The Canadian Real Estate Association (CREA) has revised its forecast for home sales for the year bringing it upward, and it is now citing better economic conditions.
CREA forecasts 527,300 sales this year, up 13.3% from 2009 levels. The previous forecast called for a 7% increase. The national average home price is forecast to rise 5.4% in 2010 to a record $337,500.
What we can expect next year is the impact of higher interest rates, with sales forecast to decline 7.1% in 2011. This would put 2011 on par with levels reported in 2005 and 2006, according to the realtor’s association.
2011 is when Canada’s realtors expect to see prices drop around 1.5%.
Markets will begin to cool with less speculative supply coming onto the market from the new home sector notes CREA. Housing starts have dropped 0.5% to a seasonally adjusted and annualized rate of 20,700 units, according to figures released by Canada Mortgage and Housing Corporation (CMHC).
Nationally, housing starts across Canada have risen 5.8% to 186,300 annualized units according to the federal housing agency. New homes market are slowly coming back to life, and can possibly be benefitting from the overall Canadian housing market activity, however at the same time it may be too early to tell the direction it is heading.
We need to monitor the housing market closely the next few months, especially during the spring market to be sure of any conclusions for the year, especially since it is expected for interest rates to rise in the latter half of 2010.
