Fueled by record activity levels in the first half of the year, national MLS® home sales activity is expected to reach record levels again in 2007, according to a new residential forecast prepared by the Canadian Real Estate Association.
National home sales are forecast to rise by 8.1 per cent to 523,100 units in 2007, and will set new annual records in most provinces, including Manitoba.
According to the revised forecast, there are expected to be 13,870 homes sold in Manitoba by the end of 2007, 6.5 per cent more than a year earlier.
However, CREA is predicting a one per cent drop off in home sales in Manitoba for 2008 when compared to 2007.
“Resale housing activity was a juggernaut in the second quarter of 2007,” said CREA chief economist Gregory Klump. “Record-breaking sales activity in the first and second quarters forced the Canadian Real Estate Association to revise its forecast upward.
“Home buying sentiment remains upbeat in all regions and mortgage financing is still within reach for many potential home buyers,” Klump added. “The resale housing market will become more balanced as rising prices and higher mortgage interest rates gradually impact affordability.”
Activity is forecast to edge slightly lower in 2008, but will reach the second highest annual level on record in almost all provinces. Prices are forecast to set new records in every province this year and in 2008, but price increases will be smaller next year.
In Manitoba, CREA is forecasting that home prices will increase by 7.7 per cent.
Canada Mortgage and Housing Corporation has also revised its housing forecast for 2007 for Winnipeg, predicting that the city and surrounding municipalities will see a significant jump in the number of homes sold in 2007 than earlier forecast.
Jeff Powell, CMHC’s senior market analyst, said the Crown agency is predicting that 12,350 resale homes will be sold in Winnipeg during 2007. Last year, 11,594 resale homes were sold.
The average price of a resale home in Winnipeg and the surrounding municipalities will jump this year from 2006’s $154,600 to $172,000, he added.
Resale housing markets will continue to become more balanced in British Columbia and Alberta. Even so, markets will remain tightest in the Western provinces where annual price increases will be greatest. In other provinces, the resale housing market is forecast to be tighter in 2007 than it was last year, but it will become more balanced as housing prices increase and higher interest rates further impact affordability.
The MLS® residential average price is forecast to set new records over the next two years in all provinces. Price increases are forecast to become smaller as the resale housing market becomes more balanced in 2008.
Resale housing activity is projected to ease gradually in all provinces. New listings are forecast to rise further in all provinces except Alberta, where they are projected to retreat after spiking in the second quarter.
“Strong employment numbers will keep sales activity strong, even as prices and interest rates continue to rise,” said Klump.
In Manitoba, Statistics Canada indicated that unemployment rate for Winnipeg is so low (well under five per cent) that the job market is considered to be virtually at a full employment level.
“Consumers continue to have strong confidence in Canada’s resale housing market, and activity is on track to set a new annual record in 2007,” added Ann Bosley, president of the Canadian Real Estate Association.
Bosley said the Canadian market has shrugged off the sub-prime problems that have been affecting the housing market in the United States, and a number of investment funds.
According to CREA’s forecast, the resale housing market will become more balanced next year, but negotiations will continue favouring the seller in most provinces.