The number of properties sold via the MLS® systems of all real estate boards across Canada declined in October 2008, according to statistics released by The Canadian Real Estate Association (CREA). Much of the decline in national sales activity resulted from fewer sales in several major markets, including Toronto.
Seasonally adjusted residential MLS® sales activity in all markets numbered 32,048 units in October 2008, the lowest level for monthly activity since July 2002. This is down 14 per cent from sales levels recorded in September, and the largest month-over-month decline in seasonally adjusted sales activity since June 1994.
In Canada’s major markets, seasonally adjusted residential MLS® sales activity in October totaled 21,091 units, down 15.1 per cent from sales activity in September.
"Many homebuyers across Canada battened down the hatches in October as they were concerned with dire headlines about stock market volatility and a global economic downturn," said CREA’s Chief Economist Gregory Klump. "Elimination of mortgage default insurance availability for purchases with less than a five per cent down payment and for amortizations beyond thirty-five years also likely played a lesser role in the decline in sales activity."
Activity was down from levels recorded in September in more than three quarters of Canadian housing markets, including the five most active major markets: Toronto, Montreal, Vancouver, Calgary, and Edmonton. Fewer sales in Toronto accounted for nearly one third of the decline in national MLS® sales activity.
"The breadth and depth of the drop in MLS® activity suggests a major downshift in consumer psychology" adds Klump. "And that has moved many homebuyers to the sidelines until economic news begins to improve."
The drop in sales activity resulted in a more balanced national resale housing market than at any other time in over a decade. Markets became more balanced in every province except Newfoundland & Labrador, where sales activity remains near peak levels.
Seasonally adjusted dollar volume for MLS® sales totaled $9.1 billion in October 2008, down 17.7 per cent from the previous month. Fewer transactions in Ontario, British Columbia, and Alberta accounted for more than 90 per cent of the monthly decline in national MLS® dollar value.
"The gap between national sales activity and the number of new listings is at its widest since 1990," Klump added. "This situation is unlikely to persist for long. New listings will decline, which will stabilize the market."
Consumer confidence in October of 2008 declined to levels not seen since the mid-‘90s, and that is reflected in the housing market trends, the President of The Canadian Real Estate Association, Calvin Lindberg, points out. "The major drop in consumer confidence and a steady stream of economic bad news from the financial markets is taking its toll on the national housing market."
"When consumers are not confident about their financial situation, they’re not active in the housing market, and that in turn impacts the economy more," the CREA President added. According to a study prepared for The Canadian Real Estate Association, the overall economic consumer spending spin-offs from MLS® transactions are $15.3 billion per year, including moving and renovation costs, and purchase of new furniture and appliances.
Lower activity in Canada’s more expensive housing markets continues to weigh on the national MLS® residential average price.
The average sale price of residential properties sold via the MLS® in October 2008 was $281,133, 9.9 per cent below where it stood in the same month last year. The price trend is similar but less dramatic for the weighted national MLS® average price, in which the proportion of privately owned housing stock in each province is taken into account. The weighted national MLS® average price eased by five per cent on a year-over-year basis in October.
