House Price Index (HPI): September 2010

Canadian home prices in September were down 1.1% from the previous month, according to the Teranet-National Bank National Composite House Price Index released today.

The monthly decline ended a string of 16 consecutive increases in the composite index since the last monthly deflation in April 2009. For the first time since February 2009, prices fell in all six of the metropolitan markets surveyed.

Year-over-year, Canadian real estate values were up 7.9%, showing increases in all cities surveyed with the largest YoY increase in Vancouver & Ottawa at 9.2%.

In Calgary, house prices were down 2.2% from the previous month. It was the second consecutive monthly decline.  Year-over-year, Calgary house prices were up 1.7%.

House Price Index: September 2010 (click to enlarge


11 responses to “House Price Index (HPI): September 2010

  1. Looks like pending sales dropped every day during that cold snap. I guess we’ll see if it’s a trend or if it actually was the weather. I’m guessing it was just the weather.


  2. Jen, he was Minister of National Revenue for 4 months back in 1993, that’s fact. How he got there only he knows, but this is politics, you don’t need to know much (if anything), if you know the right people you’re set.

    As for financial adviser, how hard is that really?

    How Easy Is It To Become A Financial Advisor?

  3. Last post until i am back in the country, with internet access.

    1 – Bond rating agencies are the A$$ of the financial world unfortunately. If you have the skills to potentially make Millions at Goldman Saks, or 50k at the SEC or Moody’s…where would you work?
    The Bonds that trashed the US financial systems (MBS’s) were rated AAA by these agencies….so how reliable are they really???? the agencies do not LEAD with their ratings, they follow the professionals (like Goldman) after the professionals start to shun them and demand Yield Premiums.

    2 – Trashing opinions. No, my point was that the majority of Canadians have their Net Worth in a single asset (their house), nobody listens to anyone with a message that their is massive risk in that decision. Its easier to follow the herd and pretend that 500K bungalow in scenic Acres can only go up 5%/yr forever and offset a lack of financial portfolio.
    The same can be applied when Nortel was hot and crashing. No One wanted to listen that their decision to put 40% of their Invesements in a single stock is a bad one.

    3 – Einstein comment. my comment is still to show how ridiculous you still base institutionalized educated peeps as naturally knowing the right answer. the reference is to show that the smartest and most influential man in Centuries was not “School Smart”, so why mock someone just because of that?

  4. Jimmy
    ”This comment tells us a lot about you”.
    ”YOU” NOT ”US” TROLL!!!!!!!!

  5. One can imagine what effect cutting back the maximum amortization from 35 years down to 25 would have on the real estate market.

    But TD’s CEO is recommending that this be done, eventually.

    In a brief roundtable with reporters after his speech, Mr. Clark addressed several other issues, notably concerns by experts that Canadians are taking on too much debt and a nascent move by lawmakers to push banks to tighten credit.

    “We’ve been an advocate of taking some measures now,” Mr. Clark said. “We see a world in which low interest rates and excess liquidity has created asset bubbles all over the world … We don’t have a problem here, but why are we not making sure we don’t create a problem?”

    Mr. Clark said Canada should eventually move back to allowing maximum 25-year mortgage amortizations from 35 years now because longer debt repayment leaves Canadians more exposed should the economy tank. He said half of TD’s fixed-rate mortgage customers in the United States choose 15-year paydown times. “[The] American consumer lost a big amount of their net worth and are trying to recover it by saving more … [Canada has been following a recent motto] of ‘Don’t save. Take a longer period to spread out your payments.’ I don’t think that’s good public policy.”

    Read more in the Financial Post

    RBC Housing Trends & Affordability

    It’s becoming more affordable to own a home, according to Royal Bank of Canada. Here is the excerpt from the report regarding Calgary:

    Calgary — Stuck in a low gear
    The good news is that Calgary’s housing market is no longer running in reverse. The bad news is that it appears to be stuck in a very low gear. Despite affordable homeownership costs, the recent pick up in area home resales has been modest, with levels moving up only to levels that last prevailed 10 years ago – notwithstanding the slump at the end of 2008, during the worst of the housing downturn.

    Weak demand to a large extent reflects Calgary’s still sluggish job market where employment has been stagnant at best in the past year. Meanwhile, availability of homes for sale continues to be plentiful, maintaining downward pressure on property values.

