Category: National Real Estate News

OTTAWA – February 8, 2010 – The Canadian Real Estate Association has revised its forecast for home sales via the MLS® Systems of Canadian real estate boards in 2010, and extended the forecast to 2011.

With Canadian economic growth rebounding from the recession, the unusually severe decline in sales activity in early 2009 is not expected to recur in 2010.  Annual activity in 2010 is forecast to be well above the previous year’s level as a result.

CREA forecasts national activity will reach 527,300 units in 2010, up 13.3 per cent from 2009. This would represent a new annual record, standing 1.2 per cent above the previous peak in 2007. Low interest rates are expected to boost housing demand in the first half of the year, resulting in strong annual sales growth in nearly all provinces in 2010, led by British Columbia and Ontario.

National home sales activity is expected to remain strong in the first half of 2010, fuelled by low interest rates and homebuyers motivated to avoid the HST before it comes into effect in Ontario and British Columbia.  Over the second half of the year, national activity is expected to trend downward as the last of pent-up demand is exhausted, interest rates begin rising, and the HST comes into effect in Ontario and British Columbia.

Interest rate increases will contribute to weaker national sales activity in 2011.  National home sales activity is forecast to decline 7.1 per cent to 490,100 units in 2011, putting it on par with annual levels reported in 2005 and 2006.

“Although interest rates are expected to rise, they will still be low enough to keep affordability within reach for many homebuyers requiring mortgage financing, and support overall housing demand,” said CREA President Dale Ripplinger.

The national average home price is forecast to climb 5.4 per cent in 2010, reaching a record $337,500, with average price gains forecast in all provinces. The national average price increase will continue to reflect upward skewing from the rebound in activity among Canada’s priciest markets, particularly in British Columbia and Ontario.

The national average price is forecast to ease by 1.5 per cent in 2011. Modest average price gains are forecast for all provinces except British Columbia and Ontario, whose share of national activity is expected to ease. The shift in the contribution made by provinces toward national activity will continue skewing the annual comparison in the national average price in 2011.

The price trend is similar but less dramatic for the weighted national average price, which compensates for changes in provincial sales activity by taking into account provincial proportions of privately owned housing stock. The weighted national average price is forecast to climb 4.8 per cent in 2010, and remain stable in 2011.

“Improved financial market stability and recovering global economic growth mean that home sales activity in 2010 is unlikely to repeat the dive it experienced in late 2008 and early 2009,” said Chief Economist Gregory Klump.

“Fiscal restraint, a strong Canadian dollar and a subdued inflation outlook point to marginal interest rate increases over the next couple of years, especially if the U.S. economic recovery proves to be weak and protracted,” said Klump.

“The Bank of Canada will need time to gauge the effect of interest rate increases on Canadian economic growth,” Klump said.  “It recognizes that consumer debt burdens are running high, so it will want to gauge the impact of interest rate hikes on domestic demand and overall economic growth. Changes in interest rates impact the economy with a lag, so the timing and magnitude of interest rate hikes will be tricky, given that the Bank expects the private sector to lead economic growth once temporary government stimulus spending expires,” he added.

“The decline and subsequent rebound in sales activity for homes in the upper price spectrum in some of Canada’s priciest markets skewed average prices upward in the second half of 2009 and into 2010. This segment of housing activity in Ontario and British Columbia is expected to ease beginning in the second half of 2010, causing average prices to moderate in those provinces,” said Klump.

“A downward trend in national sales activity combined with an increase in listings will result in a more balanced market. Although builders are understandably more upbeat than they were during the depth of the recession, speculative building will likely continue to be held in check. As a result, while the real estate market will become more balanced, Canada will continue to avoid the massive realignment in housing supply and demand experienced in the U.S.”

CREA Residential Market Forecast:

Residential unit sales forecast	2009	2009 Annual percentage change	2010 Forecast	2010 Annual percentage change	2011 Forecast	2011 Annual percentage change
Canada	465,251	7.7	527,300	13.3	490,100	-7.1
British Columbia	85,028	23.4	101,900	19.8	88,800	-12.9
Alberta	57,786	2.5	63,050	9.1	64,000	1.5
Saskatchewan	10,856	6.5	10,900	0.4	11,050	1.4
Manitoba	13,086	-3.2	14,050	7.4	14,350	2.1
Ontario	195,840	8.2	223,700	14.2	200,300	-10.5
Quebec	79,290	3.3	87,950	10.9	85,450	-2.8
New Brunswick	7,003	-7.3	7,550	7.8	7,700	2.0
Nova Scotia	10,021	-7.8	11,400	13.8	11,500	0.9
Prince Edward Island	1,404	-0.6	1,450	3.3	1,450	0.0
Newfoundland	4,416	-5.9	4,900	11.0	5,050	3.1

