Home buyers can expect more choice and lower prices in the second half of 2010, while sellers can expect fewer offers for their homes, says one of Canada’s leading real estate brokers.
“Accurate pricing is going to be really key,” said Phil Soper, president and chief executive of Royal LePage Real Estate Services.
In its latest housing survey, Royal LePage said Wednesday the real estate market will start to slow in the second half of 2010 with the number of sales expected to fall compared with the hot activity earlier in the year.
“I would say if you’re a seller, the first thing you should expect is fewer multiple offers on your home,” Soper said.
Sellers who try to squeeze extra money out of their homes will likely have their homes “languish” on the market, unless they’re exceptional properties, he said.
“I believe we are through the highly volatile spiking of prices and activity levels, both up and down,” Soper said.
“We’ll see a much a more stable, but frankly less exciting in a good way, real estate market in the next 18 months,” he said.
The Canadian housing market has been a strong pillar under the economic recovery in Canada, mainly because of low mortgage rates and positive consumer confidence.
However, interest rate increases and stiffer bank lending rules have taken some of the steam out of the sector since the early part of the year.
Soper said a lot of buyers were frustrated by a tight supply and “over-exuberant competition,” particularly in the 2010 first quarter, but that’s easing with increased listings.
In the first six months of 2010, about half of real estate transactions involved first-time buyers, he said.
“It took a while for sellers to get comfortable that the recovery from the recession was real. We had an all-time record number of new homes come on the market in the first quarter of 2010. It started to impact prices in the second half (of 2010).”
Derek Burleton, vice-president and deputy chief economist at TD Bank Financial Group, said the decline in homes sales is expected to accelerate and selling prices will also go down.
“The market is frothy and it’s going to come back down to earth for the usual reasons,” he said.
In the survey, Royal LePage said some markets will see a decline in home prices and sales volumes toward the end of 2010 but that should be seen more as a reaction to the highs reached late last year rather than a major slowdown.
Prices for detached bungalows and two-storey houses were up about nine per cent in the April-June quarter, compared with the same time last year. Condominiums were up 7.3 per cent.
Royal LePage is forecasting that by the end of 2010, home prices will rise an average 6.8 per cent over last year, while the number of home sales will increase by just over one per cent from 2009.http://news.therecord.com/Business/article/741919
By year end, the broker expects home price appreciation to average 6.8 percent year over year to C$342,000 ($325,714), while home sales will increase by about 1 percent to 470,000 units compared to 465,251 units in 2009, Royal LePage said.
That compares with double-digit price appreciation and sales growth during the peak of the Canadian housing boom.
"This should not be interpreted as a severe correction but rather a natural reaction to the market having peaked quite early this year."
Overall, the broker expects the market to be supported by firm consumer confidence and a healthy job environment. Home prices in markets with strong local economies, such as Alberta, are expected to keep rising.
The average price of a detached bungalow in Canada climbed 9 percent to C$331,868 from a year earlier, while standard two-story homes rose 8.7 percent to C$367,835.
Condominiums rose 7.3 percent to C$230,014.
In the second quarter, St. John's, Newfoundland, reported the sharpest price increases, up an average 18.4 percent to 19.6 percent across three housing types, spurred by its robust oil sector.
Vancouver and Toronto, two of the country's biggest markets, continued to show firm gains, though both are also expected to experience downward pressure in prices for the balance of the year.
Detached bungalows led the strong gains in Vancouver, up 19.1 percent in the quarter to C$905,000, while other housing types rose between 16.6 percent to 17.6 percent.