The Teranet Housing Price Index released their data for May 2009 today. The composite index level for May 2009 is at 120.05 which represents a -6.92% decrease year over year but a 0.72% increase month over month from April. Year to date the composite index has dropped -4.4%.
Archive for the ‘Real Estate’ CategoryHousing Price Index – May 2009Wednesday, July 29th, 2009US Housing Price Trends – Case-Schiller Housing Price IndexFriday, July 3rd, 2009Today I was looking into the state of US housing prices to determine if the market has hit a likely bottom or if we can expect to see further declines. I was also curious to see if the US housing data could provide me with any insights into where Canadian housing prices are likely to end up if they follow US trends. Now I realize that Canadian mortgage lending practices are much stricter then our neighbours to the south and we will not likely experience the same magnitude of housing price declines, but it is interesting to look at the general trends and duration of the decline in prices. In my opinion the future of the US financial markets will be heavily influenced by the trends in the US housing market. After all it is the US housing market that first initiated this dilemma that we find ourselves in today. If US housing prices have stabalized from their free fall over the last 2 years then it is good support for hopes of an economic recovery in the next year or two. The networth of many Americans is tied up in thier homes so if housing prices are continuing to decline then it will cause a continual decline in personal consumption which is a core component to a healthy economy. If people aren’t willing to spend then corporations post lower earnings which leads more job losses, higher unemployment and further a reduction in personal spending. A viscious cycle. The best US housing price data that I have come across is the Case-Schiller Housing Price Index by Standards and Poor. The index publishes national average US housing prices on a quaterly basis dating back to 1987. This length of back data is ideal for analyzing the long term trends of US housing prices.
As you can see from the graph above US housing prices peaked in 2006 at 190 where they had increased 90% from Q1 2000 when the index was 100. Since mid 2006 US housing prices have been on a sharp decline and are currently down 32% from the peak at the Q1 2009 index level of 129. From Q4 2008 to Q1 2009 US housing prices have decreased 7.5% which signals that prices have not finished declining.
The second graph illustrates the year over year percentage (%) decrease in the housing price index. From this graph it is evident that the % year over year decrease is increasing which doesn’t give much hope for prices stabalizing any time soon. Given this investors should be cautious about their expectations for a continued rally in the stock market and a quick return to economic growth. What are your thoughts? House Price Index – May 2009Thursday, May 28th, 2009A useful tool for analyzing the health of the Canadian real estate market is the Teranet / National Bank House Price Index which released its May 2009 report today. According to the report housing prices across Canada decreased by 5.8% year over year from March 2008 to March 2009 which extends a 4 month streak of consecutive year over year declines. Since the peak of housing prices in August 2008 prices have also fallen about 8.5%.
The report also breaks out housing price trends for the 6 major metropolitan areas of Toronto, Vancouver, Montreal, Ottawa, Calgary and Halifax.
As you can see from the table above the largest declines in price from the peak have been experienced in Calgary, Vancouver and Toronto. A lot of the economic turmoil that has occurred in the United States over the last year has been related to the rapid correction in their housing market. I saw a stat yesterday that US housing prices have dropped over 33% since the peak a couple of years ago and are continuing to decline according to the latest S&P/Case-Shiller Home Price Index report from May. Some people are of the opinion that Canadian housing prices have not declined as much as US housing prices as a result of stricter mortgage lending regulations imposed by the Canadian Mortgage and Housing Corporation. However one has to question if the Canadian housing market still has a long way to go before it hits the bottom. I will continue to post the lastest trends from the Teranet / National Bank House Price monthly report as they are released to keep you informed of the trends. |
