Canada's longest housing boom of the post-war period has come to an end, according to the latest Real Estate Trends report released November 20 by Scotia Economics. The reversal of fortune has been most pronounced in the previously hottest markets of Western Canada, including Calgary, Edmonton and Vancouver. "In Ontario including Niagara-on-the-lake we are witnessing a cooling off but not to the same degree as in the West. Our local real estate market experienced a decrease in unit sales of 68% from last October primarily because sellers are not attracted by offers being made by prospective buyers," according to Gary Zalepa Jr. Broker. "Buyers are actively making offers, it is just that sellers are not interested in their terms".
"This is not a 'U.S.-style' bust caused by overbuilding, speculative buying and imprudent lending, but rather a cyclical slowdown accompanied by a valuation adjustment in several large centres where booming demand conditions and temporary supply constraints led to an overshooting in prices," said Adrienne Warren, Senior Economist and Real Estate Market Specialist, Scotia Economics.
The report cautions that real price trends are not a particularly useful guide to future price movements, at least over the short-term. The driving forces behind the price appreciation as well as current supply and credit conditions are more important. Record unsold housing inventories, mounting foreclosures, overbuilding and credit constraints are bigger factors behind the continuing and steep slide in U.S. home prices than overvaluation, none of which are major concerns in Canada.
In Niagara-on-the-Lake we do not have an oversupply. Infact we have 6% less homes available for sale today then we did at this time last year. This suggests that prices will remain steady during this period and there will be fewer sales. Buyers may find some sellers willing to accept lower prices but for the most part sellers will and can wait for the market to improve.
"There is further downside risk to home prices in Canada, especially in light of reduced growth and employment prospects," said Warren. "We expect, however, that the correction in national average prices from their late-2007 peak will probably be in the range of 10 per cent-to-15 per cent, well below the ongoing U.S. retrenchment."
At this point motivations are what is key in any housing transaction. If a seller is motivated primarily by the economy then they will be more likely to accept a lower offer. Most sellers in the NOTL market are some what insulated from the economy and these sellers will not be looking to part with their home for less than market value. So if you are a buyer looking for a bargain it may take you several attempts with offers before you find a seller sufficiently motivated to accept your lower price.