National association revises housing forecast for 2011 and 2012

Housing markets have a tendency to change. What happens one month isn’t necessary the case the folllowing month.
In Canada, how markets in Toronto and Vancouver perform has a tendency to skew the overall results for the entire nation.
Such has been the case this summer, which has resulted in the Canadian Real Estate Association (CREA) revising its housing market forecast for this year and next.
“The national average home price is forecast to rise 7.2 per cent in 2011 to $363,500. This is an increase from the previous forecast, reflecting continued strong price growth in Vancouver in the second quarter of 2011 and acceleration in prices elsewhere, particularly Toronto,” according to CREA. “These two markets exert an outsized influence on the national average due to their relatively high level of activity and average price.”
Overall, national sales activity and prices remained stronger than expected in the second quarter. Sales momentum was also better than expected heading into the third quarter. As a result, the 2011 national forecasts for sales activity and average price have been raised slightly.
In Manitoba, the number of home sales is expected to rise 2.9 per cent to 13,550 units by the end of the year, while the forecast for 2012 is an increase by a modest 1.8 per cent to 13,800 units sold.
In terms of average price, the CREA revision is calling for a 5.7 per cent increase in Manitoba this year to $234,700, while the average sale price next year is expected to rise by 5.3 per cent to $247,000.
Both average price and number of sales has been revised slightly downward by CREA for Manitoba from its original forecast at the start of the year.
There has been some easing in the Winnipeg market price due to increased availability of new listings, “but housing inventory still remains tight overall in a number of neighbourhoods,” commented WinnipegREALTORS® president Ralph Fyfe. “So depending on the price and neighbourhood, multiple offers may still come into play.”
“The continued stability in national sales activity shows that home buyers remain confident about the soundness of investing in a home,” said Gary Morse, CREA’s president. “Mortgage interest rates are low and keeping home affordability within reach, making it an excellent time for buyers to take advantage of very favourable financing. 
“Prices and affordability evolve differently among local markets, so buyers and sellers should consult their local REALTOR® to better understand how the outlook for housing supply, demand, and prices is shaping up in their housing market,” he added.
National sales activity is forecast to reach 450,800 units in 2011, up less than one per cent from levels in 2010. CREA had previously forecast a decline of about one per cent for activity in 2011. Erosion in affordability due to higher prices has prompted the small downward revision to the outlook for sales in 2012.
National sales activity in 2012 is forecast to ease seven-tenths of a percentage point to 447,700 units, which is roughly on par with its 10-year average.
“While there had been some talk of potential interest rate increases, that hasn’t happened,” said Morse. “In fact, rates have actually come down, and are now expected to remain low for the remainder of this year and into 2012. It’s a great opportunity to purchase a property with financing at very favourable rates.”