According to a recent article in the Financial Post, the Canadian Real Estate Association (CREA) reported that 70% of real estate markets showed a decline in sales from May to June. While this continues a downward trend in the number or sales each month of this year, there is at least one senior executive who says this news has to be taken in perspective.
Michael Polzler, Executive Vice-President of Re/Max Ontario – Atlantic Canada is quoted as stating that the pace that had been seen in the market up to this year could not have been sustained indefinitely. He warns that a note of caution should be taken when talking about the market slowing down. He agrees that sales have decreased noticeably, but as of yet, the real estate market in Canada has not become a buyer’s market. Instead, he feels that the majority of the markets in Canada are now balanced between buyers and sellers.
The CREA reported that in June there was an average decrease in market activity of just over 8%, with Toronto and Calgary seeing the greatest decreases. Over the quarter this means that sales have dropped by an average of about 13%. Many mortgage brokers and industry experts point to the new mortgage regulations and increasing costs of buying a home as two key reasons for this slow in home sales.
The new mortgage rules introduced earlier this year have made it more difficult for people to be approved for a mortgage. This is thought to have fuelled greater sales earlier in the year as home buyers tried to get in before the regulations came into effect. Also, potential interest rate increases and the introduction of the HST in Ontario and British Columbia are two other key factors thought to have affected when homes were purchased this year.
Of benefit to sellers is the fact that it appears that less people are putting their homes on the market. Coupled with the decrease in sales for June is a decrease of almost 7% in the number of new listings when compared to the previous month. Less competition, coupled with a recovering economy and job market, will help sellers maintain the equity of their homes, even though it appears that buyers are taking longer to make a purchase, with the average length of time for a home to be listed having risen from 4.2 months in 2009 to 5.7 months currently.
