New listings surpass 80,000

Homes listed for sale across Canada set all-time record in July

The number of new listings of existing houses for sale surpassed 80,000 for the first time ever in July and sales activity fell, making the market more favourable for buyers and less so for sellers, the Canadian Real Estate Association said today.

The nationwide Multiple Listing Service residential listings set a new record in July, coming in at 80,147 units, up 1.4 per cent from June and up by half a per cent over the previous record set in May, said CREA.

This is the first time in any month that new listings surpassed 80,000 units, the association said, adding that listings are up across the country as people rush to take advantage of high home prices.

“We’re facing a far more balanced market than we did last year,” said Gregory Klump, CREA’s chief economist, in an interview.

“There’s a lot more product from which to chose,” he said. “Buyers can afford to be in less of a hurry.”

Across Canada, said Klump, “people are putting their homes on the market to take advantage of recent price gains.”

What Canadians are seeing, said Michael Gregory, an economist with BMO Capital Markets, is “a healthy correction.”

“When you have double digit price gains on a nationwide basis for several years, you’re going to have to pay a little bit of that back at some stage,” he said.

New listings reached new heights in Ontario and Quebec.

In Manitoba, they climbed to their second-highest level since the beginning of the new millennium.

In fact, the rise in listings nationally more than offset a monthly decline in the number of new listings in Alberta, where levels have been retreating from a peak reached in March, said CREA.

Earlier this month, CREA reported that listings in the country’s major markets remained near record levels in July. On a seasonally adjusted basis, 50,782 properties were listed through the MLS systems - the second-highest level on record, just 0.2 per cent below the peak reached in May.

“The trend for new listings generally (national and major market) reflects recent price trends,” said Klump.

“While still elevated, new listings in Alberta are easing and market balance is stabilizing now that prices there have softened,” he said.

Affordability has been eroded by recent price gains, he said, “That’s one of the reasons you have fewer buyers this year, just from an affordability standpoint.”

Some people are listing their homes for sale, said Gregory, in part because they figure “that prices have gotten toppish.”

Then, he said, there are those who have made investments. They are probably “looking to move out of real estate at the tailend of a very healthy ride.”

A big chunk of the new listings are “investors and speculators.”

The housing dynamic has changed quite considerably in Canada over the last few months, said Gregory. “It looks like that is going to continue.”

Seasonally adjusted national sales activity in July was stable compared to June. The average price of a home based on the national MLS figures slipped by 2.4 per cent year-over-year in July.

That compared to an average price decline of 3.6 per cent in major markets reported by CREA in early August.

At the end of July, the average price of a resale home was $302,298, down from $309,885 in July 2007, the national MLS figures released Friday showed.

CREA’s figures indicate that in July almost 43,000 sales were sold, down from 48,748 in July last year.

Going forward, said Klump, “we expect that new listings will remain elevated for the rest of the year.”

As a result, he said, “the significant price gains that we saw last year are definitely in the rear-view mirror. They’ll be very modest over the rest of the year and into next.”

He also said that with the country’s economic fundamentals remaining strong, CREA doesn’t see any collapse in the housing market in the offing

On Friday, Statistics Canada reported that the economy rebounded in the second quarter after losing ground in the first quarter.

Gross domestic product increased at an annual rate of 0.3 per cent in the three months ended June 30, after it contracted by 0.8 per cent in the first quarter.

Technically that means Canada has technically avoided a recession, which is defined as two consecutive quarters of declining economic output.

“With the economy still fundamentally on sound ground, we don’t expect to see the massive layoffs that we saw in the recession of the early 1990s,” said Klump.

“With employment remaining elevated, the fundamentals are still sound for the housing market,” he said. “We don’t expect the Canadian market have similar trends to those in the U.S.”

Statistics Canada recently reported that the national unemployment rate improved slightly to 6.1 per cent in July, from 6.2 per cent in June, but only because many people - especially the young - left the workforce.

The U.S. housing market has experienced a severe downturn for more than a year after several years of rapid growth. Many industry observers say Canada will avoid a U.S-style boom-and-bust cycle but that demand will nevertheless slow.

As for prices going forward, said Gregory, “houses on the market are staying on longer.”

Many dwellings “put up at the heights of the boom, they aren’t moving.”