With the recent mortgage rule changes announced by the Federal Government last month many economists expected that this would be the last arrow fired to finally slow down the Canadian housing market. Along with a slower than expected economic recovery and increasing mortgage rates, some experts believed that the mortgage rule changes coming into effect on March 18 would result in up to 20K fewer house sales in 2011.
The Canadian Real Estate Association (CREA) released an updated 2011 home sales forecast yesterday that pointed out maybe things won’t be so bad. They said that consumers understand mortgage rates are at once in a lifetime levels, but they are planning ahead for higher rates and not buying more than they can afford. So the dynamics in the market are different but buyers are still moving ahead. The report outlined that home sales in the second half of 2010 bounced back faster than expected. Now for 2011 they expect hosing sales to reach 439K units (-1.6% year/year) and 453K units in 2012 (+3%), which is about the 10 year average. The revised forecast for this year was due to an improved economic outlook and expected higher consumer confidence.
Due to the mortgage rule changes next month, CREA expects some home buying activity to be moved up into Q1 2011, especially in the higher price markets such as Toronto and Vancouver. Q2 2011 will see a dip and then rebound in the second half of the year.
CREA’s forecast for the national average home price is $343,300 (+1.3%) in 2011 and $347,900 (+1.3%) 2012.
Here is CREA’s forecast city by city: