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TORONTO — Home sales may be slowing, but prices in six of Canada's largest housing markets are in bubble territory for the first time in 30 years -- and a U.S.-style correction is still not out of the question, according to a report from an Ottawa-based think tank. According to the Canadian Centre for Policy Alternatives,  prices now sit at 4.7 to 11.3 times Canadians' annual income -- much higher than historical comfort levels of between three and four times income.

Sales have fallen by 25 per cent since reaching a peak at the beginning of the year as fewer buyers compete and more houses come onto the market. But Canadian home prices were up 13.6 per cent in June from a year ago in Canada's major cities, according to the Teranet-National Bank composite house price index. The steep rise in house prices in so many cities points toward an "accident waiting to happen," said David Macdonald, a research associate who authored the report entitled "Canada's Housing Bubble: An Accident Waiting To Happen."

Sellers who are planning on putting off selling until spring 2011 might want to reconsider as prices are expected to moderate by as much as 10% in some areas. In Barrie year to date residential sales are now behind last years numbers for the first time. If sales are slowing and prices remain robust for a while now maybe the best time to sell. One way or another by this time next year it will be a NEW ball game.

As of August 11th 2010 sales In Barrie residential homes YTD are lower that same time in 2009. The seasonally adjusted number of months of inventory in July was 7.3 months. That's how long it would take to sell every listed house at the current pace of sales. It’s at its highest level since March, 2009. The average resale price nationally was $330,351, according to CREA. In June, the price was $342,662 as predicted “We expect a downward correction of nearly 10 per cent in the monthly average prices, followed by several years of stagnation of price growth at the rate of inflation, in order to bring Canadian house prices back to balance,” Toronto-Dominion Bank economist Grant Bishop said. The country's largest cities led the annual decline, with Vancouver posting a 45-per-cent drop in sales. CREA, a trade association that governs the country’s 100,000 real estateagents, attributed the decline to an increased number of sales earlier in the year and said the “outlook for economic and job growth remains generally positive nationally.” “The soft sales figures we’re seeing right now can be attributed in part to accelerated home purchases earlier in the year,” CREA president Georges Pahud said in a statement. “Activity may remain at lower levels for some time, but ultimately we expect a more stable market to emerge, with demand coming back into line with economic fundamentals.” Earlier this month, CREA lowered its forecast for the year, saying sales would post an annual decline of 1.2 per cent compared to 2009, which saw the market rebound with an unprecedented intensity from the recession. It also forecast average resale prices would end the year at $331,600 - slightly higher than July's average. Economists suggest many Canadians bought houses earlier in the year than they would have otherwise to take advantage of low interest rates. This caused huge gains in the first half of the year, but is expected to mean a lull as the year winds down. “While the softening in sales is very real, we continue to view it as a giveback (a big giveback, admittedly) to the surge in sales in the first half of the year,” Bank of Montreal said in a research note. “Anyone who wanted to buy a home this year seems to have done so already. Still, note that prices remain a bit above year-ago levels in all major cities, and it’s tough to see the market spinning lower amid a sturdy employment backdrop and a still very low interest rate environment.” The introduction of the harmonized sales tax in British Columbia and Ontario also contributed to the slower sales, with buyers trying to beat the July introduction even though it didn’t have a direct connection with resale homes. “While existing homes sales are not directly taxed, they could still experience an outsized pullback during that month as some previously untaxed housing-related services now fall under the HST,” TD’s Mr. Bishop said. “Additionally, the anecdote is that a certain amount of new home buying was moved forward by mistaken home buyer perceptions that purchases ahead of HST implementation would save the tax, ignoring that the pre-HST rush may have actually pushed up prices, with consequent give-back in July." CREA said the number of listings in July fell by 7.2 per cent, the biggest drop in a decade, as homeowners opted to stay put rather than sell into a weaker market. Since April, new listings have fallen 17.5 per cent, which the organization said will help lead to a “balance between supply and demand and temper home price volatility.” The seasonally adjusted number of months of inventory in July was 7.3 months. That's how long it would take to sell every listed house at the current pace of sales. It’s at its highest level since March, 2009. Oc course its not all doom and gloom. Sellers who are proactive and price their home according to buyers expectations will not experience any delay in selling. The message is clear. Sell now while you can or suffer the consequences of a future filled with uncertaity.

