Canadian Housing Market to Slow Further in 2011: RE/MAX Reports
This article was posted by the Toronto Sun on December 7, 2010.
The Canadian housing market is likely to cool further in 2011, returning to more normal long-term growth patterns after a decade-long bull run, according to a report by RE/MAX.
The real estate company forecasts housing sales will fall 5% to 441,000 homes this year and remain flat in 2011. Prices however will continue to rise, gaining 7% this year and 3% next as a lack of supply outweighs falling demand, RE/MAX said.
“In terms of resale housing activity, what many are talking about as the new normal is actually a return to the traditional real estate cycle,” says Michael Polzler, the company’s executive vice-president and regional director for Ontario-Atlantic Canada.
“The past decade was truly unprecedented — never before have we experienced a run up that was as strong or lasted as long.”
Record low interest rates fuelled a home buying spree in 2009 that helped pull the Canadian economy out of recession and pushed home sales back to record levels. The market cooled rapidly over the summer as the Bank of Canada began hiking interest rates, though recent data have indicated the market may be stabilizing.
Ample inventory levels, steady demand and moderate growth, both in terms of sales and prices, will characterize the market in 2011, RE/MAX said.
“Looking forward, we see steady improvement in provincial and local economies — which will bode well for housing markets across the board,” says Elton Ash, RE/MAX’s regional executive-vice president of Western Canada. “The relentless drive in the market reminiscent of years past will be gone and instead, we can expect to see more normal, balanced market conditions, with buyers maintaining a slight edge.”
British Columbia is likely to see the strongest sales next year, with Greater Vancouver rising 10%, followed by Victoria at 8% and Kelowna at 6%.
Almost all regions are likely to see increased prices, led by St John’s, N.L., and Labrador with gains of 8% next year.
The value of homes in Greater Vancouver, Kelowna, Regina, Saskatoon, London-St. Thomas, Ottawa, Sudbury and Greater Montreal is also predicted to climb 5%.