Sunny Forecast for Canadian Home Sales
Filed in The Notebook, August 22, 2007.
Globe & Mail, August 20, 2007
Sales of existing homes are expected to reach 523,100 units this year, an 8.1-per-cent increase over last year, the Canadian Real Estate Association said in a new residential forecast issued Monday. That is up from a previous target of 514,450 units and 6.5 per cent growth.
CREA has already revised its sales growth target several times this year. In February, it forecast sales activity would ease 1.6 per cent from 2006 amid higher prices and mortgage costs.
Gregory Klump, chief economist with the Ottawa-based group, said Monday that record sales activity in the first and second quarters of this year prompted the sunnier sales outlook. “Home buying sentiment remains upbeat in all regions and mortgage financing is still within reach for many potential home buyers.”
Despite trouble south of the border, the Canadian Real Estate Association is boosting its outlook for year-over-year sales growth in 2007 to 8.1 per cent from 6.5 per cent.
Unit sales are forecast to be strongest in Saskatchewan, surging 33.7 per cent from last year, and weakest in British Columbia, rising 4.6 per cent.
Not only are sales expected to set records in most provinces this year, prices are forecast to reach new highs in every province both this year and in 2008, although the pace of price increases will ease next year, the CREA said.
Nationally, the average price is seen rising 10.4 per cent to $305,900 this year and adding another 5.5 per cent to $322,700 in 2008. Price gains will be largest in Alberta, surging 24.6 per cent to $355,600 in 2007, and 6.6 per cent to $379,000 next year.
Canada’s housing activity is still expected to cool in 2008, with national unit sales forecast to fall 2 per cent. Unit sales are forecast to fall in all of the provinces next year.
“The resale housing market will become more balanced as rising prices and higher mortgage interest rates gradually impact affordability,” Mr. Klump said. “Strong employment numbers will keep sales activity strong, even as prices and interest rates continue to rise.”
A vastly different scenario is unfolding in the United States, where the collapse of the subprime mortgage market has triggered a severe downturn in the housing market, leading to widespread fears about the overall health of the U.S. economy and triggering a global credit crunch which has rattled financial markets.
