Housing prices fall for the first time this year

[caption id="attachment_715" align="alignleft" width="300"] (Photo credit: colink./Flickr)[/caption] As we move into a slower period of the housing market cycle, the debate rages on over where housing prices are expected to head in the new year: whether they'll continue going up or if we're in for a correction. While the average housing price was $413,000, which is a 5.7 per cent jump from the year before, according to the Canadian Real Estate Association (CREA), on a monthly basis, the housing price dropped by 0.3 per cent, according to the Teranet National Bank National Composite House Price Index. While the drop could be attributed to less homebuyers in the market this time of year, there remain concerns that the recent drop in oil prices will have an effect on the housing market. Some cities that saw month-to-month declines include: Halifax, which saw a drop of 1.6 per cent, Quebec City, which saw a drop of 1.5 per cent and Montreal, which saw a drop of one per cent. Toronto and Calgary also saw slight drops of 0.3 and 0.2 per cent, respectively, while Vancouver remained unchanged. Also, the average housing price was skewed once again by hot markets in Toronto and Vancouver and once those are removed from the equation, the average price sits at $331,743, which is a smaller five per cent increase, says the CREA. But current prices remain near record highs, said TD Bank economist Dina Ignjatovic in a note to investors. "Moreover, while the decline was fairly broad based, prices in several key cities are well up from year-ago levels," she said. Recently, the Bank of Canada joined the group of voices who've expressed concern that the prices of Canada's housing market are overvalued by between ten to 30 per cent. It's still expected that the market will see a soft landing, which could be triggered by an economic shock, but will still have severe effects on the economy. Interest rates have remained at record lows since 2010 and it's expected that they won't go up until mid-2015, depending on the global economy. Moody's said the market was 15 per cent overvalued and that "structural changes" to the housing market, such as increased urbanization rates in the housing market and homeownership among immigrants, justify the high pricing, according to the Financial Post. Moody's predicts that by 2017, the increase in prices will slowdown thanks to higher interest rates, but later on increased prices will rise at the same rate as income growth. Meanwhile, recent fee changes by the Canadian Mortgage and Housing Corp. (CMHC) may speed up a slowdown since homebuyers will need to cover additional housing costs. The CMHC is looking to reduce its role within the mortgage insurance market and starting on April 1, financial institutions that issue mortgage-backed securities will need to pay more to them, according to the Financial Post. It's expected that consumers will see higher mortgage rates as a result, says the Post. If you've invested into a newly built property, you are still eligible for an HST housing rebate. Rebate4U can work with you to determine whether you do qualify, which can put some money back into your pocket. We take great pride in offering our clients a personalized and attentive service, and we make sure that all of our clients are 100% satisfied.