Home prices in Canada declined for the fifth straight month in January. Prices were down 0.3 per cent over the 11-city composite index, declining in seven of 11 major Canadian markets from December. Real estate showing lowest annual growth rate since late 2009 as the housing market continued to cool. Only Vancouver has seen an annual decline in home prices, falling 2.5 per cent from January 2012. In Toronto, many are calling for a slowdown, yet prices were up 5.3 % annually. Analysts are calling on Canadian home sales to continue to cool, especially in the red-hot Toronto and Vancouver markets. The federal government has taken steps over the past couple years to avoid a bubble and cool the housing market by tightening mortgage rules. The Canadian Real Estate Association found that sales activity dropped by 5.2 per cent in January compared to a year ago, which they attributed to the tighter rules. Bank of Canada governor Mark Carney welcomed the cooling market, saying it’s all part of the Canadian economy’s transition from one dependent on borrowing to one  more reliant on strong exports. He is leaving before the implosion? Pay down your debt!

The Housing Market which imploded during the Financial Crisis in the USA is said to be showing further strengthening in residential real estate. Housing Starts were down 8.5% in December but as they do, they try to put a positive spin saying that it represents the third largest level since 2008. Apartment construction dropped 24.1% and Home construction slumps 18% in Jan. Steady job gains and near-record-low mortgage rates have encouraged more people to buy probably from the glut of existing inventory.

 

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Philip Magnoli- My Friends Call me Don Filippo- The FX Specialist- www.donfilippo.ca

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