Winnipeg housing market forecast to lead the nation in 2011

“Hot”is the word being used to describe how Winnipeg’s housing market will perform in 2011, according to recently-released reports from real estate analysts. 
It’s been years since such a description has been used for the local market, which  traditionally has been noted for its slow, but steady, rate of growth. 
The Royal LePage House Price Survey and Market Survey Forecast released last week said Winnipeg’s market will lead the country, predicting a seven per cent increase in the average selling price in 2011.
The prediction follows a record-breaking December, when the average selling price hit $252,414, the highest monthly average in the city’s history, according to WinnipegREALTORS®. The previous record was June 2010 at $250,440.
But the Winnipeg average price for 2011 will still be well below those for Vancouver and Toronto, as well as the national average, which is forecast to hit $348,600.
“The numbers speak for themselves,” said out-going WinnipegREALTORS® president Claude Davis, “as homes were clearly part of consumers’ year-end big-ticket purchases.”
Davis said home purchases held their momentum in 2010, despite affordability becoming an issue in the lower end of the market, especially in the under $250,000 range.
“As a result of the record December, WinnipegREALTORS® was able to finish the year edging out 2009 in annual MLS® sales (12,236 properties sold in 2010 vs. 12,182 in 2009) and eclipsing $2.7 billion in dollar volume, which set another record,” added Davis.
“The housing market in Winnipeg continues to make gains as the city prospers and buyers access historically low interest rates,” said John Froese, a past-president of WinnipegREALTORS® and a broker for Royal LePage Prime Real Estate.
In a Globe and Mail article, Phil Soper, president and chief executive of Royal LePage Real Estate Services, described Winnipeg as “the poster child for a well-diversified economy, which is driving the local housing market.
He said the city was not a “one-trick pony,” such as Calgary and St. John’s, which rely primarily upon the oil industry to fuel their economies.
Due to its diversified economy, Manitoba led the nation with the lowest unemployment rate in 2010, according to Statistics Canada. Manitoba’s jobless rate was 5.2 per cent last year, while the national rate was 7.6 per cent.
According to the Royal Lepage survey, detached bungalows, standard two-storey homes and standard condominiums in Winnipeg witnessed strong year-over-year price gains in the last quarter of 2010.
Although Froese reported there was signs of a cooling market, sellers are still receiving multiple offers on some listings resulting in higher prices being realized.
“In 2010,” said Davis, “more affordable property types, such as condominium townhouses and apartments were sought after as there was an increase in condo sales activity and fewer residential-detached  sales.”
In fact, condo sales through the MLS® system increased by 50 per cent in 2010 from five years ago to 1,459 units, with  many of them purchased by first-time buyers who have been priced out of the residential-detached market.
WinnipegREALTORS® reported the average price of condos increased at a slower pace than residential-detached homes, rising by eight per cent to $200,000, while residential-detached homes rose last year by 11 per cent to $241,743.
The most active price range for condos in 2010 was between $150,000 and $199,999, which accounted for 33 per cent of all sales. The $100,000 to $149,999 price range accounted for 22 per cent of all condo sales last year.
WinnipegREALTORS® reported there was actually a 13 per cent drop in residential-detached activity from 2009 to 2010 for houses selling for under $250,000, and a sharp drop in the percentage of houses that sold for under $200,000, which accounted for 50 per cent of all sales in 2009, but just 39 per cent last year. 
The only real brake on the momentum for the local and national real estate markets would be a significant rise in interest rates by the Bank of Canada with mortgage lenders following suit. 
“Canadians realize that interest rates are unsustainably low and that homes will  become effectively more expensive when mortgage rates return to normal levels,” said Soper. “We will likely see more price appreciation early in 2011 as some buyers complete transactions in advance of anticipated higher borrowing costs.”
WinnipegREALTORS® will be releasing its annual forecast for the local market later in January.