Negativity continues to seep into the Montreal housing market and sellers, who have ruled the roost for the past several years, no longer have the upper hand.

Montreal's resale market "has been impacted badly by all the bad news on the economy, so that consumer confidence has dropped dramatically," said Michel Beausejour, chief executive of the Greater Montreal Real Estate Board.

It's been going on for about three months, he said, culminating in a 29-per-cent drop in sales in December compared with December 2007, and a 17-per-cent jump in the number of homes on the market.

Forecasting 2009 is tough, he said, since much will depend on how well politicians in Canada and the U.S. fare at stimulating the economy and restoring consumer confidence. He's optimistic sales won't do badly.

"We don't believe we will see a major decline," he said, with prices reflecting inflation - which, he added, would make them revenue neutral.

The board's survey of buyer intentions, conducted between Oct. 21 and Nov. 9, found 5.1 per cent of households in the Montreal area intend to buy a home this year, compared with 6.1 per cent in 2007.

But there will be a shift in power at the bargaining table. As a rule of thumb, he said, the industry considers the market to be balanced when there are eight to 10 houses for sale for every buyer out hunting. Since 1997, there have been fewer houses than that, he said, leaving sellers solidly in the driver's seat. But the market is balanced now, he said, and in some neighbourhoods and some housing categories, buyers are gaining the advantage, though he could not be more specific.

"There's a lot of variables involved."

Despite the recent declines, Montreal's market has escaped the free fall experienced in the U.S. and has fared better than other places in Canada - like Calgary, Vancouver and Toronto - that have seen sales and prices drop dramatically over the past year.

In December, sales of single family homes dropped 29 per cent, condominiums slid 33 per cent and plexes with two to five dwellings declined 23 per cent. However, 2007 was the best year the housing market has ever had, Beausejour said, and the median prices of single-family homes and plexes still rose three per cent, to $230,750 and $337,750, respectively. Condominiums lost ground, dropping two per cent to $192,000.

For all of 2008 compared with all of 2007, sales were down seven per cent, to 40,916 homes. Single-family homes were down 10 per cent and plexes down nine per cent. Condos were neither up nor down.

The median price of homes rose six per cent to $227,000 for single-family units, three per cent to $185,000 for condos and six per cent to $335,000 for plexes.

The North Shore and Vaudreuil-Soulanges were the hardest hit, with sales off nine per cent. The island of Montreal was down eight per cent and the South Shore and Laval were off five per cent and six per cent, respectively, compared with 2007.

smcgovern@thegazette.canwest.com