Another real estate franchise with another survey. There is some interesting information in this survey, in that they don’t compare the average prices for an entire city, to other cities in Canada. They’ve defined what a typical home is for each city, and compared how the prices for that "typical" home have changed over the past 6 months, and past five years. Turns out Edmonton has seen the highest price increase in the country, specifically bungalows in North East Edmonton.
They also talk a lot about how the decline seen in the US in recent months is not expected to happen here in Canada. They give some good reasons, but I think they miss a few major points. First, the US is likely headed into a minor recession, since over 1/3 of the population in the US now has negative equity in their homes, due to borrowing against their mortgages and the incredible increase in sub-prime mortgages (such as 0% down payment). Another thing to keep in mind is that the US economy is no longer the biggest in the world, they make up about 15% of world growth in GDP, whereas China and "emerging Asia" make up 49%! Basically, our economy has become a bit shielded from the old saying, "when the US coughs, Canada catches pneumonia." Anyway, here is the article from Century 21.
CENTURY 21 Canada Fall 2006 House Price Survey
Strong price increases in the West, stability in the East
Canadian market will escape the price declines seen in U.S.
VANCOUVER, BRITISH COLUMBIA–(CCNMatthews – Nov. 22, 2006) – Canada’s housing prices will remain strong in the West and stable in Central and Atlantic Canada through the rest of 2006 and into 2007, according to an analysis by CENTURY 21 Canada released today.
Don Lawby, President of CENTURY 21 Canada, says all Canadian markets will avoid the price declines experienced in many markets in the United States – and Canada’s strongest markets in Alberta and British Columbia will not suffer the price crashes seen in some hot spots in southern California, Nevada, Arizona and Florida.
"Housing markets in both Canada and the U.S. have had robust price increases for several years, with some regions growing at spectacular rates," says Lawby.
"In Canada over the past six months, price increases have slowed except for a few hot markets, but all markets are supported by strong economic fundamentals such as job growth and stable mortgage rates," Lawby says. "In the U.S., the economies of certain regions and cities have weakened throughout 2006 and can’t continue to support house price increases."
The situation in the U.S. is exacerbated by other factors. "There is more speculation in the U.S. than we have seen in Canada. Lenders in Canada don’t have the same lending policy as the U.S. For the first time in history we have interest-only mortgages. In the U.S., they’ve had them for years," Lawby says.
"In the U.S., because they can deduct mortgage interest from income tax, people use their homes like an ATM. Once you start doing that, you treat your home as a different vehicle rather than as a place to live. It becomes your cash machine. So people try to make money off the value of their homes, and that pushes up the value of homes faster. This has occurred only in certain areas, parts of California, Nevada, Arizona, Florida and parts of the North East, and these are the areas where the markets are taking a real tumble."
CENTURY 21 typical house prices
The CENTURY 21 Canada Fall 2006 National House Price Survey reflects the price of a typical home in communities across Canada. A "typical home" is the type of home that occurs most frequently in any given neighbourhood or community. These homes are not identical, but meet a fairly narrow range of criteria including size and design.
The CENTURY 21 survey includes housing sales in 39 markets across the country over two time periods – over the past six months and the past five years.
Over the past six months, the largest price increase occurred in Edmonton northeast, where the price of a typical bungalow increased 36 per cent to $300,000 from $233,000 (Over the past five years, the price of a similar home in Edmonton northeast increased to $300,000 from $123,000, up 144 per cent).
Other strong markets over the past six months were Red Deer, up 19 per cent (up 68 per cent over 5 years); North Vancouver, up 12 per cent (108 per cent over five years); Vancouver west side, up 10 per cent (up 100 per cent over five years); Summerside, up nine per cent (up 54 per cent over five years); Halifax west, up eight per cent (up 48 per cent over five years); and Regina, up seven per cent (up 37 per cent over five years).
Several other Canadian markets have moderated over the past six months compared with their performance over five years. Examples are Calgary Lakeview, up one per cent over the past six months (up 128 per cent over five years); Fort McMurray, up one per cent (up 114 per cent over five years); Kelowna, up seven per cent (up 103 per cent over five years); Toronto Beaches, up six per cent (up 106 per cent over five years) and Vernon, zero growth (up 129 per cent over five years).
U.S. prices
In the U.S. over the past six months, the median price of all existing homes across the country fell to U.S.$200,000 from U.S.$223,000, a decline of 11.5 per cent, according to an analysis of data from the U.S. National Association of Realtors.
Over the same six months, the median price increased 2.2 per cent to U.S.$184,000 in the South, increased 1.8 per cent to U.S.$169,000 in the Midwest, fell 10.6 per cent to U.S.$259,000 in the Northeast, and fell 4.6 per cent to U.S.$332,000 in the West.
