TORONTO - Fewer Canadian homes were sold in the third quarter and the number put on the market also dropped -- signalling a slide in housing prices is beginning to slow, says the Canadian Real Estate Association.
A total of 76,391 homes were sold in major Canadian markets in the summer quarter, a dramatic 10.7 per cent drop in volume from the same period last year, CREA said Wednesday.
Vancouver led the way with a 43.2 per cent decline in the number of homes sold year-over-year while Victoria posted a drop of 16.6 per cent.
Nationally, average home prices fell 4.9 per cent year-over-year to $319,969. Vancouver saw the biggest drop among major Canadian cities, with a decline of eight per cent to $535,598.
Craig Alexander, deputy chief economist with TD Bank, said the decline was unavoidable as skyrocketing prices, particularly in the West, made homes less and less affordable to the average Canadian.
"We had a sellers' market for several years and now we have a much more balanced market," Alexander said in an interview.
A drop in new listings helped to moderate the decline in prices, said BMO Capital Markets economist Doug Porter.
"What we saw earlier this year initially was a sharp drop in sales and the listings kept right on rising, and that imbalance led to some very clear downward pressure on prices," Porter said.
He also said the Vancouver market has had a big impact on the national figures.
"When you have fewer homes selling in your most expensive market in the country, that will tend to bring down the average price of any home sold in the country."
New listings declined to 146,637 nationally, a drop of 3.3 per cent from their peak in the second quarter of 2008. Listings had been increasing steadily and are still up 6.5 per cent year-over-year.
The small drop in the most recent quarter indicates the market is beginning to stabilize, said Gregory Klump, chief economist with CREA.
"With fewer sales and fewer listings, it's a built-in stabilizer as far as the extent to which you can expect to see prices to decline," Klump said in an interview
As the oil boom eases, Edmonton and Calgary led the decline in the number of new listings, posting year-over-year drops of 19.8 per cent and 11.7 per cent respectively.
"The West basically led the march up the hill and is now leading the march down the hill as well," said Porter.
Average home prices in those two cities also fell, by six per cent in Calgary and 5.6 per cent in Edmonton. In neighbouring Saskatchewan, which has benefited from Alberta's change in tax policy, Regina posted an increase of 27 per cent while Saskatoon home prices added 23 per cent.
Alexander said the housing boom enjoyed primarily by Western Canadians over the last five years is over.
"The evidence that the Canadian housing boom is over is completely compelling and ultimately I think we're going to continue to see some further cooling in Canadian real estate markets across the country," he said.
But Canadian homeowners shouldn't expect to see the kind of price crash that their neighbours south of the border have experienced, Alexander added.
"In the case of the United States, it was the bursting of the housing bubble that drove the problems in the economy. In the Canadian context the Canadian economy is slowing down and that is leading to a lot of the moderation we're seeing in the housing market," he said.
"In the Canadian context, this is very much a cyclical event. The housing market is cooling down after a very hot run but the tide will turn when economic conditions improve and that will probably be late 2009 into 2010."
