Forecasters said 2009 would be a tough year to predict due to the uncertain economic conditions prevailing across the country. Recently, the Canadian Real Estate Association revised its forecast and CMHC has made revisions in its regional forecasts for the year based on 2009 first-quarter results.
In the case of Manitoba where the real estate market and the economy remains solid and respectable in comparison to the rest of the country, CREA has changed its outlook. CMHC is still predicting an increase in average price for Manitoba, but very slight due to increased listings with less sales activity in comparison to last year. It is predicting a modest rebound in 2010 based on improved demand reducing the build-up in housing resale inventory.
WinnipegREALTORS® forecast for 2009 is for the greater Winnipeg region to experience a five per cent decline in sales, while prices will either hold or be up marginally from last year. It is important to keep in mind WinnipegREALTORS® has seen its house prices increase in the low-double-digit percentage range for six consecutive years, so 2009 was fated to be more restrained due to the economic uncertainty and a housing inventory that has become more balanced.
The following CREA MLS® market releases explain the more positive news and balance that is occurring in Canada.
Resale housing market continues to recover in April
MLS® home sales activity increased for the third time in as many months in April 2009, according to statistics released by the Canadian Real Estate Association (CREA). The national average price also rose in April, to within short reach of the record levels reached one year ago.
Seasonally-adjusted national home sales activity climbed 11.2 per cent in April 2009 compared to the previous month. This is the largest month-to-month increase in activity in more than five years. MLS® home sales activity reached its highest level in seven months, with 34,838 units trading hands nationally via the MLS® in April on a seasonally-adjusted basis.
The increase in April builds on gains of 10.3 per cent in February and 7.7 per cent in March. Seasonally-adjusted activity now stands 32 per cent above the lowest level in a decade that was recorded in January 2009.
Seasonally-adjusted sales were up from March levels in 70 per cent of local markets, with gains in Toronto (10 per cent), Vancouver (30 per cent), Montreal (15 per cent), and Calgary (31 per cent) contributing most to the overall increase in monthly activity.
Actual (not seasonally-adjusted) MLS® home sales totaled 43,473 units in April 2009, down 11.8 per cent from the same month one year ago. Year-over-year declines have been shrinking since dropping a record 42.2 per cent in November 2008.
“REALTORS® know that several factors have led to this market situation,” says Regina broker Dale Ripplinger, president of the Canadian Real Estate Association. “First, price adjustments in some markets have helped affordability. Second, lenders do have money for people and properties that qualify, although some are being more stringent. The third factor involves consumer confidence, which has risen in the housing market through the spring.”
The last factor, CREA’s president said, is that sellers have realized that realistic pricing is key and that is very much driven by local factors.
“Homes are only worth what a buyer is willing to pay,” he added.
The national MLS® residential average sale price in April ($306,366) stands 3.2 per cent below April 2008, when it reached its pre-recession peak. The MLS® residential average price broke all previous monthly records in Saskatchewan, Manitoba, Quebec, and Nova Scotia.
The supply of homes coming onto the MLS® market continued trending downward in April. Seasonally-adjusted MLS® residential new listings edged lower by 1.8 per cent from the previous month to 66,843 units, the lowest level since June 2006. Seasonally-adjusted new residential listings in April were 16.4 per cent below the peak reached in May 2008.
With sales activity rising strongly and new listings dropping, the balance between supply and demand is firming up in British Columbia, Alberta, Ontario and Québec. As a result, in April 2009 national sales as a percentage of new listings reached the highest point since February 2008.
The residential dollar volume for MLS® sales climbed 12.3 per cent from the previous month to reach $10.2 billion. This is the biggest increase since December 2001, and first time since September 2008 that dollar volume surpassed $10 billion.
“If the trend for MLS® sales activity over the past few months persists, the number of transactions in May could surpass the pre-recession levels of September 2008,” said CREA chief economist Gregory Klump. “In the recessions of the early 1980s and 1990s, sales activity bottomed out before the job market or even the economy did. Improved affordability may result in Canadian existing home sales leading the economic recovery this year.” (CREA 14/05/09) MLS® home sales forecast revised
A spring housing market that was more active than anticipated has prompted a change to the MLS® home sales forecast issued by CREA for the rest of 2009, and for 2010.
National home sales activity is forecast to be down 14.7 per cent to 370,500 units in 2009. This is slightly less than the reduction in activity predicted in CREA’s forecast issued last February. The forecast decline in annual activity was trimmed to reflect a stronger than expected rebound in activity in British Columbia and Ontario in the first quarter of 2009.
Forecast declines in annual activity were reduced for these provinces. They were also shaved for Manitoba, Quebec, New Brunswick, and Prince Edward Island to reflect stabilizing trends in sales activity in these provinces.
National MLS® home sales activity is forecast to rebound by 7.2 per cent to 397,000 units in 2010. This is a slightly weaker rebound than predicted in CREA’s previous forecast. The revision reflects recently downgraded forecasts for economic growth next year. The rebound in activity in 2010 is forecast to be biggest in British Columbia and Alberta.
New listings on MLS® systems in British Columbia, Alberta and Ontario are forecast to continue easing following the peak reached last year. New listings are also expected to shrink in Saskatchewan, Quebec, New Brunswick and Nova Scotia. Fewer new listings will further stabilize the resale housing market as sales activity draws down inventories.
The national MLS® average home price is forecast to decrease 5.2 per cent in 2009, led by average price declines in British Columbia and Alberta. By contrast, the average home price is forecast to rise in Manitoba (4.3 per cent), Prince Edward Island (4.2 per cent) and Newfoundland & Labrador (10.9 per cent). CREA’s previous forecast predicted a decline in the national average price of eight per cent in 2009.
The price trend is similar but less dramatic for the weighted national MLS® average price, which compensates for changes in provincial sales activity by taking into account provincial proportions of privately owned housing stock. The weighted national MLS® average price is forecast to decline 3.6 per cent in 2009 and hold steady in 2010. CREA’s previous forecast predicted the weighted national average price for MLS® homes sales would decline by 6.4 per cent.
“Monthly resale housing activity improved as the first quarter progressed, entering the second quarter on a rising trend and closing in on levels last seen before it fell sharply late last year,” said CREA chief economist Gregory Klump. “It will take time for housing inventories to be drawn down enough to put new home construction on a stronger footing, but the balance between resale housing supply and demand is improving in a number of major markets.
“The national average price has begun to rebound from the recent low reached in January, and is forecast to begin rising modestly above year-ago levels in the fourth quarter of 2009,” he added.