By Kim Covert, Postmedia News

Stable interest rates and rising prices in Vancouver have proved to be positive factors for Canada’s housing industry, according to the Canadian Real Estate Association, which had forecast declining sales but now expects them to increase overall in 2011.

Sales and housing prices actually dropped in July from the previous month – sales edged down by 0.1%, and the national average price of a home during the month was $361,181 – the lowest it’s been since January, CREA said, though it’s 9.3% higher than in July 2010. While year-to-date sales are 1.6% below last year’s figures, transactions are up 12.3% from the same month last year.

“This increase reflects weakened activity in July 2010, when levels for the month reached their lowest point since 2002,” CREA said.

The Ottawa-based industry group represents about 100 boards across the country.

While it had been forecasting a slowdown, it now says there will be 450,800 sales in 2011 – a 1% increase from a year ago. It says rising prices in Vancouver have helped push its forecast for the average sale price in 2011 to $363,500, a 7.2-per-cent increase from a year ago.

“While there had been some talk of potential interest rate increases, that hasn’t happened,” said CREA president Gary Morse. “In fact, rates have actually come down, and are now expected to remain low for the remainder of this year and into 2012.”

CREA expects sales to fall less than one% in 2012, while prices will flatten.

“Canadian housing remains surprisingly robust, thanks to still-low interest rates and solid job growth,” Douglas Porter, deputy chief economist at BMO Capital Markets wrote in a note responding to CREA’s data.

“While the recent financial market turmoil may temporarily weigh on activity, sales should ultimately find support from continued exceptionally low borrowing costs.”

Sonya Gulati, an economist with TD Economics, says while low interest rates will continue to support sales, the bank is still forecasting a slowdown in housing market activity.

“With uncertainty permeating markets regarding the state of the global economic recovery, we continue to expect that real estate activity with temper over the next 18 to 24 months,” Gulati wrote in a note. Prices in Toronto rose 0.8% in July over June’s figures – though sales declined 0.8% – and while prices and sales both declined in Vancouver, by 2.5% and 3.2%, respectively, “going forward, a correction is ripe for these cities in order to bring both markets in line with balanced territory,” Gulati said, though pricing declines will be gradual, with the biggest cuts coming in late 2012 and early 2013.

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Contact the Jeffrey Team for more information – 416-388-1960

Laurin & Natalie Jeffrey are Toronto Realtors with Century 21 Regal Realty.
They did not write these articles, they just reproduce them here for people
who are interested in Toronto real estate. They do not work for any builders.
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