affordability measure, which RBC has compiled since 1985, is based on the costs of owning a home. The higher the reading, the more costly it is to afford a home. For example, an reading of 50 per cent means that homeownership costs, including mortgage payments, utilities and property taxes, take up 50 per cent of a typical household's monthly pre-tax income.
The city says it is taking action against abandoned construction sites. It says it will now be billing costs back to developers for work the city is forced to complete.
There are several sites around Calgary that the city says it's keeping an eye on. One of those sites is at 5320 2 Street, S.W.
Ashley Norris' boyfriend lives across the street from the future site of the Manchester Station condos. Norris says she keeps a close eye on her two kids whenever they play outside because the abandoned site has left a 46mx40m hole that is up to three stories deep. "He wanted me and my kids to move in and have this big family but I won't raise my children next to that," says Norris.
The selloff in real estate has morphed beyond a correction of overheated individual markets into a broad national slump, with prices posting their worst decline in nearly 20 years in November.
In the face of a collapse in consumer confidence, the number of resale homes sold in Canada plummeted by 42 per cent year-to-year to 27,743, the lowest level since January, 2001.
Between May and November, the average price of an existing home in Canada fell by 11 per cent, matching the drop in 1990 that coincided with the onset of a painful recession. Housing prices would go on to fall by about 20 per cent and it would be another decade before they managed to make new highs.
TORONTO - Municipal property assessments issued this fall are "unrealistic" given the dramatic drop in the real-estate market, Ontario Premier Dalton McGuinty admitted Wednesday, but he made no move to spare homeowners across the province.
By contrast, British Columbia Premier Gordon Campbell last month announced a freeze of property assessments at 2007 levels to help people cope with the turbulence in property values, putting off new valuations until late next year.
At a year-end news conference yesterday, Mr. McGuinty instead called on municipal governments to recognize that the assessments are out of date as they prepare local property tax bills next year.
Downtown office rental rates in Calgary soared by 160 per cent from 2003 to 2007, but show a slight dip this year as the vacancy rate continues to increase.
A market report by Barclay Street Real Estate Ltd. says the overall average rental rate for office space in downtown Calgary jumped from $15.25 per square foot in 2003 to $39.60 last year. This year it has fallen to $38.20.
The report, by Michelle Pink, the company's research analyst, said increasing vacancy in the upcoming years will not be largely due to new construction but from "typical contraction of businesses and the increasing amount of sublease space."
mission is to provide a fun and interesting way to help real estate investors grow in their professional and personal development. Born out of the need for a cohesive regional investors associations, the REIC serves Canada, by bringing together like-minded investors in an online community and by providing an opportunity for those investors to meet monthly with leaders in the industry. 
CMHC's Monthly Housing Statistics 2008 December