Residential average price forecast	2009	2009 Annual percentage change	2010 Forecast	2010 Annual percentage change	2011 Forecast	2011 Annual percentage change
Canada	320,333	5.0	337,500	5.4	332,400	-1.5
British Columbia	465,725	2.4	485,500	4.2	476,600	-1.8
Alberta	341,201	-3.3	357,300	4.7	361,700	1.2
Saskatchewan	233,695	4.1	242,500	3.8	248,500	2.5
Manitoba	201,343	5.8	210,300	4.4	215,300	2.4
Ontario	318,366	5.3	332,700	4.5	326,000	-2.0
Quebec	225,412	4.7	240,500	6.7	249,100	3.6
New Brunswick	154,906	6.3	159,400	2.9	164,200	3.0
Nova Scotia	196,690	3.6	200,900	2.1	204,700	1.9
Prince Edward Island	146,044	4.4	149,900	2.6	153,200	2.2
Newfoundland	206,374	15.6	222,300	7.7	238,900	7.5

NOTE: All statistics contained in this release are obtained through analysis of the MLS® Systems of real estate Boards across Canada.

Link

What do you think about this article posted by the Vancouver Sun on September 24, 2009? Have we seen the bottom of the housing market here in Canada and specifically Kamloops or was it a mild correction? What will the result be once interest rates begin to increase? Have we seen the worst of the recession here in Canada? I would love your opinion.

OTTAWA — The worst is over in the Canadian residential housing market, according to a new industry report that forecasts growth in the sector in the fourth quarter of the year.

According to the Re/Max Bricks and Mortar Report, “the bounce-back that began in early spring has made this recession one of the shortest on record for real estate.” Sales have increased in more than half of the 11 markets surveyed for the report, and values have surpassed “record-breaking” 2008 levels in seven of the markets.

“The strength of the residential housing sector cross-country has taken many economists and housing analysts by surprise once again,” said Elton Ash, regional executive vice-president, Re/Max of Western Canada. “In terms of its impact on the resale market, by historical standards, this recession was one of the mildest… . While there may still be some challenges down the road, the worst is definitely behind us in the housing industry.”

Low interest rates and falling housing prices in the midst of the economic downturn helped drive sales growth, Re/Max said. Sales in Vancouver, one of Canada’s most expensive housing markets, rose 14 per cent from January to August, while sales were up 7.4 per cent in Victoria over that period, 6.2 per cent higher in Edmonton and up five per cent in Regina. In Ottawa, where the real estate market remained fairly steady through the economic crisis because of the city’s relatively stable employment situation, sales were up 2.4 per cent.

Nationally, the average price of a home is about $312,585, up 0.5 per cent from January to August, but there was a much larger jump in St. John’s, N.L., where the average price rose 18.1 per cent to $203,584. There have also been substantial increases in Regina (6.4 per cent), Halifax-Dartmouth (3.5 per cent), Winnipeg (3.5 per cent) and Ottawa (3.3 per cent).

“Prices are on the upswing and inventory levels are tightening, so the push toward home ownership is expected to continue throughout the fall and possibly into early 2010,” says Michael Polzler, executive vice-president, Re/Max Ontario-Atlantic Canada.

The picture south of the border isn’t as optimistic. A report Thursday showed existing home sales in the United States fell in August after four months of gains. Still, BMO Capital Markets economist Jennifer Lee suggests there is room for hope, pointing out that inventories continue to drop and while housing prices continue their downward trend, the cuts are not as deep as they were earlier in the year.

 

This article was written by the Canadian Press June 15, 2009.

Resales of existing Canadian homes showed continuing improvements in in May, with both the number of transactions and the national average price on the rise, according to the Canadian Real Estate Association.

There were 49,521 existing homes sold in May, less than one per cent below the comparable month of 2008. The national average sale price in May hit the highest monthly level on record, at $319,757, which was up four-tenths of a percentage point from the previous record in May 2008.

The real-estate association said the dollar value of sales through its members reached $11.4 billion in May, up 10 per cent from the previous month and more than 50 per cent above the low of $7.5 billion in January. The association said the the rebound in activity was led in some of the most expensive local markets in Canada and that had the effect up pushing the national average price upward. On a seasonally adjusted basis, the number of sales in May was eight per cent above April’s and 43 per cent above the low point in January.

