The Canadian Real Estate Association (CREA) has revised its forecast slightly for real estate sales activity for 2011 and 2012.
National sales activity is now expected to reach 441,100 units in 2011, a decline of 1.3% from 2010, but a slight improvement from the 1.6% decline forecast by CREA in February.
In 2012, CREA forecasts that national sales activity will rebound by 2.6% to 452,500 units. This is little changed from the previous forecast, and stands roughly on par with the ten-year average for annual activity.
Although sales activity in the first quarter of 2011 came in largely as expected, multi million dollar property sales in Greater Vancouver have surged unexpectedly. These sales have upwardly skewed average sale prices for the province and nationally, prompting the average price forecast to be revised higher.
The national average home price is forecast to rise 4% in 2011 and 0.9% in 2012, to $352,500 and $355,800 respectively. This marks an increase from the previous forecast, and underscores the significant effect that investment in British Columbia is and will have on national results, CREA said.
‘Home buyers expect mortgage interest rates to rise and are mindful of their current and future debt levels. They’re doing their homework to better understand how their mortgage payments and family budget might change down the road before they make an offer.’ said Gary Morse, CREA President.
‘That said, even though mortgage rates have increased recently, they remain very attractive and are keeping financing within reach for many homebuyers,’ he explained.
‘Some housing markets are hotter than others, so buyers and sellers would do well to consult their local realtor to understand how supply, demand and prices are evolving in their housing market,’ he added.
CREA expects home sales activity to regain traction after dipping in the second quarter as economic recovery and hiring continues. ‘While interest rates are expected to rise later this year, they will still be within short reach of current levels and remain supportive for housing market activity. Continuing job growth will underpin housing demand, keeping the housing market in balance and stabilizing home prices,’ said Gregory Klump, CREA chief economist.
‘As expected, recent changes to mortgage regulations brought forward some sales activity into the first quarter that would have otherwise occurred later in the year, particularly in some of Canada’s more expensive housing markets. This is likely to result in a milder version of the volatility in sales activity that we saw last year,’ he explained.
‘The extent to which high priced sales activity in Vancouver will pitch up the average price locally, for British Columbia and nationally will likely diminish in the next couple of months in line with a seasonal increase in national activity. That said, foreign investment in Vancouver residential real estate is showing no signs of slowing, so it seems likely to remain a prominent market feature for some time,’ he added.