Canadian home prices are "defying logic": Queen's University expert
Queen’s University real estate expert John Andrew is available to talk about today’s Canadian Real estate Corporation Association report for December that found that housings sales are down 17.4% from December 2011, yet the national sales price are up 1.6%.
Dr. Andrew feels the prices of Canadian homes are “defying logic” and sellers are clinging to the elevated home prices they have grown accustomed to.
“Home sales continued to fall in December in nearly every city in Canada, continuing a trend going back to July, when the federal government introduced tighter mortgage rules. The number of homes sold in December was more than 17% lower than for the same month in 2011. Paradoxically, home prices continued to hold steady; actually rising 1.6% compared to one year ago for Canada as a whole. While normally we see only a three to six month lag between a significant drop in home sales volumes and a decline in home prices, this time around prices are defying gravity and logic. It appears that sellers are refusing to drop their prices, clinging to the elevated home prices they have grown accustomed to. Many are removing their homes from the market, and many potentially sellers are not listing at all. On the other side of the transaction, would-be buyers are fully expecting prices to drop and mortgage rates to remain low, so they are patiently waiting on the sidelines. The result is a stand-off between vendors and buyers, and homes are simply not changing hands,” Dr. Andrew says.
Dr. Andrew is the director of the Queen’s Real Estate Roundtable and a professor in the School of Urban and Regional Planning.
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