While the Canadian Real Estate Association expects MLS® home sales activity to decline in most of Canada, the association is predicting gains for Manitoba in 2010 and 2011.
In Manitoba, the forecast has been revised upwards with a projection of 13,200 MLS® sales in 2010, or a slight 0.9 per cent increase. For 2010, the projection is for a 1.9 per cent increase to 13,450 MLS® sales.
Manitoba continues have one of Canada’s better provincial economies and one of the nation’s lowest unemployment rates, which is contributing to high consumer confidence.
According to a recently-released report from Statistic Canada, the province has the lowest unemployment rate in the country at 5.2 per cent. During the past 12 months, the federal agency reported 19,200 jobs were created locally, including 15,100 full-time jobs and 14,500 private-sector jobs.
The strong economy has contributed to a prediction of a significant rise in Manitoba’s average home sale price by 7.7 per cent in 2010 to $216,800 and by 2.8 per cent to $22,800. Only Newfoundland will record a higher average sale price increase in 2010, rising by 13 per cent, according to the CREA report.
Nationally, sales activity in the third quarter of 2010 began on a weak footing, but gained traction as the quarter progressed. Improving momentum for home sales activity suggests the resale housing market is stabilizing, but weaker than expected third quarter activity has reduced CREA’s annual forecast.
National sales activity is now expected to reach 442,200 units in 2010, representing an annual decline of 4.9 per cent. While monthly levels for sales activity are stabilizing, year-over-year comparisons are likely to remain stretched well into 2011 due to the record-level activity reported in late 2009 and early 2010.
Lackluster economic and job growth, muted consumer confidence, and the resumption of interest rate increases across the nation are expected in 2011. Against this economic backdrop, national home sales activity is forecast to decline by nine per cent to 402,500 units.
“Interest rates are expected to resume their return to more normal levels next year, but will still be at levels that are friendly to the housing market,” said Georges Pahud, CREA’s president. “For the 10th year in a row, more than 400,000 homes are expected to change hands over the MLS® systems of Canadian real estate boards and associations next year.”
Levels for sales activity and new listings have swung widely until recent months. Despite their volatility, movements in sales activity and new listings have remained in synch and have kept the resale housing market balanced since early 2010. The overall supply of homes for sale has also been trending lower in recent months. The resale housing market has remained balanced on a national basis and in most provinces, resulting in stable average price trends.
The national average home price is forecast to rise 3.1 per cent in 2010 to $330,200. The small revision to CREA’s average price forecast reflects changes to the forecast for provincial sales activity and corresponding provincial contributions to the national average price calculation. The balance between supply and demand is forecast to remain stable, resulting in stable price trends.
Modest average price gains are forecast in 2011 in all provinces except British Columbia, Alberta, and Ontario. Lower sales activity in British Columbia and Ontario are expected to result in a 1.3 per cent decline in the national average price to $326,000.
“Housing demand and supply is stabilizing,” said Gregory Klump, CREA’s chief economist. “That’s good news for home buyers, who will feel less hurried to make an offer than they did when transitory factors ignited housing demand in early 2010. It’s also good news for home sellers, who will feel more confident about price stability now that the housing market has become balanced.
“Interest rates are widely expected to remain low for some time due to recent downward revisions by the Bank of Canada to its outlooks for economic growth and inflation,” Klump added. “Consumer sentiment will likely remain under pressure until economic prospects improve meaningfully.
“In the meantime, many households will be focused on paying down their debts before the Bank of Canada resumes hiking interest rates next year. Economic uncertainty is likely to keep potential home buyers in a cautious mood, so the continuation of low and stable interest rates is unlikely to cause housing demand or prices to swell.”