CREA Updates Resale Housing Forecast

 

CREA Updates Resale Housing Forecast

Ottawa, ON, June 16, 2014

The Canadian Real Estate Association (CREA) has updated its forecast for home sales activity via the Multiple

Listing Service

® (MLS®) Systems of Canadian real estate Boards and Associations for 2014 and 2015.

Extraordinarily bleak winter weather made for a slow start to 2014 national sales activity. As the first quarter

ended, sales momentum heading into spring was constrained by a continuing shortage of listings in a

number of local markets. The rise in newly listed properties in April and May supported an increase in sales

activity.

The deferral of sales and listings reflects a delayed start to the spring home buying season, with combined

sales for the period from March to May coming in largely as anticipated and at average levels. These

deferrals are now likely to have been largely depleted, which suggests that the strength of sales momentum

heading into the summer may be transient.

CREA’s forecast for sales activity in 2014 is largely unchanged from its previous forecast published in March.

At that time, interest rates had been expected to start to edge higher in the second half of the year.

However, it now appears that interest rates may not begin to rise until closer to the end of the year, which

remains supportive for home ownership affordability over the balance of 2014.

Sales are forecast to reach 463,400 units in 2014, representing an increase of 1.2 per cent compared

to 2013. This is little changed from CREA’s forecast of 463,700 sales (rising 1.3 per cent) published in March.

Activity is still expected to remain in line with its 10

year average and to hold within fairly short reach of

450,000 units for the seventh consecutive year

British Columbia is forecast to post the largest year

overyear increase in activity (8.3 per cent), and make

the biggest contribution to the increase in national sales activity. B.C.’s projected increase in sales this year

largely reflects a slow start to 2013.

Alberta’s annual sales are projected to rise by +3.8 per cent increase in 2014, while activity in Saskatchewan,

Manitoba, and Ontario is expected to be roughly in line with 2013 levels. Sales are forecast to fall by 1.7 per

cent and Quebec, 4.2 per cent in New Brunswick in 2014, 5.1 per cent in Nova Scotia, and by 2.6 per cent in

Newfoundland and Labrador.

In 2015, the outlook for the economy, jobs and incomes is one of further improvement, accompanied by a

slow and gradual increase in fixed and variable mortgage interest rates.

On balance, these two opposing factors should most benefit housing markets where sales are currently

softer but prices remain more affordable. Sales in relatively less affordable housing markets are likely to be

more sensitive to higher fixed mortgage rates, whether from the standpoint of higher monthly mortgage

payments or qualification for mortgage financing based on the posted five

year mortgage interest rate.

As such, provinces east of Ontario are expected to post the largest gains in activity in 2015 in the range of

around 2.5 to five per cent, while sales in provinces from British Columbia to Ontario are forecast to remain

little changed.

National activity is now forecast to reach 467,800 units in 2015, representing a further annual increase of 0.9

per cent. This would result in sales staying in line with the 10

year average for the eighth year in a row.

Average prices have remained firm and continue to reflect a rise in the share of national sales among some

of Canada’s most active and expensive markets compared to last year. Additionally, prices have been

heating up in some markets, particularly in Calgary and Toronto where single family properties remain in

short supply.

The national average home price is now projected to rise by 5.7 per cent to $404,300 in 2014, with similar

sized gains in British Columbia, Alberta, and Ontario. More modest changes in average prices are forecast for

all other provinces this year.

The national average price is forecast to edge up a further 0.7 per cent in 2015 to $407,300. Alberta and

Manitoba are forecast to post average price gains of two per cent in 2015, followed closely by Ontario at 1.2

per cent. Average prices in all other provinces are forecast to remain stable, edging up by less than one

percentage point.

Paul Gentile

Paul Gentile

Broker
CENTURY 21 Lanthorn Real Estate Ltd., Brokerage*
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