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Thursday, November 25, 2010

CREA revises real estate forecasts for 2010 and 2011

In a news release issued on November 5, 2010, the Canadian Real Estate Association (CREA) revised its national sales forecast downward for both 2010 and 2011. Sales activity in the beginning of the third quarter was weak, resulting in the total number of transactions forecast for the year being lowered, even though the sales pace did pick up steam towards the end of the quarter. So what does this mean for Canadian homebuyers and sellers?

It’s important for consumers to realize that the decline in sales activity is quite a modest one. And, sales activity is being measured against one of the best years ever for Canadian real estate. It’s also very important that homebuyers and sellers understand that the modest decline in sales activity refers only to the number of transactions, and does not refer to house prices. In fact, the inventory of homes currently up for sale remains tight, due in part to a limited number of new listings coming on the market. This keeps demand strong, so the market should be seen as 'stabilizing' or 'balanced'.

Despite a slowing of the pace of real estate sales, house prices in 2010 have reached record highs in all provinces. Next year, the CREA forecast calls for some provinces to experience further price gains, even above this year's record prices. However, the higher-priced, relatively more populous provinces of BC, Alberta and Ontario are expected to experience modest price adjustments next year, resulting in a national decline – but bear in mind, that modest decline will only represent 1.3% below this year's record high. In general, today’s pricing levels will tend to be sustained through the end of next year, but the days of double-digit appreciation are behind us for the near future.

Of course, this is just the ‘big picture’ of national trends. Real estate sales activity and house prices can vary dramatically between different communities or neighbourhoods, and sometimes even on the same street. For more detailed insights on your local real estate scene, contact your local Coldwell Banker real estate professional.

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