The flooding outside of Winnipeg will likely have an effect on the Canadian Real Estate Association’s recently-released revised MLS® housing forecast, according to WinnipegREALTORS®.
Peter Squire, the market analyst for WinnipegREALTORS®, said Winnipeg may have been spared the worst of recent flooding, but the housing markets in rural Manitoba and in Portage la Prairie and Brandon are feeling the effects of historically high levels of flooding along the Assiniboine River.
Flooding along the Red and other rivers has also effected communities south of Winnipeg, while overland flooding remains a concern in the Interlake Region.
“Given the concerns with flooding, the portion of CREA’s revised Canadian housing forecast pertaining to resale housing in Manitoba may have to be looked at again,” he added.
Squire said CREA may be overshooting its 2011 prediction for a 7.9 per cent increase in home sales based on what is currently happening in the province.
“Of course, when CREA released its new forecast, it couldn’t have predicted the extent of the flooding in Manitoba,” he added.
But, Squire said the CREA forecast for a six per cent increase in the average home sale price to $249,900 won’t be too far off the mark.
“Listings will actually be tighter due to homeowners negatively impacted by flooding being less willing to put their homes on the market,” Squire said, “but demand will remain high because of strong immigration to the province.”
“WinnipegREALTORS® had a great start to the year with the first quarter recording more than a half billion dollars in sales, which has never happened before in its 108-year history,” he said.
“April sales fell off in comparison to last year due to a drop in listings, which may be attributed to concerns and issues associated with flooding,” Squire added, “It’s a pattern observed in 2009 due to flooding concerns and again in 1997 during the ‘Flood of the Century.’”
In its revised forecast, CREA predicts residential sales in Manitoba by the end of 2011 will rise by 7.9 per cent to 14,200 units and by 2.1 per cent in 2012 to 14,500 home sales.
The forecast for Manitoba bucks a national trend for lower home sales in most provinces, according to CREA.
Nationally, sales activity is expected to reach 441,100 units, a decline of 1.3 per cent from 2010. This is an improvement from the 1.6 per cent decline CREA had earlier predicted.
“Home buyers expect mortgage interest rates to rise and are mindful of their current and future debt levels,” said CREA president Gary Morse. “They’re doing their homework to better understand how their mortgage payments and family budget might change down the road before they make an offer (on a home).
“That said,” he added, “even though mortgage rates have increased recently, they remain very attractive and are keeping financing within reach for many home buyers.”
CREA chief economist Gregory Klump said first-quarter increased home sale activity are attributed to the federal government’s changes to mortgage qualification regulation, which reduced the allowed amortization period on Canada Mortgage and Housing Corporation-insured mortgages from 35 to 30 years with loan-to-value ratios of more than 80 per cent.
Due to the changes, Klump said home buyers rushed to purchase homes instead of waiting until later in the year as would have normally been the case. The greater sales activity skewed average home prices upward across the nation.