    In the third quarter, home prices fell in all housing categories, for the second consecutive time in some cases. This result contributed to further improvement in affordability in the area. RBC’s affordability measures declined by 1.2 to 2.3 percentage points, representing the third straight drop for two-storey homes and condominiums.

    You can read the entire report here

  6. I’m all for fixing the amortization to 25 years max. It should be done gradually and announced at some point in the future when home prices pick up again. It could mean short term pain for buyers and sellers … The groups that will surely lose out in the short term are RE agents and speculators though.

  7. So True Cory. I think to many people begin to get bogged down in details when trying to predict future prices in real estate, but when you take a high level look its quite clear that without anymore governement intervention in the market prices can only go down.
    The real estate market is slightly poor for a few locations and sluggish for the rest. And this during a time when we have apparently been out of a recession for over a year; interest are almost as low as they can go; and people are said to be spending just as much in the economy as ever. I don’t believe prices will “crash” as some people think, but the days of making money and speculating on houses is over for a good long while.

  8. People need to simply run numbers in a mortgage calc to see what a .5 interest increase will do to payments alone on ~400k mortgage. Funny how banks are “advocating” shorter amort’s when they are doing all the lending to these over extended people. I don’t see a big crash but the market is certainly doing what I thought it would do and that is a prolonged decrease in prices……more than likely back to ~2003-2004 levels. Interest rates are the key here (i.e bond market) and eventually the BoC rate will take part as well.

    I don’t know how people do it anyway. I have been in O&G for 20 years and make very good money and I can’t afford half the house people buy these days, nor do I want to. If something goes sideways (health problems, job loss, etc) people are in instant trouble.

    I saw a real estate piece on CTV news tonight about Calgary’s housing market. it was good for the most part because it was truthful…meaning the market is terrible and dropping. But then at the end they comment about CREA?? saying house prices here will rise ~5% next year so people should wait for a better market…this will effectively sink many people who should be selling now because it won’t happen.

    Strange days for sure. One thing I learned from travelling to several countries with a world of history attached to them, and I can say for sure, is if you look at all of known human history, humans are very resilient and things will work out eventually. Of course there will be casualties along the way but things will still move forward. Does it mean I think housing will come roaring back? No, not for a loooooongg time. But people will survive and move on, that’s for sure.

    Mike Fotiou says: At the end of the CTV segment, it was CMHC – not CREA – predicting a better 2011. CREA has forecasted a decrease in sales and average prices for Alberta next year.

  9. James Williams

    Nice post, there is no limit of investment in property.You have done great work to take the pricing list in percentage thats very good for those which are upcoming real estate holders. House is only worth what a ready, willing and able buyer will pay for it. But it can be depend upon the value of the the property
    but real estate holder must know about buyer is willing to pay. Real estate provide the facility to visit the location of that property and provide all facilities that are not provided by other forms through which clients are fully satisfied

  10. A couple of interrelated news stories to consider:

    We know David Rosenberg has been one economist warning of a Canadian housing bubble. Here’s an excerpt from a research note of his today:

    Did Canada experience some type of housing bubble? “We are worried about looming default risks but have been pleasantly surprised by the fact that the real estate market has eased, rather than busted. Be that as it may, a more pernicious turndown in real estate values cannot be ruled out, especially if the Bank of Canada follows the market and resumes in its rate-hiking program early next year.”

    Read more in the Globe & Mail

    Which brings us to the next article of the day, which is a case of bad news/better news.

    The Canadian economy grew at the slowest annual pace since the recession between July and September. The 1% rate of expansion was well below Bank of Canada Governor Mark Carney’s estimate of 1.6% annual growth for the three-month period. The silver lining in this?

    `This result is a clear disappointment, especially after the surprisingly perky growth rates seen earlier this year,” Douglas Porter, deputy chief economist at BMO Nesbitt Burns, said in a note to clients. “It looks like the economy borrowed all the growth from the second half of the year and put it in the first few months of 2010. Bottom line for the Bank of Canada – there’s zero rush to raise rates again.’’

    Read more in the Globe & Mail

    Weird how a poorly performing economy might end up being somewhat of a stabilizer for real estate.

  11. Mike,
    In my opinion it’s better to sell too early then to try to sell too late. I’d hold off on the call for a bottom in 2009 until we’re clearly past the current depression.

    Mike Fotiou says: Weak sales are showing we aren’t out of the woods yet.

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