Sales of new homes and condominiums in the Greater Toronto Area declined in August, the Building Industry and Land Development Association (BILD) reported today:
“According to RealNet Canada Inc., BILD’s official source of new home market intelligence, the 1,242 homes sold in August 2012 add up to the lowest monthly sales since 2009 and the lowest August on record. Year-to-date sales have remained on par with 2010 but below its record-breaking 2011 predecessor.”
The Huffington Post picked up on the recent data yesterday and pointed out that while lower prices would be a help to would-be-buyers, the adjustment in Canada’s now housing-dependent, over-indebted, domestic economy is likely to be painful:
“While many prospective home buyers may cheer to hear that homes could soon be more affordable, at least in Toronto, economists warn that a significant slowdown in housing could have repercussions for the entire economy.
In a report issued last month, Scotiabank warned that “balance sheets heavily skewed to real estate leave Canadians vulnerable to an adverse shock, including a sharp rise in unemployment and/or a sharp drop in home prices.”
Scotia predicted that home prices would decline on average 10 per cent across the country, and the market would take a decade to recover, based on previous housing market cycles.
But Capital Economics predicts a 25-per-cent decline in house prices, which would inevitably lead to rising unemployment. As BILD noted in its report, there are 193,000 people employed in construction in Toronto alone.