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Average home price dropped $10K in July

CBC News

Average home prices in July were lower than they were in June, but sales numbers and average prices are still up sharply compared to the same month a year ago, new data showed Tuesday.

The Canadian Real Estate Association said the national average price for homes sold in July 2011 stood at $361,181, which is the lowest level since January. In June, the average price was $372,700. Despite the slowdown, prices have nonetheless gained 9.3% in the past 12 months.

Comment: What? Prices dropped $10k in July, but are up almost 10% in the past year. So we are concerned about a $10k drop after prices have risen $40k? Can someone explain to me how this is bad news? The average price has risen nationally by over 9% and we are talking about prices going down? Is there a special class in journalism school that teaches people how to spin good news into bad? I am a journalism school grad (which obviously leads to a career in real estate) which is why I am always so hard on writers and reports.

“Earlier this year, the national average price was being skewed upward by sales in some expensive Vancouver neighbourhoods, but this factor is now diminishing,” CREA’s chief economist Gregory Klump said. “Upward skewing of the national average price is also shrinking due to overall sales trends in Vancouver, and most recently in Toronto.”

The pullback was expected, as most economists have been forecasting for months that prices and sales will moderate somewhat through 2011 after an exceptional run following the recession that ended in 2009.

Comment: The pullback was expected because every summer sees a mini-slump. Prices and activity always go down in the summer because people are on vacation, at the cottage or just enjoying some relaxation time in the backyard. Watch things go up again in the fall – like they do every year.

“Sales should ultimately find support from a continuation of exceptionally low borrowing costs,” Bank of Montreal economist Doug Porter said in a note Tuesday morning.

Sales activity, meanwhile, was flat on a monthly basis (up by less than 1%) but it came in 12.3% above national levels reported in July 2010. The large gain is a bit misleading because it came against an oddly low comparison point: Sales activity in July 2010 was the lowest it’s been since 2002.

2011 Forecast Raised

In a separate release Tuesday, CREA updated its forecast for the housing market as a whole. The agency now expects 450,800 homes to change hands across Canada this year, an increase of less than one% from their last forecast in May.

Sales are forecast to then slip to 447,700 units in 2012.

Comment: To put that in perspective, they are saying that sales volume will decrease by 0.7% next year. Statistically moot. That is only 3,100 out of 450,800, or 1/150th. Moot.

CREA also expects the average price of a sold home will be $363,500 through 2011 as a whole. That’s slightly higher than the July figure, but well below some of the monthly averages seen so far in 2011.

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Contact Laurin Jeffrey for more information – 416-388-1960

Laurin Jeffrey is a Toronto Realtor with Century 21 Regal Realty. He did not
write these articles, he just reproduces them here for people who are
interested in Toronto real estate. He does not work for any builders.

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