2010 has been an absolutely INSANE year for the Canadian real estate market. The battle between the Competition Bureau and CREA, new mortgage rules, rising interest rates, the introduction of the HST, skyrocketing prices and, accordingly, the worries of a US-style crash–it makes me exhausted just thinking about it. But, to try to give you a bit of a retrospective, we’ve summarized in chronological order what went down. So here goes nothing…
The Tale of Two Firsts: the Housing Bubble and CREA formally accuses the MLS
THE NUMBERS: Year Over Year Price Change (February 2010)*
Were prices going up too quickly? Would purchasers fail to make payments after interest rates began to rise? Only time would tell…and this article. **SPOILER ALERT…there was no housing bubble.
Secondly, CREA was called out on its use of the MLS by the Competition Bureau. The point of contention? Basically, if you wanted to list your home on the MLS you had to pay for the full services of an agent. And, with the advent of discount brokerages (especially online), consumers weren’t willing to stand for it anymore.
March 2010-April 2010
THE NUMBERS: Year Over Year Price Change (April 2010)*
March and April were pretty crazy months. Bidding wars were rampant as supply in the market wasn’t keeping up with demand. Sellers in Calgary were holding out on selling their homes…hoping that prices would increase even further. And with the introduction of the new lending rules slated for mid-April, the introduction of the HST coming July 1, and the inevitable interest rate hikes– buyers were rushing to make their purchases. By mid-March and early April, the number of listings began to increase once again to ease the upward pressure on housing prices.
THE NUMBERS: Year Over Year Price Change (June 2010)*
Okay, so by May-June 2010 the new mortgage rules were introduced, everyone knew the HST was coming and interest rates started to rise. And, as expected, sales slowed (even in BC). Vancouver home prices even dipped in the month of May.
May and June were relatively quiet months. Most of the sales activity flurry died down as the market readied itself for the worst. The HST was being introduced on July 1 and interest rates began to rise. The title of this section “The calm before the storm?” ends with “?” because no one really knew if a storm was coming– but there was definitely talk.
THE NUMBERS: Year Over Year Price Change (August 2010)*
The summer was fairly slow. Sales in Vancouver were down 30 per cent from a year earlier in July. But this slowdown turned out to be more of an aberration than a precedent. Still though, it didn’t stop the media from jumping on the bubble bandwagon. The number of housing starts declined in July, which gave the idea a bit more momentum.
But, with so many exciting new launches hitting the market in the fall, Buzzbuzzhome didn’t think a bubble was likely. In fact, we wrote many stories arguing the contrary which you can view here, here and here.
You see, really the slowdown is sales was expected. Mortgage rules were implemented mid-April which was the first policy which slowed the housing market. Banks hiked mortgage rates in the Spring which stifled demand. Finally, the HST was introduced in Ontario and BC which caused sales to slow further.
The Soft Landing and the Resolution
THE NUMBERS: Year Over Year Price Change (September 2010– October to be released)*
But, for the most part, the housing market was back on track. The Central Bank didn’t think we were headed for a US-style crash and Royal LePage thought that housing prices were on a steady trajectory. Things were settling down.
The housing market seems to have settled down for the most part. Although the next few years probably won’t be as exciting– they’ll be a lot more stable. Sometimes boring is good. This has been a fun post to write, but it brought back some of the feelings of anxiety I felt throughout the year when things were less-than-certain. I’m just happy for the advent of a new year.