Home sales are plunging across the country. Most sellers are still not aware of the change in the market. Sales are down 70% in most markets . Many experts agree prices will be next. Sellers refuse to accept that as they track Price's on the way up they should also track prices on the way down. By failing to take action the market stalls out and for many sellers with high hopes of moving this year they are disappointed. Stock prices are a good example of how commodity prices operate. Most home owners understand that their port folio value goes up and down but if you need to sell you will only get the market sale price offered on the exchange on the day the stock is to be sold. The MLS is the primary exchange for the sale of homes across Canada. The information gathered from the results of sales in markets across Canada by CREA is very valuable. Speculative pricing will become a thing of the past with more normal returns based on real value, improvements and inflation. The question to ask your Realtor is "based on the last months sales how many homes had price reductions to get a sale compared to the previous month and same time last year. If this number is increasing you may be left behind by not taking action. Multiple reductions may be required until you hit the sweet spot where you find foot traffic through your home increases. When combined with staging and a fresh clean house you are sure to get an offer and be on your way.

Sales activity cools in June Residential property sales recorded through the MLS® System of the Barrie District Association of REALTORS® Inc. came in well below last year’s record levels in June. Home sales numbered 461 units in June 2010, down 19 per cent from the record in the same month in last year. On a year-to-date basis, however, activity was still up 12 per cent compared to the first six months of 2009. New listings rose five per cent from a year earlier to 767 units in June. While still up, the gain was considerably smaller than in the previous four months. This was reflected in the seasonally adjusted figure, which posted a third straight month-over-month decline in June. “Sales activity is softening as has been widely expected, but we’re also now seeing slower growth in the number of new listings coming on stream,” said Elizabeth Wilson, President of the Barrie and District Association of REALTORS®. “This will help in maintaining a good balance of supply and demand going forward.” The average price for homes sold via the Association’s MLS® System in the first half of the year was $280,013, up seven per cent from the same period last year. The Barrie & District Association of REALTORS® cautions that over a period of time, the use of average price information can be useful in establishing trends, but it does not indicate actual prices in widely divergent areas or account for price differentials, between geographical areas. The total dollar value of all home sales amounted to $131.6 million in June 2010, 15 per cent below year-ago levels. Total sales activity in the Barrie region numbered 472 units in June, down 19 per cent on a year-over-year basis. The total value of all properties sold in June 2010 was $133.3 million, a decrease of 15 per cent from June 2009. The number of active residential listings on the Association’s MLS® System rose four per cent on a year-over-year basis to 1,987 units at the end of June 2010. There were 4.3 months of inventory at the end of June 2010, up from 3.3 months one year earlier. The number of months of inventory is the number of months it would take to sell current inventories at the current rate of sales activity. The Barrie and District Association of REALTORS® Inc. covers a geographical area that includes the City of Barrie and part or all of the surrounding townships, including Springwater, Oro-Medonte, Innisfil, Essa, Bradford-West Gwillimbury and Clearview. The Association provides continuing education, Multiple Listing Service® (MLS®), statistical information, and many other services to its members.

