In line with the recent downward revisions of Canadian economic and job growth forecasts, The Canadian Real Estate Association (CREA) is updating its MLS® housing market forecast for the balance of 2008, and 2009. National home sales activity is now forecast to decrease by 12 per cent to 461,200 units in 2008, and decrease by three per cent in 2009. The number of new listings is forecast to decline further from the peak reached in the second quarter of 2008, with levels in 2009 on par with levels in 2007.
Fewer new listings will stabilize the resale housing market in 2009. Average home prices will reach new heights in nearly all provinces in 2008, but declining activity in higher priced markets will hold the national average price stable this year compared to 2007.
Average price is forecast to reach new heights in six of ten provinces in 2009, but lower sales activity in British Columbia will continue weighing on the national average price. The national average price is forecast to ease by 2.1 per cent in 2009.
Canadian economic growth is forecast to start improving in the second half of 2009 before accelerating in 2010. Re-aligning housing market balance and improving home affordability will set the stage for an improving housing market in 2010.
“Canadian economic growth is being sideswiped by financial market turmoil, slowing world economic growth, and weaker commodity prices,” said CREA Chief Economist Gregory Klump. “The question of whether Canada will avoid a technical recession is moot, growth will be slow enough that it will feel like a recession.”
“Consumer confidence is being battered by downbeat headline news. Homebuyer sentiment has become very cautious, by contrast to the urgency to purchase in 2007. There are fewer buyers and they are taking longer to shop, so the pricing environment is very competitive. Unrealistically priced homes will sit on the market. Sellers are by and large under no distress to sell. Those who put their home on the market at an unrealistic price and are unwilling to cut it will likely take it off the market when the listing expires with a view to selling another day.”
“The projected decline in new MLS® listings will prevent an oversupply of homes available for sale on the Canadian housing market”, says CREA President Calvin Lindberg. “This stands in stark contrast to the U.S. housing market, which is significantly oversupplied.”
“Canadians are definitely concerned by the economic news out of the U.S., and much of that news stems from distress in the U.S. housing market. Canadians should realize that Canada’s economy and housing market are both in better shape. This means the downturn in Canadian consumer confidence will pass and when it does, housing demand will rebound, especially when they realize the window of opportunity to buy at reduced prices and at low interest rates will begin to narrow once economic growth shows signs of rebounding next year.”