(Globe and Mail Update, February 9, 2009 at 12:17 PM EST)
Sales and prices of existing homes will continue widespread declines that took hold in the middle of last year, and no province is expected to buck the trend, said a forecast from the Canadian Real Estate Association (CREA) released Monday.
Existing home sales are expected to fall by 17 per cent year-over-year in 2009 to their lowest level since 2000, the report said.
The sharpest drops in sales activity will be in Alberta, British Columbia and Ontario, where 19 per cent fewer housing units are expected to be sold this year.
Declines are expected to be most moderate in Prince Edward Island (-4.5 per cent), Manitoba (-6.5 per cent), and Newfoundland (-7.3 per cent).
Resale housing units totalling 360,900 are expected to change hands in 2009, compared with 434,477 in 2008.
Job losses and flagging consumer confidence are hurting the resale market, said CREA president Calvin Lindberg in a statement.
The average existing home price is expected to fall by 8 per cent in 2009 from the year before, and then stabilize in 2010.
In 2008, home sales in Canada fell by 17 per cent, and prices slid by under one per cent.
CREA's estimate calls for home sales levels to bounce back by 10 per cent year-over-year in 2010, and for prices to edge up slightly.
Listings should start to drop as buyers who can't get their asking prices pull their homes from the market, said CREA chief economist Gregory Klump. In time, this should put a floor under prices, he added.
The forecast was released the same day as data for the new homes market, which showed building activity has continued to decline across the country.
Housing starts fell by 11 per cent in January to 153,000 on a seasonally-adjusted annual rate basis, the Canada Mortgage and Housing Corp. said Monday.
Total urban starts are now down more than 40 per cent from a year ago.
The decline was led by erosion in Western Canada as the prairies and British Columbia suffered the most.
“It is clear from these data that the Canadian housing market is under a great deal of pressure,” said Charmaine Buskas, senior economics strategist at TD Securities.
“The combination of an increasingly weak labour market and lingering concern about the state of the economy has left consumers unwilling to take the plunge into the housing market,” Ms. Buskas wrote in a research note. “The correction in Canada's housing market continues to unfold and it appears the pace is a bit quicker than we had originally anticipated. In the face of continued economic weakness, housing may not see a rebound until early 2010.”
In urban areas, construction starts fell 15.6 per cent. Multiple starts fell 12.2 per cent while single starts 20.2 per cent, Canada Mortgage and Housing Corp. said Monday.
“To a certain extent, the decline in housing starts coincides with recent developments in the existing home market,” Bob Dugan, CMHC's chief economist, said in a statement. “Reduced sales and increased listings in the existing home market have led to reduced spillover demand in the new home market.”
CMHC said the decline swept across all regions but was led by a 30.3 per cent fall in the prairies and 29.1 per cent erosion in British Columbia.
