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House prices forecast to fall
The Canadian Real Estate Association forecast Wednesday that home prices will fall by 2.2 per cent next year. The agency expects the average price of a home in Canada to be $325,400 by the end of 2010, a 1.6 per cent increase over 2009's level. Though still a gain, that's well below the 5.4 per cent increase the agency was previously expecting for 2010.
But by 2011, the agency expects a 2.2 per cent decline in the average price. That's because a slowdown in Ontario and British Columbia, the two largest housing markets in the country, will drag the national average down. All other provinces are forecast to post gains, CREA said.
"With interest rates soon expected to rise, Canada is widely believed to be entering a typical demand-driven downturn due to recent price increases and rising interest rates,” CREA chief economist Gregory Klump said.
Forecast of sales decline
Sales activity overall is forecast to slow. CREA now forecasts that 490,600 homes will be sold on its Multiple Listings Service this year. That's 5.5 per cent higher than the level in 2009, but much lower than the agency was originally forecasting for 2010.
In 2011, an 8.5 per cent drop to 448,700 is expected.
New mortgage rules unveiled by Finance Minister Jim Flaherty in April aimed at curbing speculation are expected to "marginally impact" activity, the agency said.
Although mortgage rates have gone up and are expected to rise further, the association says the higher cost of borrowing will have a minimal impact on the market this year.
"Interest rates are expected to rise slowly and at a measured pace during a new era of government spending restraint, so home financing will remain within reach for many homebuyers," CREA president Georges Pahud said.
Source: CBC News
June 2, 2010 | Permalink
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Comments
Interesting real estate blog.I will take considerable time,effort and passion.The top of the US housing bubble didn't hit as high as Canada so we will crash even hard then the US.
Posted by: Table Linens | Dec 31, 2010 3:56:58 AM
If the prices will fall (TD Bank reports that prices could fall by even 2.7 percent in 2011) the buyers will be in good position, only the mortgage rates could bother them and represent certain source of insecurity.
Posted by: Elli D. | Aug 6, 2010 10:14:46 PM
The first half of 2010 had a rush of buyers trying to buy before HST in July, before mortgage rates started going up, and before mortgage qualifying rules changed in April. It is very predictable that 2nd half of 2010 will be slower than the first half. 2011 and 2012 are much harder to predict… as the long term usually is!
Posted by: Christina Catana in Toronto | Aug 5, 2010 11:38:03 PM
"In Vancouver, and the rest of the Lower Mainland of British Columbia there will always be a sort of perpetual real estate bubble because of geographical limitations, as in we are almost out of land."
That's very funny. Homeowners in San Francisco were reassuring themselves with that very same myth...leading up to the Bay Area real estate crash in 2006.
http://mysite.verizon.net/vzeqrguz/housingbubble/san_francisco.html
Can you say half a million off?
Posted by: GK71 | Jul 21, 2010 12:46:24 PM
Price in Canada are set to fall in the 30-40% range over the next couple of years. People don't want to believe it but it will happen.
Posted by: tony | Jun 23, 2010 6:31:00 AM
The housing market in Canada is going to not only fall but crash. Price to income ratio is 5.5 while the normal ratio is 3 times income. The top of the US housing bubble didn't hit as high as Canada so we will crash even hard then the US. The realtors on here are worried and for good reason. Housing in Canada is going to crash. Smart money is running for the exit.
Posted by: George | Jun 21, 2010 11:26:30 PM
While the prices in Toronto and the rest of Ontario may fall, I don't think we will see much of a decline in Vancouver. In Vancouver, and the rest of the Lower Mainland of British Columbia there will always be a sort of perpetual real estate bubble because of geographical limitations, as in we are almost out of land.
Posted by: Sam Reynolds | Jun 11, 2010 2:12:50 PM
With the price of homes in some areas, will it really of an impact on Buyers or Sellers? $8,000 on a $400,000 home is not much in the big picture.Maybe Sellers will spend a little more on their homes to "show" better before getting it on the market.
Posted by: Don Edmunds | Jun 8, 2010 11:49:40 AM
Houses in some areas are always in high demand irrespective of the market. There are also new policies like increasing the population density along avenues that will likely have a big impact on house prices in a given area.
I think we will likely see a huge variation from one area to another.
AllAboutTO.com
Posted by: allaboutto | Jun 7, 2010 9:45:05 AM
It's very god news for home buyers. Now they can buy a house easily within their budgets.
Posted by: Jasmine Smith | Jun 7, 2010 8:00:09 AM
These numbers seem standard if you looked at a broad time line like 50 years. They really are... normal.
Posted by: Doug Francis | Jun 5, 2010 9:29:42 PM
Interesting real estate blog. I have bookmarked for future reference. Hope to see such good things again.
Posted by: North Miami Homes | Jun 4, 2010 3:34:13 AM