Vancouver home sales fell 30.2 per cent in June from the inflated levels of a year earlier, and 5.8 per cent from May. New property listings rose 1.2 per cent from May and 32 per cent from a year earlier. Calgary sales of single family homes fell 16 per cent in June from May and 42 per cent from June of 2009, while condo sales fell 14 per cent from a month earlier and 40 per cent from a year earlier. All in all a sobering change of fortune for two major Canadian City's unaffected by recession. Whats next? How far can this go? Here is analogy of a Housing Collapse Pattern. Volume drops precipitously, Got it!, Prices soften a bit, Got it, Inventory levels rise, Got it, Bubble denial kicks in with media articles everywhere saying the fundamentals are ok, Got it, Stubborn sellers hold out for last year's prices as Sales volume continues to shrink and inventory increases Got this too. Inventory levels reach new highs months ahead of the media reporting the changes. Builders start offering huge incentives to clear inventory, Got this too, Price declines hit the high-end, Increasingly desperate sellers get creative with incentives, Got this, Even Gimmicks are not working, Price declines will escalate within months sharply at all price levels, Prices collapse, inventory skyrockets, and builders holding inventory go bankrupt, Some of those may happen simultaneously or in a different order, but the whole mess starts with a huge plunge in volume. Confidence is building that the peak in Canadian housing insanity is finally in. Where have all the first time buyers gone. In Barrie the first four price categories are in decline compared to 2009 YTD and have been that way since April. It took, on average, 47 days to sell a house in Edmonton last month, up a full week in the last eight. The number of homes for sale is closing in the highest level ever experienced – a whisker under 10,000 – and soon there will be a six months’ supply of houses on the market, just as buyers go on strike. Industry experts suggest home sellers should consider taking immediate action to price match the markets expectations or else face bigger discounts in the not to distant future. This will not change anytime soon.

Canada's hot resale housing market starting to cool Home sales activity in Canada came up short of the record for the month of April and new listings continued to climb, according to statistics released by The Canadian Real Estate Association (CREA). Residential sales activity via the Multiple Listing Service® (MLS®) Systems of Canadian real estate Boards numbered 52,042 units in April 2010. This is short of the record for national sales activity during the month of April, which was set in 2007. Compared to April 2009, national activity was up 20 per cent. Seasonally adjusted home sales activity slipped 2.6 per cent from the previous month, and now stands 6.8 per cent below the peak reached in December 2009. Some 99,901 homes were newly listed for sale on Canadian MLS® Systems in April 2010, surpassing the previous record for the month of April set in 2008 by six-tenths of one per cent. A total of 236,397 residential properties were listed for sale on Boards’ MLS® Systems at the end of April 2010, down 1.9 per cent from levels one year earlier. As for the national average price of homes sold via Canadian MLS® Systems, that figure rose 12.2 per cent over this time last year. This is a smaller increase compared to those recorded over the past eight months. Bucking the national trend, price gains continue to increase in a number of major markets in Alberta, Toronto Ontario and Quebec. With last year’s string of downwardly skewed average price values having now mostly passed, and with activity in British Columbia’s lower mainland having settled down, year-over-year national average price comparisons are coming back into line with changes in the national weighted average price. On a seasonally adjusted basis, months of inventory stood at 5.3 months in April, the highest level since last May. "Next month will mark the passage of one year since the national average price rebounded from the recessionary trough to return to the pre-recession peak, so the rise in the national average price is expected to be more subdued next month, " said CREA Chief Economist Gregory Klump. "The national average price could potentially be skewed higher over the next couple of months if buyers of higher priced homes in Ontario and British Columbia move their purchase decision forward to beat the introduction of the HST in July." (CREA 5/17/2010) "The easing trend in national sales activity masks a rising trend in a number of major markets," said CREA President Georges Pahud. "Real estate is local, so buyers and sellers should engage the services of a REALTOR® for knowledge about housing market trends in their market." The bottom line is its getting competitive out there!

