Housing market to see ‘greater stability’
Not a single Canadian city will see house prices fall in 2011, according to a market forecast by Re/Max, as low inventories prop up prices.
The residential real estate brokerage said there will be “greater stability” in the market in 2011, with the national average price forecast to rise by 3 per cent to $350,000. It expects sales to stall, however, with the same number of homes changing homes in 2011 as in 2010 – about 441,000.
“Ample inventory levels, steady demand, and moderate growth, both in terms of sales and prices, will characterize the market in 2011,” said Michael Polzler, executive vice-president and regional director of Re/Max Ontario-Atlantic Canada.
The report is far cheerier than those issued by others in the industry, including the Canadian Real Estate Association which revised its forecast lower earlier this month – it expects prices to fall 1.3 per cent and sales to plummet 9 per cent. And where CREA warned of “lacklustre economic and job growth and the resumption of interest rate increases” in 2011, Re/Max cited “low interest rates and improving consumer confidence levels” as the basis of its forecast.
Some bank forecasters have suggested drops of 10 per cent may be in order next year as mortgage rates move higher and household struggle to service record debt loads, and the Bank of Canada specifically mentioned the prospect of “a more pronounced correction in the Canadian housing market” as one of three key risks to the country’s economy. However, sales data from the fall market showed that fewer houses have been listed and prices were largely unchanged from a year ago.
While CREA reports sales statistics for November on December 15, some markets have already released their data – Toronto and Vancouver both posted their fourth straight month of increasing sales. BMO Nesbitt Burns economist Douglas Porter said that while prices may not accelerate much in 2011, a harsh correction is unlikely.
“Some of those early indications for November would indeed a soft landing,” said Mr. Porter.
Re/Max suggested in its report that sales in Vancouver could increase 10 per cent next year, followed by Victoria at 8 per cent and Kelowna at six per cent. It also suggested Windsor, Ont. could see a strong 2011 after several slow years, with sales increasing by 5 per cent.
Meanwhile, it said “almost all” markets are expected to see higher prices – and those that don’t will just see prices remain at 2010 levels.
It suggested St. John’s would see gains of 8 per cent, while houses in Greater Vancouver, Kelowna, Regina, Saskatoon, London-St. Thomas, Ottawa, Sudbury and Greater Montreal could see gains upwards of 5 per cent.