The Royal LePage House Price Survey was released today detailing 2012 Q3 average price and sales results.
Before we get into “blame game” which is well underway, here’s RL’s take on the Calgary real estate market:
National average house price changes do not always reflect the markets of individual cities, which are closely tied to their local economies. Case in point, some $29 billion in energy related investments are now underway in Alberta and Calgary is expected to lead the nation in economic growth through 2013. The city posted healthy price appreciation for both detached bungalows and two-storey homes, as predicted in previous Royal LePage House Price Surveys and Market Survey Forecasts.
“When the underlying economy of a city is sound and growing, house price appreciation is sustained. Calgary has enjoyed solid growth in home values this year. I have also been very pleased with the growth in commercial brokerage transactions seen in our Royal LePage Commercial business in the region.”
You can read the release in its entirety here.
Alright, let’s continue with some interesting quotes from the report which will focus on other Canadian markets:
“A drop in the number of homes trading hands typically precedes a period of softening house prices. Where there is reduced demand, those who want to sell their homes adjust their asking price to stimulate interest.”
“We had predicted this cyclical change early in the year, a natural market reaction after a period of strong expansion. Changes to mortgage regulations, which took effect on July 9th, accelerated the correction.”
I was pleased to see that Royal Lepage was not blaming the softening activity on the mortgage rule changes themselves, only that it brought the “adjustment” forward. However some are trying to blame the slowing sales on the mortgage rule changes instituted in July.
“There’s been a clear reduction in buyer demand in the three months since the federal government eliminated the availability of a 30-year amortization on government-insured mortgages,” the Real Estate Board of Greater Vancouver president, said in a statement. “This makes homes less affordable for the people of the region.”
I can’t decide whether it’s a case of being disingenuous or if it’s outright ignorance. It’s much easier to blame decelerating sales on new changes & say that’s why market is tanking rather than admit they were too blind to heed the warnings of the looming correction months in advance.
Take a look at the chart below – when did sales actually start dropping?
Greg Williamson (@GWilliamsonYYC) October 03, 2012
Some industry associations are already trying to get the government to rollback the newly instituted changes. Hopefully Mr. Flaherty will be immune to such lobbying efforts. There might be some short term pain, but it will pave the way for a much more healthy real estate market down the road.