Canada's Condominium Magazine

Housing market stable, less volatile: CREA

As expected, the Canadian Real Estate Association says that housing sales in 2013 will be lower than they were in 2012 but sees no reason for undue concern. Sales activity will be slightly lower, CREA now projects, than previously thought, but the market has remained balanced and prices stable. Low interest rates will continue to support sales activity and  prices this year and next.

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Soft landing. CREA forecasts housing sales slightly below last year’s but sees a more stable, less volatile market into 2014, when sales will rebound.

The drop-off in sales activity following last summer’s mortgage changes has been greater than anticipated in some markets, but sales are expected to improve later this year, as economic growth resumes. CREA is now calling for sales of 441,500 units in 2013, a decline of 2.9 per cent from 2012. The housing agency had previously called for a drop of 2 per cent. Alberta and Manitoba will be the exceptions, CREA says, with modest growth in 2013.

Year-over-year comparisons will continue to create an impression that things are worse than they are, as strong sales in the first half of 2012 cast a “long shadow” over this year’s sales numbers, according to CREA analyst Gregory Klump. In February, for example, sales were down 15.8 per cent compared to February 2012. This will continue until the summer months, when comparisons to last year will begin to show less precipitous declines and a return to normalcy. The monthly trend since then shows “reasonably stable” demand and prices, Klump said.

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With those new mortgage rules expected to remain in place, the housing market will likely show less volatility going forward than in recent years.

Looking ahead to 2014, CREA forecasts that national activity will rebound by 4.5 per cent to 461,200 units. A period of “slow but steady improvement” will still leave national sales slightly below the ten-year-average. We should not expect to see activity at the levels recorded in the first half of 2012 at any time soon.

The national average home price is projected to edge down by 0.2 per cent to $362,600 in 2013. That national average price was $368,895 in February.

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