Canadian Realty: MLS home sales plunge
Tags: BMO, CREA, Douglas Porter, Gregory Klump, property, Realtors, Realty, Toronto
The number of homes sold through the Canadian multiple listing service plunged 14 per cent last month to the weakest level since July 2002. It was the steepest month-to-month decline since June 1994, the Canadian Real Estate Association said Friday (14 Nov 08).
The association added that the impact was heaviest in big cities — notably Toronto, which accounted for one-third of the national decline. Total major-market sales were down 15.1 per cent from September, and overall national sales were down 27 per cent from October of last year.
“The breadth and depth of the drop in MLS activity suggests a major downshift in consumer psychology,” commented CREA economist Gregory Klump.
Seasonally adjusted residential MLS sales nationally numbered 32,048 in October, and the total dollar value of $9.1 billion was down 17.7 per cent from the previous month.
The average MLS home sale price was $281,133, a reduction of 9.9 per cent from October of last year.
“Canadian home sales look to have been one of the biggest casualties from the intense financial market turmoil in recent months,” commented BMO Capital Markets economist Douglas Porter.
“Prices are now down from year-ago levels in four provinces, and it just so happens to be in the four largest provinces,” Porter added. “With commodity prices in retreat, it seems likely that the resource-related booms in other provincial housing markets are poised to come to an abrupt end as well.”
CREA’S Klump observed that many homebuyers across Canada “battened down the hatches” in October amid headlines about falling stock markets and a global economic downturn.
“Elimination of mortgage default insurance availability for purchases with less than a five per cent down payment and for amortizations beyond 35 years also likely played a lesser role in the decline in sales activity,” Klump added.
BMO’s Porter said October’s sales weakness may be an overstatement, but “there is no doubt that Canada’s housing market continues to soften markedly. We look for a further decline in sales and some further correction in prices in the year ahead, especially in the cities that had the biggest booms in recent years.”
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Wow, it’s been a whole 15 minutes since the last negative bit of news on the real estate market!
What people are not stopping to remember is that 2007 was a record year, as was 2006, as was 2005 etc. Simply stating that mls sale prices have dropped 9.9% year over year or that MLS sales dropped 27% year over year doesn’t really tell the whole story does it ? Coming off record highs it doesn’t seem so scary.
Is that to say I’m not concerned ? No, not at all. I’ve made a career in the mortgage industry and have many years left in front of me however I’m looking at – and showing my clients – the whole picture and see it as an opportunity for all consumers to flock to quality and experience. A consumer can still expect a good realtor to sell their home at market value and a good mortgage broker to get the best financing options.