CREA Boosts Annual Resale Housing Forecast

OTTAWA – February 8, 2011 –

 ® (MLS®) Systems of Canadian real estate Boards and Associations, and extended it to 2012. 

 

$343,300 and $347,900 respectively. Average price is expected to rise modestly in most

provinces, reflecting the continuation of a healthy balance between supply of, and

demand for, homes listed for sale. Although the supply of new listings is expected to

trend higher, the expected continuation of sellers’ market conditions in Manitoba is

forecast to result in a bigger percentage increase in average price in 2011 and 2012

compared to other provinces.

The national average home price is forecast to rise 1.3 per cent in 2011 and 2012, to

Sales in the second half of 2010 rebounded faster than CREA had previously expected.

“The hand-off going into 2011, together with the highs and lows for sales activity posted

in 2010, provided guidance for CREA’s revised forecast,” said Gregory Klump, CREA

Chief Economist.

“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. “The housing market and buyer psychology is different now than it was at the

beginning of last year, so buyers and sellers would do well to consult their REALTOR®

to understand local market trends.”

The upward revision to CREA’s forecast for 2011 reflects recent improvements in the

consensus economic outlook and a further expected improvement in consumer

confidence. National sales activity is now expected to reach 439,900 units in 2011,

representing an annual decline of 1.6 per cent. In 2012, CREA forecasts that national

sales activity will rebound by three per cent to 453,300 units, which is roughly on par

with the ten year average.

“Recent additional changes to mortgage regulations will further ensure that buyers don’t

buy more home than they can afford when interest rates inevitably rise,” said Klump.

“The announcement of the new changes to mortgage regulations will likely bring forward

some sales into the first quarter that would have otherwise occurred later in the year,

particularly in some of Canada’s more expensive housing markets. This is expected to

produce a milder version of the volatility in sales activity that we saw last year which

resulted from additional transitory factors.”

Three transitory factors contributed to volatility in sales activity last year: changes in

mortgage regulations announced last February, the early withdrawal by the Bank of

Canada of its conditional commitment to keep interest rates on hold until the second half

of 2010, and the introduction of the HST in BC and Ontario during the summer of 2010.

CREA expects that home sales activity will gain traction after dipping in the second

quarter as the economic recovery and job growth continue, incomes grow, and

consumer confidence further improves. “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 Klump.

The Canadian Real Estate Association (CREA) has revised its 2011 forecast for home sales activity via the Multiple Listing Service

 

Mary Kay McCoy

Mary Kay McCoy

Sales Representative
CENTURY 21 Dreams Inc., Brokerage*
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