CREA revises 2011 forecast upward
OTTAWA (17August 2011) - A stronger than expected second quarter, coupled with a year-over-year surge in July, has prompted the Canadian Real Estate Association (CREA) to revise its resale housing forecast for the rest of 2011, saying the market will make an ever-so-slight gain in units sold through its Multiple Listing Service.
CREA now forecasts some 450,800 units will be sold in 2011, up less than 1% over 2010 - reversing its previous forecast which said unit sales would fall 1% this year. However, what it called an "an erosion in affordability due to higher prices" has prompted a downward revision to its outlook for 2012.
By province, CREA is upping slightly its forecast for British Columbia, believing sales have bottomed out sooner than anticipated.
Meanwhile, stronger than expected activity in Ontario offset slightly softer than anticipated demand in Quebec, Manitoba, and Newfoundland during the second quarter of 2011, prompting the realtors' group to raise the 2011 Ontario sales forecast while the outlook for activity in Quebec, Manitoba, and Newfoundland has been revised lower.
National sales activity in 2012 is forecast to ease 0.7% to 447,700 units, which is roughly on par with its ten-year average.
"While there had been some talk of potential interest rate increases, that hasn't happened," CREA president Gary Morse said in a statement. "In fact, rates have actually come down, and are now expected to remain low for the remainder of this year and into 2012."
CREA now expects the national average home price to rise 7.2% in 2011 to $363,500. This increase from the previous forecast reflects the continued strong price growth in Vancouver during the second quarter and acceleration in prices elsewhere, particularly Toronto. "These two markets exert an outsized influence on the national average due to their relatively high level of activity and average price," CREA noted.
The national average home price is expected to moderate in the second half of 2011, returning to normal following a heavily skewed start to the year. In the first half of 2011, the national average home price was pushed upward by a surge in multi-million dollar sales in selected areas of Greater Vancouver and a higher than normal share of overall sales in more expensive markets.
"Some of the expected moderation in the national average price is seasonal, with average price peaking in many local markets during the second quarter of any year," CREA chief economist Gregory Klump noted. "Elevated shares of provincial and national sales activity in Vancouver and Toronto are also expected to return to more normal levels, contributing to an anticipated moderation in average price in British Columbia, Ontario, and nationally.
"Additional new listings are anticipated to result in a more balanced resale housing market in most provinces," Klump continued, adding, "The national average price is forecast to stabilize in 2012, although at a slightly higher level than previously expected."