Tag Archives: price survey
Strengthening Economic Recovery and Low Interest Rates Point to a Stronger Than Anticipated 2011 for Housing Market
Prospect of rising mortgage rates may prompt heightened buyer activity early in the year, according to Royal LePage forecast.
The average price of a home in Canada increased between 3.9 and 4.6% in the fourth quarter of 2010, compared to the previous year, as markets shrugged off a lackluster third quarter and returned to a post-recession growth profile.
Home values are forecast to continue a moderate and steady climb in many of the country’s key housing markets through 2011 with sales activity skewed to the first half of the year, according to the Royal LePage House Price Survey and Market Survey Forecast released today.
The low cost of borrowing stimulated the housing market in 2010, and this trend is predicted to continue in the first half of 2011. The widely held consumer belief that rates will rise in the latter part of 2011 may prompt an increase in buying activity early in the year.
“Trends in the housing market continue to be driven by the lingering after-effects of the recession,” said Phil Soper, president and chief executive of Royal LePage Real Estate Services. “Canadians realize that interest rates are unsustainably low and that homes will become effectively more expensive when mortgage rates return to normal levels. We will likely see more price appreciation early in 2011 as some buyers complete transactions in advance of anticipated higher borrowing costs.”
Soper added, “2011 is expected to unfold much like 2010, when close to 60% of sales volume occurred in the first half of the year in anticipation of interest rate increases that never materialized. However, housing market activity in the first half of 2011 will be modestly closer to the norm, as last year’s phenomenon was exacerbated by mid-year tightening of mortgage accessibility and the introduction of HST in Ontario and British Columbia.”
Regionally, the strongest price appreciation of the cities studied is expected in mid-sized urban centers where affordability is better than the national average. For example, in Winnipeg, St. John’s and Fredericton, two-storey homes below $300,000 are still widely available. Demand in these cities is expected to be strong, putting upward pressure on home values.
Cities in Alberta are expected to be among Canada’s strongest performing markets in 2011. Woes in the historically volatile region’s housing market stretch approximately five years, when the Alberta housing market suffered a sharp correction following several years of double-digit price increases.
The province’s energy-driven economy staged a comeback in 2010, recovering from the recession-led plunge in oil and gas prices. Major employers are expected to steadily increase hiring in 2011 which should attract new residents to the province and put upward pressure on the limited supply of housing.
Royal LePage forecasts the average price of a home in Calgary will increase 5.4% through 2011 while Edmonton home prices will increase 3.3%. Home sale transactions are predicted to rise 6.7% in Calgary and 9.1% in Edmonton over the same period.
Across Canada, the average price of a home is forecast to rise 3% over the coming year to $348,600 while the number of transactions is expected to drop 2%.
During the fourth quarter of 2010, average home prices either increased or stabilized year-over-year, with Winnipeg, Ottawa, Montreal and St. John’s seeing the biggest gains. Nationally, the average price of detached bungalows rose to $324,531 (up 4.6%), the price of standard two-storey homes rose to $360,329 (up 4.4%), and the price of standard condominiums rose to $226,746 (up 3.9%), compared to the fourth quarter of 2009.
Mr. Soper continued, “Like many Canadians, we anticipated an end to the ultra-low interest rate era before year-end 2010. Paradoxically, global economic weakness, particularly in the United States, allowed policy makers and financial institutions to keep borrowing costs low, resulting in a stronger Canadian housing market and a better than forecast fourth quarter.”
REGIONAL MARKET SUMMARIES
House prices surveyed in Toronto increased modestly year-over-year. Standard two-storey homes witnessed the largest increases at 5.6%. Market activity slowed in the second half of the year as buyers rushed to the market in the first half of the year in anticipation of interest rate hikes and HST. For 2011, price increases are expected to be very modest at approximately 1%.
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Laurin & Natalie Jeffrey are Toronto Realtors with Century 21 Regal Realty.
They did not write these articles, they just reproduce them here for people
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A Royal LePage House Price Survey released earlier this week is showing modest year-over-year price appreciation across all housing types surveyed in Toronto.
On average, condominiums witnessed the largest year-over-year price increase climbing 5.9% to $329,138. Detached bungalows rose 4.8% to $473,867 while prices for standard two-storey homes increased by 4.6% to $577,119.
“Prices have softened since the last quarter, but year-over-year gains show that Toronto is a very resilient real estate market. Last year Toronto was experiencing an unusually busy third quarter in regards to unit sales due to pent-up demand as buyers had waited through the spring, looking for signs that the economic slowdown was ending,” says Gino Romanese, senior vice president, Royal LePage Real Estate Services Ltd. “We are now seeing a return to more normal seasonal trends in the real estate cycle. The increases are modest, but healthy.”
According to Romanese, properties that are appropriately priced are selling at a quick pace. Although homes are sitting on the market slightly longer, the average turnover time is still well within the parameters of a healthy market.
Listings have increased by 25% compared to this time last year bringing more balance to the market, says Romanese. “In fact, the year is unfolding much as we predicted as the active first half of 2010 gives way to slower markets in the later part of the year.”
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Despite a modest decline in sales forecast for the second half of 2010, Toronto’s house prices are expected to remain steady, according to the Royal LePage House Price Survey and Market Survey Forecast.
Standard two-storey homes and detached bungalows saw increases from both the previous quarter as well as year-over-year comparisons to 2009.
“It’s important to understand the real estate trend over the past year to keep these increases in context,” said Gino Romanese, senior vice president, Royal LePage Real Estate Services Ltd. “In 2009, typical seasonal growth in the second quarter was delayed until the third quarter. Fueled by the threat of rising interest rates and to a lesser extent some pressure to buy prior to the introduction of HST, growth continued right through the second half of 2009 into the first half of 2010.”
In the second quarter of 2010, standard two-storey homes increased 10.5% year-over-year to $589,857 from $533,748 in 2009. Detached bungalows increased 11.4% to $481,933 compared to $432,433 during the same period last year. Standard condominiums were up 7.7%, with the average price in the second quarter rising to $326,913 from $303,650 in 2009.
“By the end of 2010, we expect to see about 7% growth in average house prices in comparison to 2009. However, this growth has already been accounted for in the first half of 2010. Average prices are expected to decline moderately for the rest of the year.”
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