Thanks to low interest rates, and the knowledge that they can’t stay there forever, 2010 ended well for Canadian Real Estate, and more of the same is expected for 2011, according to the Royal LePage House Price Survey and Market Survey Forecast released today. "Trends in the housing market continue to be driven by the lingering after-effects of the recession," said Phil Soper, president and chief executive of Royal LePage Real Estate Services. "Canadians realize that interest rates are unsustainably low and that homes will become effectively more expensive when mortgage rates return to normal levels. We will likely see more price appreciation early in 2011 as some buyers complete transactions in advance of anticipated higher borrowing costs."
Soper believes that this is the main impetus pushing people towards purchase sooner, rather than later. “There is anticipation that money is going to become more expensive.”
“Our outlook is skewed now to the positive, and we expect the momentum that the industry carried through 2010 to carry on through 2011. Unit volumes were forecast originally to be very negative for 2011 as recently as October, but in November things began to change.” With a boost to close out the year in Q4, average home prices nationally, rose between 3.9 and 4.6 % year-to –year, shedding memories of an unimpressive Q3- and were able to return to healthy growth.
Similarly, home values expected to carry on climbing steadily across the country through 2011, with most of the sales activity to take place in the first half of the year. Soper says, “Typically, in a northern climate, a strong spring will carry the year.” The introduction of the HST can also take credit for a spike in activity in the early part of 2010.
“2011 is expected to unfold much like 2010, when close to 60 per cent of sales volume occurred in the first half of the year in anticipation of interest rate increases that never materialized. However, housing market activity in the first half of 2011 will be modestly closer to the norm, as last year's phenomenon was exacerbated by mid-year tightening of mortgage accessibility and the introduction of HST in Ontario and British Columbia."
The front runners for growth are most likely situated in Alberta- where some of the only price decreases were seen in 2010. Calgary, in particular, suffered after a sharp correction after years of huge gains, and after sinking oil and gas prices, the regionally heavy sector is expected to start hiring again—which will certainly contributed to the economic health of the city.
Nationally, the average home price is expected to rise 3 % throughout 2011 to $348,600; the actual number of transactions is expected to slide 2%.
In Q4, most of the country saw either increases or stability in price. In terms of cities specifically, Winnipeg, Ottawa, Montreal and St. John's topped the list for the most significant increases. Nationally, the price of detached bungalows went up 4.6%; prices for two –storey homes went up 4.4%; prices for condominiums went up 3.9%.
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