Each year Post City Magazine editors host a debate about housing markets. The gathered real estate agents and economists hash everything out and issue warnings and predictions. In the 2011 gathering, held in the spring, those present produced the opinion that the real estate market was literally pushing the end of the proverbial envelope. As in, nothing lasts forever. If the volume of homes decreases, then the price of homes will increase. That’s just how things work.
This year’s event offered the same hashing of the proverbial problems. But one of the predictions from the 2011 gathering did bear fruit. It was the prediction that the envelope was being pushed too far.
Looking at Toronto, December of 2012 saw a 19.5 percent decrease in sales from that same month in 2011. All of 2012 experienced a four percent drop in sales compared to 2011. But a bit more disturbing was the fact that sales showed a decline every month in 2012 since May when compared with the same month in 2011. At the same time, condo sales in the last quarter of 2012 were down by 23 percent.
Last spring saw a bit of a bidding war but since then prices dropped by nearly 13 percent during the last eight months of 2012. In April the average price of a single family home was $831,000 in Toronto. By December it was $722,393. Vancouver pricing has seen similar drops. Sales have also slowed, particularly in Montreal and Edmonton. Local real estate markets are, in some cases, in denial. Many had no clue this type of turn in the market was coming.
Looking at the economy in the United States, we found that it is stabilizing, growing in fact. Eventually the three percent interest rate would be a thing of the past, home prices would decrease enough that demand would be squeezed, slowing sales while prices started to inch up. Is Canada all that different, isolated?
Not really. The predictions of a year ago did come true. Those who wanted to listen did so. Only a select number of neighbourhoods and cities across Canada escaped the adjustment. For all else it was a learning experience.