Monday, December 17, 2007

Canadian Resale Housing Market up 11.6% year over year - Good news for us all!

Canadian Housing: It is Legend

At least one Canadian economic train fully decoupled from the U.S. this yearthe housing market. Today's November existing home sales data from the Canadian Real Estate Association show that resale activity barely blinked in the face of the severe credit squalls in the Fall. Sales rose 3.2% from October, and were up a solid 7.6% from year-ago levels. While some of the sales strength may be attributed to a buying rush in Toronto ahead of a new land transfer tax in 2008, that city saw only the fourth strongest rise in the country, and no fewer than 10 of the 25 reporting cities posted double-digit y/y sales gains last month. Meantime, price increases just keep chugging along.

Average home prices were up 11.6% from year-ago levels in November, with 12 cities reporting double-digit increases.

All cities west of Lake Superior continued to report double-digit price increases last month, led by the 50% sprint in Saskatoon. (That was actually down a shade from the 57% spike seen earlier this year.) However, the price surge is not confined to Western Canada, as Toronto, Kitchener, Sudbury and Quebec City have also posted double-digit gains.

Meantime, the previously scorching Alberta markets continue to coolsales in both Calgary and Edmonton fell steeply from a year ago (Calgary down 18.4% y/y, Edmonton down 22.3% y/y), while new listings have posted double-digit gains. That's not a friendly combo for prices, looking ahead. Notably, only three cities reported sales declines in the first 11 months of the yearEdmonton, Calgary and Windsor. Elsewhere, however, markets still look tight, with rapid sales increases suggesting that prices could climb further in a number of cities.

The Bottom Line: Canadian home sales have hit a new annual high with one month left to go, an impressive performance in view of the traumatized U.S. market and the variety of risks facing the Canadian economy.

While there are plenty of questions surrounding the 2008 economic outlook, not many are from the domestic side of the equation. Housing may not manage to pack as strong a punch next year as it did in 2007 for the Canadian economy, but it's also highly unlikely to suffer a knockout blow either, a la the U.S. market over the past year.

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A. Mark Argentino
P. Eng. Broker
Specializing in Residential & Investment Real Estate

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