Improving economic conditions will have a positive impact on the Canadian housing markets, however the a report by RE/MAX forecasts residential real estate sales remains static in most major centres in 2011.
Check out the RE/MAX Housing Market Outlook 2011, which examines trends and developments in 26 major centres across the country, which found that home-buying activity in 2010 fell short of 2009 levels.
Fret not, as the report shows that housing values continued to climb, with virtually all areas reporting an upswing in average price, ranging from just under one per cent to 15 per cent this year.
The report says:
“By year-end, approximately 441,000 homes are expected to change hands nationally, a five per cent decline from the 465,251 sales reported in 2009. Housing values are forecast to continue to climb, up an estimated seven per cent to $340,000, compared with $320,333 one year earlier.”
Check out what Michael Polzer, Executive Vice President, Regional Director, RE/MAX Ontario-Atlantic Canada has to say:
“In terms of resale housing activity, what many are talking about as the new normal is actually a return to the traditional real estate cycle… The past decade was truly unprecedented—never before have we experienced a run up that was as strong or lasted as long. As we have digressed from the typical pattern, people have forgotten what the usual healthy cycle looks like, but all the hallmarks are there. Ample inventory levels, steady demand, and moderate growth, both in terms of sales and prices, will characterize the market in 2011. While the pace may appear lackluster in comparison to what we’ve grown accustomed to, it underscores the principles of real estate 101: The market is cyclical. All boats rise and fall with the tide.”
Now, time for the forecast!
Let’s start with a really boring and lame looking video…
Greater stability is expected to characterize the markets in 2011, with Canadian housing sales predicted to mirror 2010 levels at 441,000 next year, while average price is forecast to escalate three per cent to $350,000 by year-end 2011.
Elton Ash, Regional Executive Vice President, RE/MAX of Western Canada, says:
“Looking forward, we see steady improvement in provincial and local economies—which will bode well for housing markets across the board… The relentless drive in the market reminiscent of years past will be gone and instead, we can expect to see more normal, balanced market conditions, with buyers maintaining a slight edge.”
Markets in British Columbia are forecast to lead the country in terms of percentage increases in sales activity next year, with Greater Vancouver expected to climb 10 per cent, followed by Victoria at eight per cent and Kelowna at six per cent! Kaboom!
After a prolonged period of economic hardship, Windsor is once again on track for growth, with residential home sales predicted to climb five per cent.
Almost all markets are reporting an anticipated increase in housing values next year.
The value of homes in Greater Vancouver, Kelowna, Regina, Saskatoon, London-St. Thomas, Ottawa, Sudbury and Greater Montreal are predicted to climb five per cent.
So, what are the factors that will continue to support sustained sales and price growth in the months and years ahead? According to the RE/MAX report:
- Land scarcity, intensification, urban renewal, infill and renovation will continue to drive up values—regardless of supply and demand—in major metropolitan areas. The Canadian housing stock is ever-evolving, particularly in the central core of each city. With average price pushing closer to or well past the $300,000 mark in the vast majority of major centres, and affordability of single-family homes diminishing, the demand for attainable product will rise in tandem, bolstering the growing condominium segment in the years ahead.
- The upper-end of the market continues to be a strong indication of the overall health of Canada’s housing sector. Typically the first segment to soften in a downturn, luxury homes posted record sales activity in 2010, and demand is expected to remain solid in 2011. Strong sales in the high-end will continue to prop up average prices.
- Immigration will remain a serious force stimulating demand, particularly given the penchant for homeownership among today’s new Canadians. While the formation of new households used to take an average of five years, a growing number of newcomers arrive skilled, financially secure, and ready to make their home-buying moves. It is estimated that Canada will average 250,000 new immigrants annually.
- In the year ahead, federal, provincial and local stimulus in the form of continued infrastructure spending and capital projects will be a considerable boon to economic stability and employment, providing consumers the confidence to move forward with real estate purchases.
- Volatility in the money markets will continue to drive buyers to the tangibility of homeownership, both as a reliable long-term investment and a form of shelter, particularly given low vacancy rates and a lack of new rental construction in a number of major centres.
There you have it… the 2011 predictions begin! Thanks to Re/Max for all the above predictions. They sound pretty sound.