The Canadian Real Estate Association (CREA) has revised its forecast for home sales activity via the Multiple Listing Service® (MLS®) Systems of Canadian real estate Boards and Associations for 2011 and 2012.
Overall, sales activity and prices remained stronger than expected in the second quarter. Sales momentum was also better than expected heading into the third quarter. As a result, the 2011 national forecasts for sales activity and average price have been raised slightly.
Here are some of the key points from the news release
- National sales activity is forecast to reach 450,800 units in 2011, up less than one per cent from levels in 2010.
- British Columbia’s 2011 sales forecast revised slightly higher, (home sales there appear to have bottomed out sooner than expected)
- Stronger than expected activity in Ontario offset slightly softer than anticipated demand in Quebec, Manitoba, and Newfoundland in the second quarter of 2011.
- Ontario sales forecast for 2011 has been raised, while the outlook for activity in Quebec, Manitoba, and Newfoundland has been revised lower.
- National sales activity in 2012 is forecast to ease seven tenths of a percentage point to 447,700 units
- The national average home price is forecast to rise 7.2 per cent in 2011 to $363,500.
Results of Canada Mortgage and Housing Corporation (CMHC)’s Spring 2011 Rental Market Survey released today indicate that the overall vacancy rate was up in provincial urban centres in April 2011. The overall vacancy rate was 2.1 per cent, an increase of one per cent from last April’s rate of 1.1 per cent.
The St. John’s area rental market posted a vacancy rate of two per cent in April 2011 compared to 1.1 per cent last April. “With an active labour market, population growth will continue to create rental demand and keep vacancy rates low within the region,” said Chris Janes, senior market analyst with CMHC in Newfoundland and Labrador. “High home prices and a strong economy are supporting demand for rental units. These factors, coupled with limited new rental supply being added to the market, continue to keep the vacancy rate low,” added Janes.
The Corner Brook area posted the lowest vacancy rate in the province at 1.7 per cent compared to 0.8 per cent a year ago. Other centres surveyed recorded the following vacancy rates: the Gander area increased to 2.3 per cent from 0.6 per cent last year and the Grand Falls-Windsor area came in at 2.7 per cent, a vacancy rate comparable to last year.
In a new release from CREA earlier this month, Canadian house sales are expected to decline in 2009 but rebound back in 2010. The full news release is below.
National MLS® home sales activity declined 17.1 per cent in 2008, and MLS® sales activity is forecast to fall an additional 16.9 per cent to 360,900 units in 2009. This would be the lowest level for national sales activity since the year 2000. Sales activity is expected to decline from levels set in 2008 in every province, led by declines in British Columbia, Alberta and Ontario.
National MLS® home sales activity is forecast to rebound by 9.9 per cent to 396,600 units in 2010, marked by an acceleration in activity in the second half of that year. The rebound in activity in 2010 is forecast to be biggest in British Columbia and Alberta.
New listings on the MLS® systems of real estate Boards in Canada have been trending steadily lower since peaking in the second quarter of 2008, and that trend is forecast to continue. It is that combination of rebounding sales activity and fewer new listings that will stabilize the MLS® resale housing market in 2010.
“We are caught in a cycle where consumer confidence has been eroded because of job losses, and consumer confidence is an essential ingredient for housing sales activity,” says the President of The Canadian Real Estate Association, Calvin Lindberg of Vancouver. “And housing activity helps creates jobs.”
“The essential selling ingredients in today’s market are realistic pricing, marketing, and preparation. There are potential buyers making inquiries, but the barrage of economic news makes them much more cautious than before.”
The MLS® sales forecast developed by CREA Chief Economist Gregory Klump shows that fewer transactions in some of Canada’s more expensive housing markets, combined with reduced asking prices, will continue to put downward pressure on average MLS® sale prices.
The national MLS® average home price is forecast to decline eight per cent in 2009, with prices down most in Western provinces and Ontario. By contrast, the average home price in Newfoundland & Labrador is forecast to rise 4.8 percent in 2009. Prices are forecast to stabilize in 2010, with annual price increases of one per cent or less in five provinces.
The price trend is similar but less dramatic for the weighted national MLS® average price, which compensates for changes in provincial sales activity by taking into account provincial proportions of privately owned housing stock. The weighted national MLS® average price is forecast to decline 6.4 per cent in 2009, and hold steady in 2010.
“Increasingly cautious homebuyers and mortgage lenders means that active listings will take longer to sell in 2009 compared to previous years,” said CREA Chief Economist Gregory Klump.
“The national housing market is recalibrating due to weak sales activity,” said Klump. “Supply will take time to adjust to lower demand, but sellers unwilling to accept offers below their expectations will remove their home from the market,” he added. “Fewer active listings reduces buyer choice, and in time puts a floor under prices,” CREA’s Chief Economist added.