Reprinted from the London Free Press Feb 9, 2010
The Canadian Real Estate Association has boosted its forecast for 2011 existing home sales after a stronger-than-expected hand-off from 2010.
CREA now expects sales via its Multiple Listing Service to hit 439,900 units, representing an annual decline of 1.6%. In 2012, national sales activity should rebound by about 3% to reach 453,000 homes, it said.
"Home buyers recognize that low mortgage interest rates represent a once in a lifetime opportunity. At the same time, they expect that rates will rise, so they're doing their homework in order to understand what it could mean in terms of higher mortgage payments down the road before they make an offer," said Georges Pahud, CREA president.
Average home prices are expected to rise by 1.3% to touch $343,000 in 2011 and $347,000 in 2012. Manitoba, currently considered a sellers’ market, could see bigger price increases, CREA said.
New, stiffer mortgage lending rules will also bring forward some sales into the first quarter, especially in the more expensive markets.
CREA expects the market will regain traction after dipping in the second quarter as the economic recovery, jobs, incomes and consumer confidence rebound.
"Even though mortgage interest rates are expected to rise later this year, they will still be within short reach of current levels and remain supportive for housing market activity. Strengthening economic fundamentals will keep the housing market in balance, which will keep home prices stable," said Gregory Klump, CREA chief economist.
A handful of Canada’s biggest banks have already begun raising residential mortgage rates. On Tuesday, RBC Royal Bank followed in the footsteps of TD Canada Trust and CIBC to hike their benchmark five-year fixed rate by a quarter of a point to 5.44%. Lower promotional rates are available.
Also on Tuesday, the Canada Mortgage Housing Corp. (CMHC) reported the number of new housing projects started in January edged slightly higher on an increase in rural development.
Housing starts totalled 170,400 units, up from 169,000 units in December, CMHC said. The figure was below economists’ forecasts for 174,000 starts in the month.
For the whole of 2010, the number of housing starts was 189,930 units with activity moderating towards the end of the year.
“Housing starts moved slightly higher in January because of an increase in rural starts,” said Bob Dugan, chief economist at CMHC’s Market Analysis Centre. “Single-detached and multiple starts showed a moderate decline.”
The number of condo projects started dropped by 1.5% to 82,900 units, while single-family homes declined by 2% to 64,000 units.
Rural starts were estimated at a seasonally adjusted annual rate of 23,500 units in January.
Activity was mixed across the country, with sizable declines reported in the Prairies and British Columbia, while Atlantic Canada and Ontario posted an increase in developments
and more on this subject.
'Wild card' props up Canadian housing markets over past decade
Inventory remains key to stability in 2011
Mississauga, ON (February 8th, 2011) - Tighter inventory levels helped to make the last decade one of the healthiest periods on record for Canadian real estate, insulating markets in major centres from the peaks and valleys characteristic of past decades, according to a report released by RE/MAX.
The RE/MAX Housing Barometer Report measured monthly sales-to-new listings ratios in 18 major centres across the country from January 2000 to December 2010. The report found strong seller's/balanced conditions prevailed for much of the time frame, prompting significant gains in housing values. The lone exception was when the market dipped into buyer's territory during the latter half of 2008 and early 2009. However, fewer listings served to offset diminished demand and provided greater stability. Average price increases from 2000 to 2010 ranged from an annually compounded rate of return of 4.82 per cent in London-St. Thomas to a high of 9.56 per cent in Regina. The national average was 6.82 per cent. By far the tightest market in the nation was Winnipeg, where seller's ruled the roost for 85 per cent of the decade, followed by Hamilton-Burlington (67 per cent), Regina (63.6 per cent), Kitchener-Waterloo (59.8 per cent) and Edmonton (57.5 per cent).