In January, February and March Real Estate Sales were ahead of 2009 by 50% for the same period last year. The month of May stopped dead almost all previous sale gains for the year with a 12 % decline. The month of June shows how quickly a 50% increase in sales can fall to 10% year over year. By August we will be lucky to hold onto that number. The reason is quite simple. While all price points, $250K and beyond, were in positive territory, the below $250K was negative and not going anywhere. Sooner or later the lack of interaction from first time buyers and move up buyers was bound to catch up to the rest of the market. This is the real story, not the 50% gain in sales reported by Real Estate Boards and the media. So what's next? Watch for prices to slide back to 2008 levels for a while and lower as we get into the fall. Sellers who are not spectulating on their sale price and asking fair value will receive a favourable response from Buyers. If an exchange of value existe then properties will sell in a reasonable period of time. Otherwise expect to wait or abandon your plans to sell altogether. That of course makes it better for those who wait it out as a smaller selection will be better for them. Next year is not expected to be any better.

Home sales were down in May. Only 50% of homes for sale have sold? Residential property sales recorded through the MLS® System of the Barrie District Association of REALTORS® Inc. were down from year-ago levels for the first time in a year in May 2010. The average price for homes sold via the Association’s MLS® System in the first five months of the year was $278,708. This is an eight per cent difference from the average price of May 2009, and represents the highest average price for this period on record. The Barrie & District Association of REALTORS® cautions that over a period of time, the use of average price information can be useful in establishing trends, but it does not indicate actual prices in widely divergent areas or account for price differentials between geographical areas. "Demand has fallen back following previously stronger sales in March and April,” said Elizabeth Wilson, President of the Barrie and District Association of REALTORS®. Wilson also said “Softer sales combined with gains in new inventory supply are resulting in a more balanced market, which is likely having a cooling effect on prices and sales heading into the second half of the year.” The total dollar value of all home sales amounted to $124.8 million in May 2010, 10 per cent below year-ago levels. Total sales activity in the Barrie region was only 451 units in May, down 12 per cent on a year-over-year basis. The total value of all properties sold in May 2010 was $127.7 million, a decrease of 10 per cent from May 2009. When compared to last year several price categories are in decline with no gains over last year. New listings were up. For a fourth consecutive month in May, although the increase was much smaller than in the previous three months. New residential listings numbered 853 units in May 2010, up five per cent year-over-year. The number of active residential listings on the Association’s MLS® System edged up one per cent on a year-over-year basis to 2,110 units at the end of May 2010. This is the first increase in 13 months. Inventory up. There were 4.8 months of inventory at the end of May 2010, up from 4.1 months one year earlier. The number of months of inventory is the number of months it would take to sell current inventories at the current rate of sales activity. 40% of all homes sold in 2010 had two or more price reductions. Assumption: More sellers than buyers! Home owners need to take a more aggressive approach to pricing in order to achieve their goal of a sale in 2010. Some information for this post was received from The Barrie and District Association of REALTORS® Inc. covers a geographical area that includes the City of Barrie and part or all of the surrounding townships, including Springwater, Oro-Medonte, Innisfil, Essa, Bradford-West Gwillimbury and Clearview. The Association provides continuing education, Multiple Listing Service® (MLS®), statistical information, and many other services to its members.

As we progress through each month sales volume is now seriously in decline. Contrary to earlier news media reports that residential home sales were ahead by 50% in January and 37% in March, the gains have now slowed to a trickle or 15% YTD. Clearly something else is at play here. Could it be that panicky buyers moved ahead earlier in the year to avoid the recent interest rate increases, HST etc. One startling number that stands out is that the first 3 price categories, $100K to $250K, are all in decline with no gains on the year. This was also the case in the same period for 2008. In 2009 these 3 price categories bounced back. Some have suggested inventory in those categories is the problem. However, on researching this I found an abundance of inventory. The implication is when the first time buyers fail to get access to the market it will not be long before all price categories see a serious decline in sales and increase in listings. By years end sales may do well to be the same volume as in 2009 not withstanding the earlier 50% gains experienced in late winter, early spring. If you're going to sell this year or next you will need to seriously reconsider a strong pricing strategy to move forward with your plans. This opinion is based on Barrie residential home sales for 2010 and information received from B&DAR. It is not intended to be taken as advice and is an opinion only of Ed Tracy.