Steve Baldwin

REALTOR®

Working with you EVERY Step of the Way! 

Cell: 604.317.7810 |

Categories
RSS

Real estate buyers to focus on low interest, ignore market turmoil: economists

Mary Gazze, The Canadian Press, On Tuesday August 16, 2011, 5:44 pm EDT

By Mary Gazze, The Canadian Press

 
TORONTO - Canada's real estate market is now expected to grow this year rather than decline, as buyers take advantage of continued low interest rates that are intended to offset recent economic turmoil, economists said Tuesday.

The comments came after the Canadian Real Estate Association revised its 2011 national forecast for home resales, citing stronger than expected sales and higher prices in the second quarter.

An earlier CREA forecast that called for a one per cent dip in sales this year from 2011. But the association said Tuesday sales should grow this year — albeit less than one per cent above 2010.

CIBC deputy chief economist Benjamin Tal said recent stock market uncertainty due to the European debt crisis and the United States credit downgrade is actually helping boost sales in Canada's real-estate market.

Bad economic news abroad tends to keep Canadian interest rates low, he said.

Since the European and American debt issues came to a head in recent weeks, economists have been predicting the Bank of Canada will leave its key rate untouched at one per cent until at least next year.

That's a change of opinion since last winter, when economists widely expected Canada's central bank would begin hiking its rates sometime in 2011 as the economy strengthened — putting upward pressure on the price of borrowing.

With the global economy now looking weaker than expected, and the U.S. Federal Reserve promising last week that it will keep its key short-term rate at an all-time low for another two years, the Bank of Canada is now expected to put off raising its short-term lending rates.

"The uncertainty globally is really benefiting mortgage holders because it's really postponing the increase in interest rates in Canada," Tal said, explaining that when the stock market turns volatile, real estate becomes an attractive investment because of its security.

"Many people can use this opportunity to look into extremely low mortgage rates, so again the misery of other people elsewhere is helping Canadian home buyers."

Sonya Gulati, an economist at TD Economics said the bank is anticipating that sales will be a bit more subdued in the next two months, but buyers, especially first timers and immigrants won't likely be deterred in the longer term as interest rates stay low.

"People may be waiting to see whether or not they want to purchase homes, see if things turn for the better. It really has been a roller coaster for the last little while so we anticipate a little bit more subdued activity in August and September," she said.

"(The stock market) will be a factor in their decision making process, but at the end of the day one of the key things for people is the interest rate and mortgage rates are still very low and they may actually want to enter the market for that reason despite the uncertainty out there."

Meanwhile, CREA's chief economist Gregory Klump said it is too early to judge whether buyers are moving towards or shying away from real estate due to volatile stock markets. But he said historically, real estate does well during times of uncertainty.

"During periods of financial market upheaval the Canadian real estate market has remained far more stable," he said, adding that even though some investors put off buying high end homes during the financial crisis of 2008 and 2009, those buyers returned to real estate soon after recovery began.

"The last time we had financial market instability, the housing market wasn't immune, but it was certainly less volatile and certainly Canadians recognize that and feel comfortable investing in their home."

Overall, CREA said Tuesday that 450,800 housing units are expected to be sold across Canada under its Multiple Listing Service in 2011, and the average selling price will be slightly higher. In May, it had estimated 441,100 units would be sold through the MLS.

About 90 per cent of home resales in Canada are listed on MLS.

Both Gulati and Tal said they expect the market to cool off in 2012 once interest rates rise again. Gulati said home prices could fall as much as 10 per cent, while Tal said they could fall between five and 10. Gulati described this as a "correction" while Tal said it was an "adjustment," but "nothing to write home about."

Meanwhile, the association said it was revising its sales expectations for 2012 downward to 447,000 units, roughly on par with the 10-year average.

On a regional basis, British Columbia's 2011 sales forecast has been revised slightly higher as home sales in the province appear to have bottomed out soon than predicted, while stronger than expected activity in Ontario is expected to offset slightly softer than anticipated demand in Quebec, Manitoba and Newfoundland and Labrador.

CREA said it now expects the national average home price will rise 7.2 per cent in 2011, to $363,500. The previous estimate in May was $352,500.

The upward revision reflects increases in the second quarter in Vancouver and acceleration in other parts of the country, particularly Toronto. Vancouver has experienced a surge in multimillion-dollar home sales this year.

CREA said the two markets have a high number of sales and average price, so they play a big part in influencing the national average.

Additional new listings should also result in a more balanced resale housing market in most provinces, with the national average price forecast to stabilize in 2012.

