Paul Martin’s Business Update – January 16th, 2015

The long-awaited softening of housing markets in most of the country appears to have arrived. But it was not brought on by interest rate movement as most people had expected.

In fact it has been the drop in oil prices that has triggered the change. Sales activity declined by nearly six percent in Canada in December. Yet, prices remain higher than they were a year ago so fears of a calamitous collapse have not materialized.

We’ve seen growth in the ratio between listings and transactions, increasing inventory available for buyers, another factor that will apply downward price pressure. Ultimately as sellers get antsy to move their properties, they will start to reduce prices.

But the bulk of the changes in December came in markets especially sensitive to commodity prices, notably oil. Sales were down about 25-percent in Calgary and Edmonton and declined roughly 12 per cent in Regina and Saskatoon.

In assessing these developments, the economists at TD Bank chose the word ‘flattening’ to describe the market and they see a modest 2-per cent price decline this year across the country.

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