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- Sep 14, 2007
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Prices of new homes fell by 10.4 per cent year-over-year in Edmonton and 6.5 per cent in Calgary as the economic downturn becomes more deeply entrenched in the once-booming West.
Country-wide, the prices of new homes moderated by 0.8 per cent in January compared with the year-earlier month, Statistics Canada reported Wednesday.
Between December and January of this year, contractors` selling prices declined by 0.6 per cent, a slightly faster pace than the 0.1-per-cent decline the previous month.
The month-to-month declines were steepest in Edmonton, Calgary, Victoria and Vancouver, Statscan said. “Builders in all four cities report difficult market conditions.”
Gary Friend, president of the Canadian Home Builders` Association, said in an interview this week that the Prairies and British Columbia “were later to go into the slowdown so it seems like, if you come to the slowdown later, you get a quicker decline.”
The economic crisis that began in Canada`s manufacturing heartland has spread to Alberta, marking a reversal of fortune for the energy-rich province. In Alberta, a steep drop in oil and gas prices has substantially reduced investment.
The Bank of Nova Scotia said in a research note that new home prices are down, year over year, for the first time since January, 1997, “as builders try to burn off inventory.”
“In fact, inventories are now at levels not seen since 1995 as housing demand retrenches,” the Bank of Nova Scotia said.
After a long sustained boom, characterized by rising prices and bidding wars over the past several years, Toronto-Dominion Bank economist Ian Pollick said the decline in prices is good news for buyers.
“On balance, this is a weak report [from Statistics Canada] and highlights the continued pace of moderation currently afflicting the Canadian housing market. We expect prices to continue to cool as the broader economy continues to slow,” Mr. Pollick said in a note to clients.
“However, the price moderation taking place in Canada is still much slower and to a shallower depth than the correction taking place in the U.S.”
In a separate report Wednesday, the Conference Board of Canada projected that declining housing starts and weak market conditions this year will cut into home builders` profits by an estimated 20 per cent.
“Years of frenzied construction activity had left the market overdue for a correction,” Valerie Poulin, a Conference Board economist, said in releasing the outlook.
“However, Central Canada is not immune from the contraction. Across Canada, housing demand is waning because of a combination of poor economic conditions, including weaker consumer confidence and slower growth in employment and real disposable income.”
Even Saskatoon, which until recently had enjoyed one of the strongest housing markets in North America, has seen a decline in activity, the Conference Board said.
“New construction and home resale prices started to slip in 2008, particularly in the western part of the country.”
Tighter credit conditions are also a factor in the housing market decline, the Conference Board said.
“With employment prospects more precarious and disposable income growth under threat, it is no surprise that some want-to-be-homeowners are facing a wall when asking for a mortgage,” the Conference Board said.
“Rising loan losses and the freezing up of some credit markets are resulting in tighter credit conditions.”
Country-wide, the prices of new homes moderated by 0.8 per cent in January compared with the year-earlier month, Statistics Canada reported Wednesday.
Between December and January of this year, contractors` selling prices declined by 0.6 per cent, a slightly faster pace than the 0.1-per-cent decline the previous month.
The month-to-month declines were steepest in Edmonton, Calgary, Victoria and Vancouver, Statscan said. “Builders in all four cities report difficult market conditions.”
Gary Friend, president of the Canadian Home Builders` Association, said in an interview this week that the Prairies and British Columbia “were later to go into the slowdown so it seems like, if you come to the slowdown later, you get a quicker decline.”
The economic crisis that began in Canada`s manufacturing heartland has spread to Alberta, marking a reversal of fortune for the energy-rich province. In Alberta, a steep drop in oil and gas prices has substantially reduced investment.
The Bank of Nova Scotia said in a research note that new home prices are down, year over year, for the first time since January, 1997, “as builders try to burn off inventory.”
“In fact, inventories are now at levels not seen since 1995 as housing demand retrenches,” the Bank of Nova Scotia said.
After a long sustained boom, characterized by rising prices and bidding wars over the past several years, Toronto-Dominion Bank economist Ian Pollick said the decline in prices is good news for buyers.
“On balance, this is a weak report [from Statistics Canada] and highlights the continued pace of moderation currently afflicting the Canadian housing market. We expect prices to continue to cool as the broader economy continues to slow,” Mr. Pollick said in a note to clients.
“However, the price moderation taking place in Canada is still much slower and to a shallower depth than the correction taking place in the U.S.”
In a separate report Wednesday, the Conference Board of Canada projected that declining housing starts and weak market conditions this year will cut into home builders` profits by an estimated 20 per cent.
“Years of frenzied construction activity had left the market overdue for a correction,” Valerie Poulin, a Conference Board economist, said in releasing the outlook.
“However, Central Canada is not immune from the contraction. Across Canada, housing demand is waning because of a combination of poor economic conditions, including weaker consumer confidence and slower growth in employment and real disposable income.”
Even Saskatoon, which until recently had enjoyed one of the strongest housing markets in North America, has seen a decline in activity, the Conference Board said.
“New construction and home resale prices started to slip in 2008, particularly in the western part of the country.”
Tighter credit conditions are also a factor in the housing market decline, the Conference Board said.
“With employment prospects more precarious and disposable income growth under threat, it is no surprise that some want-to-be-homeowners are facing a wall when asking for a mortgage,” the Conference Board said.
“Rising loan losses and the freezing up of some credit markets are resulting in tighter credit conditions.”