Thestar.com article given also says

"...However, there is evidence the market may be stabilizing somewhat, with sales of homes showing a 3 per cent increase in September over August. .."

"The number of properties listed on the Multiple Listing Service also declined from the record peak in the third quarter, although these figures were recorded before the recent global market turmoil."

"We believe that declining sales in the markets with the highest home prices may be causing the price measure to exaggerate declines."

"New mortgage rules that limit mortgage amortization periods to 35 years instead of 40 went into effect yesterday and should also help to balance the market, said Lindberg, whose association has struggled to calm fears of a potential housing meltdown in Canada."

http://www.yourhome.ca/homes/article/519655
Resale home prices tumble in Toronto


Prices of existing homes in Canada's largest city took a stunning drop in the first half of October, down by 15 per cent compared with the same time last year.

The average price of a home in the city of Toronto is now $375,804 compared with the $441,878 recorded in the first two weeks of October in 2007, according to figures released by the Toronto Real Estate Board yesterday.

The impact was more muted once the 905 suburbs were factored in where the average price of a home is down by 8 per cent to $337,671.

Overall, Greater Toronto Area prices fell by 11 per cent, with the average home now commanding $353,722 from the prior $399,013.

The last time average prices were that low was back in January of 2007 – or 21 months ago.

"That's a very big drop," said TD Economics Strategist Millan Mulraine in an interview. "We expected things to moderate, but when you see double-digit declines like that then the market is moving downward much faster than anticipated."

Toronto is generally seen as one of the most stable cities in North America. Prices have not risen as quickly here as in other metropolitan areas, and analysts have factored in a soft landing for price depreciation.

But on Wednesday, after a report that Canadian house prices had fallen by more than 6 per cent in September compared to a year earlier, Merrill Lynch economist David Wolf warned that the housing market is likely to trend weaker than the general consensus and that the "risk of an outright bust cannot be dismissed."

Fear of a recession and a drop in consumer confidence has taken a toll on the housing market. The Royal Bank expects to see zero growth this year, and a puny 0.5 per cent growth next year in the Canadian economy.

Sales volumes in the city of Toronto, meanwhile, declined by 21 per cent, while it was down by 16 per cent in the 905 suburban area.

The Toronto Real Estate Board is monitoring whether the implementation of a city of Toronto land transfer tax had an impact on declining sales.

One reason for the bigger price declines in the city could also be because more expensive homes tend to drop in value more quickly, said economist Mulraine.

"There is a bigger margin on more expensive homes, so if you lose a few thousand to get the house moving, that's not as big an issue. However, given that you also have a double-digit drop in the GTA proper, then it looks like this is not just restricted to upper-end homes."

Buyers have also far more choice this year, with listings up by 30 per cent compared to a year ago.

Homes are taking an average of 34 days to sell compared to 29 in 2007.

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Q. How do you predict TO market in next 6 months?

Someone had rightly mentioned here that if house prices will go down, mortgage rates will go up......I personally only read in newspapers that house prices in Toronto has gone down by 10 - 15 % but I do not see that when I browse through MLS listings.

Secondly whether one saved in a house purchase value or not is not sure but definitely will loose in mortgage rate if buys now.

You have option to play with mortgage rates/refinance/more down payment/fix/variable and mortgage rates change with time.
If you are on the hook of high home price you still need to pay that price even mortgage rate is 0%.
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People equated debt with wealth. America/Canada became a nation of spenders and not savers. Houses became lottery tickets and not homes. Frugality and live-within-your-means were seen as laughable traits. Poor people thought they should and could live like rock stars. Payola to Congress became the accepted. Liars were quoted in the MSM as if they were truthtellers, and truthtellers were portrayed as "don't understand fundamentals". Keeping up with the neighbors became a consuming passion, instead of helping the neighbors. And a nation sold out its morality and reputation for a quick buck.

And then the Great Housing Crash hit. And hopefully, everything changed.

So, what good will come about because of this economic collapse? What lessons will be learned? What behavior will change?

Quote:

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Originally posted by Aashu

Someone had rightly mentioned here that if house prices will go down, mortgage rates will go up......I personally only read in newspapers that house prices in Toronto has gone down by 10 - 15 % but I do not see that when I browse through MLS listings.

Secondly whether one saved in a house purchase value or not is not sure but definitely will loose in mortgage rate if buys now.

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Thanks to Vansanity for this tip - apparently all excavation work has stopped on the Residences at Ritz-Carlton site on West Georgia street in downtown Vancouver. Word is that everyone was told to stop work and leave the site on Friday Oct. 17th, leaving the excavation about 60% finished. All signage advertising the Residences at Ritz-Carlton have been removed from the site scaffolding and all construction trailers have been removed. I couldn’t find a text story link confirming this information, but I did find this CBC news video report on the situation.

According to that report the developer is saying that this is not due to any credit market problems (as we’ve seen in a number of other lower mainland condo developments). The developer says that although sales have been slow, financing is in place and there are enough presales to move ahead with the construction. The developer is saying that they are going to be doing some ‘modifications to the design’ and that there’s no point in having work going ahead, or having the presentation sales center open until those modifications are done. At this point there’s no indication as to when work may continue, but we’ll keep an eye out for developments on this story.

'Under Water' Mortgages are Growing Threat to US

Long before she filed for bankruptcy, Ann Neukomm was "under water" -- she owed more on her mortgage than her house was worth -- a situation more and more Americans are finding themselves in.

As the financial crisis hits Main Street America, nearly one in six U.S. homeowners are finding themselves in the same position, threatening the U.S. economy with a new wave of foreclosures and bankruptcies.

About 12 million U.S. homeowners owe more than their homes are worth, compared with 6.6 million at the end of last year and slightly more than 3 million at the close of 2006, said Mark Zandi, chief economist at Moody's Economy.com.

"At the root it's 'the' problem," said Zandi. "If you're going to put your finger on the one thing that's gotten us into this fiasco, it's the fact that millions of homeowners are under water on their homes."

If, like Neukomm, these homeowners go into foreclosure, it would add to the oversupply of homes, delay a recovery in the housing market, and add to pressure on banks.

Already, U.S. consumer spending is slumping as homeowners find they can no longer take equity out of their homes to fund their lifestyles.


In a slowing economy, it doesn't take much to push an underwater mortgage into default.

http://www.cnbc.com/id/27316653

It is normally the other way round. The mortgage rates goes up and price goes down. However, right now it is a whole different ball game. The credit crunch, people greed and all those things are pulling the market down and with recession worries, it is just unpredictible. However, at least one can sleep in their house instead of stocks where it is just a number.