Last week, the Canadian Real Estate Association released its national home sales update for the month of January and reported its 5th month-over-month sales decline and a 3.3% decline compared to December. Of note though is that the national average sales price actually rose (based on data prepared by a not so unbiased source, i.e. the association representing realtors in Canada) 9.5% on a year-over-year basis.
Follow the link below for the press release:
http://crea.ca/canadian-home-sales-moderate-further-january
CREA's interpretation of the data is that harsh January weather had an impact on buying demand, but could it be that simple? Or could it be due to the fact that house prices are becoming just a bit out of reach for first time home buyers which make up about half of total home purchases in Canada.
A decrease in sales volumes is typically positively correlated with a decrease in sales prices. This means that as sales volumes increase or decrease, housing prices tend to follow suit as home buyers are more willing to accept a lower price in order to sell there homes. But the data presented does not appear to be consistent with that train of thought. There may be a number of reasons for this namely: sellers remain confident in the continued strength in the Canadian housing market and therefore refuse to budge on their asking price and thus, sales discounts are not appearing nearly as frequently as one would expect in a market where many economists are calling for a bust in the Canadian housing market. Secondly, it may be due to the continued strength in the Vancouver and Toronto housing markets which represent the most and 2nd most expensive housing markets in Canada.
The article below is a prime example of the housing craze being experienced Canada and our infatuation with home ownership:
http://www.thestar.com/business/real_estate/2014/01/22/westend_house_attracts_32_bids_sells_for_210000_above_asking.html
Nevertheless, this data point should serve as fuel for fire in the argument for an inevitable collapse in the Canadian housing market.
Follow the link below for the press release:
http://crea.ca/canadian-home-sales-moderate-further-january
CREA's interpretation of the data is that harsh January weather had an impact on buying demand, but could it be that simple? Or could it be due to the fact that house prices are becoming just a bit out of reach for first time home buyers which make up about half of total home purchases in Canada.
A decrease in sales volumes is typically positively correlated with a decrease in sales prices. This means that as sales volumes increase or decrease, housing prices tend to follow suit as home buyers are more willing to accept a lower price in order to sell there homes. But the data presented does not appear to be consistent with that train of thought. There may be a number of reasons for this namely: sellers remain confident in the continued strength in the Canadian housing market and therefore refuse to budge on their asking price and thus, sales discounts are not appearing nearly as frequently as one would expect in a market where many economists are calling for a bust in the Canadian housing market. Secondly, it may be due to the continued strength in the Vancouver and Toronto housing markets which represent the most and 2nd most expensive housing markets in Canada.
The article below is a prime example of the housing craze being experienced Canada and our infatuation with home ownership:
http://www.thestar.com/business/real_estate/2014/01/22/westend_house_attracts_32_bids_sells_for_210000_above_asking.html
Nevertheless, this data point should serve as fuel for fire in the argument for an inevitable collapse in the Canadian housing market.
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