Kiyoko Fujimura
Buzzbuzzhome Corp.
June 2, 2010

CREA has re-thought its projections on the outlook for the Canadian housing market in the coming year.

CREA expects 490,600 sales through the Multiple Listing Service in 2010, a 5.5% jump from a year earlier and the second-best year on record. However, by 2011, sales are expected to fall by 8.5%. Financial Post

The revision was announced in light of the new mortgage rules instituted on April 19 and the Bank of Canada raising rates yesterday by 25 basis points. And it doesn’t look like the central bank intends to stop raising rates. This raises the prime rate that variable rate mortgages are dependent on.

CREA now says the market peaked in the fourth quarter of 2009 and predicts by next year the average price of a home sold through the MLS will be $318,300, a 2.2% decline from 2010. This year’s average price increase in now expected to be only 1.6% higher than 2009. Financial Post

But Gregory Klump, chieft economist at CREA, believes the Canadian housing market is on solid ground. This downturn is just plain vanilla decreased demand.

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