 

Read

Property Photo: 1117 HANSARD CREST in Coquitlam
New property listed at 1117 HANSARD CREST in Coquitlam.
Well maintained family home in a family oriented neighbourhood. This 2 level home is over 1800 sq. ft. with 3 bedrooms on the main and an optional 4th bedroom down. Family room down with 3rd full bath.Enclosed double garage, private rear yard. This home is close to everything, Coquitlam Centre, Park and Ride, recreation and schools. Quiet Crescent, no through traffic.
Read
Categories:   Ambleside, West Vancouver Real Estate | Blueridge NV, North Vancouver Real Estate | Boulevard, North Vancouver Real Estate | Braemar, North Vancouver Real Estate | British Properties, West Vancouver Real Estate | Calverhall, North Vancouver Real Estate | Canterbury WV, West Vancouver Real Estate | Canyon Heights NV, North Vancouver Real Estate | Capilano NV, North Vancouver Real Estate | Cedardale, West Vancouver Real Estate | Central Lonsdale, North Vancouver Real Estate | Central Pt Coquitlam, Port Coquitlam Real Estate | Chartwell, West Vancouver Real Estate | Citadel PQ, Port Coquitlam Real Estate | Coquitlam West, Coquitlam | Coquitlam West, Coquitlam Real Estate | Cypress Park Estates, West Vancouver Real Estate | Deep Cove, North Vancouver Real Estate | Delbrook, North Vancouver Real Estate | Dollarton, North Vancouver Real Estate | Downtown VW, Vancouver West Real Estate | Dunbar, Vancouver West Real Estate | Eagle Ridge CQ, Coquitlam Real Estate | East Burnaby, Burnaby East Real Estate | Edgemont, North Vancouver Real Estate | Fairview VW, Vancouver West Real Estate | False Creek, Vancouver West Real Estate | Forest Glen BS, Burnaby South | Forest Glen BS, Burnaby South Real Estate | Forest Hills BN, Burnaby North Real Estate | Fraserview NW, New Westminster Real Estate | Gibsons Real Estate | Glenmore, West Vancouver Real Estate | Glenwood PQ, Port Coquitlam Real Estate | Grouse Woods, North Vancouver Real Estate | Hamilton RI, Richmond Real Estate | Hamilton, North Vancouver Real Estate | Harbour Place, Coquitlam Real Estate | Harbourside, North Vancouver Real Estate | Hastings, Vancouver East | Hastings, Vancouver East Real Estate | Horseshoe Bay WV, West Vancouver Real Estate | Indian River, North Vancouver Real Estate | Kerrisdale, Vancouver West Real Estate | Kitsilano, Vancouver West Real Estate | Langley City, Langley Real Estate | Lower Lonsdale, North Vancouver Real Estate | Lynn Valley, North Vancouver | Lynn Valley, North Vancouver Real Estate | Lynnmour, North Vancouver Real Estate | Maillardville, Coquitlam Real Estate | Marpole, Vancouver West | Marpole, Vancouver West Real Estate | Mosquito Creek, North Vancouver Real Estate | Norgate, North Vancouver Real Estate | North Vancouver Real Estate | Northlands, North Vancouver Real Estate | Northwest Maple Ridge, Maple Ridge Real Estate | Pemberton Heights, North Vancouver Real Estate | Pemberton NV, North Vancouver Real Estate | Point Grey, Vancouver West Real Estate | Port Moody Centre, Port Moody Real Estate | Princess Park, North Vancouver Real Estate | Queensbury, North Vancouver Real Estate | Quilchena, Vancouver West Real Estate | Ranch Park, Coquitlam Real Estate | Roche Point, North Vancouver Real Estate | S.W. Marine, Vancouver West Real Estate | Saunders, Richmond Real Estate | Seymour, North Vancouver Real Estate | Shaughnessy, Vancouver West Real Estate | Simon Fraser Univer., Burnaby North Real Estate | Sunnyside Park Surrey, South Surrey White Rock Real Estate | Upper Delbrook, North Vancouver Real Estate | Upper Lonsdale, North Vancouver Real Estate | Vancouver Real Estate | West Vancouver Real Estate | Westlynn, North Vancouver Real Estate | Windsor Park NV, North Vancouver Real Estate | Woodland Acres PQ, Port Coquitlam Real Estate | Yaletown, Vancouver West Real Estate
Reciprocity Logo The data relating to real estate on this website comes in part from the MLS® Reciprocity program of either the Greater Vancouver REALTORS® (GVR), the Fraser Valley Real Estate Board (FVREB) or the Chilliwack and District Real Estate Board (CADREB). Real estate listings held by participating real estate firms are marked with the MLS® logo and detailed information about the listing includes the name of the listing agent. This representation is based in whole or part on data generated by either the GVR, the FVREB or the CADREB which assumes no responsibility for its accuracy. The materials contained on this page may not be reproduced without the express written consent of either the GVR, the FVREB or the CADREB.