Resale Homes
Resale Homes
AROUND THE MARKET: Real estate market fears unfounded
While fears that the Canadian real-estate market was going to head south just like our U.S. neighbours have swept the market, all signs are now pointing toward a major recovery instead.
Just last week, the Canadian Real Estate Association (CREA) revised its MLS home sales forecast for 2009 and 2010 due to unexpectedly strong sales across the country in the second quarter of 2009.
In May, CREA issued a forecast that predicted a 14.7-per-cent decline in real-estate transactions this year. But sales activity across the country has brought that up significantly, prompting CREA to forecast a decline of only 0.4 per cent in activity compared to levels set in 2008.
"Sales activity started off the third quarter on a strong footing," said Dale Ripplinger, president of CREA."The difference in the resale housing market now, compared to the beginning of the year, is night and day, and nowhere is this more evident than in the West."
Manitoba is one market where the average home price has continued to rise, despite the economic downturn and fears that the recession would impact the real estate market. In July 2009, the average selling price of a home in Manitoba was $206,135. That's up $10,000 over July, 2008, when the average price was $195,964.
Nationally, the average price of a home has also risen. The average selling price increased more than $20,000, from $303,642 in July 2008 to $326,832 in July of this year.
According to CREA, the national MLS average home price is forecast to increase 1.5 per cent overall in 2009. That's due to a strong rebound in sales activity, not price, in some of Canada's most expensive markets, which is skewing the national, and some provincial average prices upward. CREA had originally forecast a decline in the national average price of 5.2 per cent in 2009.
"Low interest rates are boosting sales by returning homebuyers to the market who moved to the sidelines late last year," said CREA's chief economist Gregory Klump. "Buyers are also shifting purchase decisions forward as they take advantage of attractive interest rates now before financing costs increase."
Just like Manitoba, the average price is expected to continue to rise across the country this year, with the exception of Alberta. The oil-rich province has to deal with recession and budget crunches for the first time in many years, and the impact is being seen in the real-estate market. Alberta is the only province with a forecast decline in average price of 4.4 per cent in 2009. Calgary's average home price dropped from $402,788 in July 2008 to $381,740 in July of this year.
Not that the bottom has really dropped out of the real-estate market in Alberta. I was in Calgary last week and housing prices seemed to be as strong as ever to me. The market has come down a bit, but prices are still exorbitantly higher than the real-estate market here in Manitoba. Despite the dampened market, Calgary still managed to post its highest-ever real-estate transaction this summer.
Two weeks ago, the home of former Calgary Flames goalie Mike Vernon sold for a record-breaking $10.3 million. The 12,700-square-foot home, which is located in upscale Elbow Park, was listed in May for $10.5 million and sold only a few months later for $10.3 million, setting the city's new real-estate record. In Winnipeg, there are two homes currently listed for more than $2 million and both have been on the market for several months.
Looking ahead, CREA's forecast predicts that average prices will stabilize over the rest of 2009 and 2010. A slow start in the first quarter of 2009 will result in a lower annual average-price increase this year compared to 2010. Next year, the national average price is forecast to be up 2.1 per cent from this year.
"The speed with which the Canadian resale housing market has rebounded is unprecedented," said Klump. "The economic recovery is expected to be slow and protracted, so the dramatic swings in activity seen in late 2008 and this year are unlikely to be repeated in 2010."