Although the number of resales has been rising, fewer properties have been put on the market through the Multiple Listing Service run by CREA members. New listings fell to a seasonally adjusted 65,070 units in May, 19 per cent below the peak reached a year earlier and the lowest since December 2005. “Inventory levels are still high in many markets, but fewer new listings and rising sales activity suggests that the selection of homes available for sale may shrink as the year progresses. The supply of homes up for sale needs to be drawn down further before average price increases become more widespread among local markets,” said CREA economyist Gregory Klump.

The Globe and Mail came out with this article today detailing a 7% rise in home sales for March which is the second straight month of improving sales. It is an interesting article but what you have to remember is that spring and summer are typically the busiest times of the year for home sales. In Kamloops, we have seen the real estate market pick up over the last month and that is to be expected as we head into spring and summer. The full article is included below.

The Canadian housing market appears to be stabilizing, with sales activity up in March for the second consecutive month as lower prices drew in more buyers, the Canadian Real Estate Association said Wednesday. Actual transactions were down 13.7 per cent, year over year. This was the smallest decline in six months, the association said. “Housing markets are starting to show signs of buyer interest because of lower prices and interest rates,” Regina real estate agent Dale Ripplinger, CREA president, said in releasing the March results. However, economists were reluctant to characterize the increased sales activity as the beginning of a recovery in the real estate market.

The March statistics were “certainly encouraging,” Toronto-Dominion Bank economist Millan Mulraine said. “Nevertheless, with the Canadian economy continuing to be in a very intense recession, and labour market conditions continuing to worsen at an alarming pace, we expect over-all housing market activity to remain soft in the coming months,” Mr. Mulraine said in a research note. “That’s why we are cautious about interpreting this as the beginning of a long-term trend,” he added in an interview.

A seasonally adjusted total of 31,135 existing homes changed hands in March. “This is an increase of 7 per cent from the previous month, and builds on the 10.3-per-cent activity gain in February,” CREA said in a news release. “The number of transactions in March stands 18 per cent above levels reported in January, 2009, when activity sank to the lowest level in a decade.”

The national average resale price was $288,641 in March, down 7.7 per cent from a year earlier – again, the smallest year-over-year decline in six months, the association said. The largest monthly increases in activity were in British Columbia, at 13.6 per cent, and Ontario, at 10.5 per cent, the association said.

CREA’s chief economist, Gregory Klump, said the sales reflected a “stronger-than-normal seasonal bounce” in a number of markets. “The story is that price reductions are working as intended. They are stabilizing the market and they are drawing buyers …who are taking advantage of improved affordability,” Mr. Klump said, adding that anecdotal evidence indicates that a lot of the buyers are first-time market entrants. “Looking back to economic recessions in the early 1980s and 1990s, national resale housing activity bottomed out before the job market or economy did,” Mr. Klump said. “It will take time for ample supplies of new and existing homes to be drawn down, but demand appears to be stabilizing.”

Bank of Montreal economist Robert Kavcic noted that, despite the recent improvement, sales activity is still down more than 30 per cent from the peak seen in May, 2007. “Still, the improvement in recent months is an encouraging sign that the Canadian housing market has crossed the halfway point for this downturn,” Mr. Kavcic said. “Affordability is the highest in about four years, which should help fuel a rebound in sales once the job market stabilizes,” he said in a research note.

Recent measures in the new federal budget, including an increase in the maximum withdrawal allowed under the Home Buyers Plan and the First Time Buyer Tax Credit, will also lend support to new buyers, Mr. Kavcic said. “While a continued gradual decline in new listings—down 10.9 per cent year-over-year in seasonally adjusted terms—will ultimately help restore the market to balance, the ratio of new listings-to-sales remained slightly elevated at 2.2 per cent in March. “Over-all price declines are still somewhat exaggerated by the changing sales mix (sharper declines in the most expensive cities and higher price ranges), and as such, weighted-average prices are down a more modest 4.7 per cent year-over-year. Still, a widespread 14 of 25 cities are reporting lower prices versus last year,” Mr. Kavcic wrote.

“Western Canada continues to face the most severe price pressure, with average home values still down more than 10 per cent year-over-year in each of Vancouver, Victoria, Calgary and Edmonton. Hard-hit manufacturing centres in Ontario are also posting double-digit declines, while Regina and St. John continue to lead the pack, up 16 per cent year-over-year and 13 per cent year-over-year respectively.” Mr. Kavcic said it remains a buyers’ market. “Further price declines and low mortgage rates will ultimately help trigger a recovery, but a reversal in the wave of job losses is one major pre-requisite still outstanding,” he said.

Link