Canadian Real Estate Forecast for 2008
December 19th, 2007 Categories: Latest Real Estate Market News & Stats, Mortgages, Economics, Finance, Real Estate News
Oakville Real Estate, Burlington Real Estate, Halton Real Estate, Canadian Real Estate
I am reprinting the Royal LePage Market Survey Forecast for 2008, released this week by Phil Soper, President of Royal LePage.
It is a good summary of the main economic factors that are influencing the Canadian residential housing market. Note the chart showing price increase broken down by city, from 2006 to 2007, and the forecast for 2008.
In Oakville, Burlington, and the Greater Toronto Area, prices rose on average 6.6% from 2006 to 2007. This was less than the Canadian average which was 10.7%. For Canada and GTA Royal LePage is predicting 3.5% increase in house prices for 2008. I read recently that ReMax is predicting a 5% increase for the Greater Toronto Area. Royal LePage is traditionally quite conservative in its predictions.
Following is the report:
Solid economic fundamentals should allow Canada’s residential real estate market to chart its own course and maintain its buoyancy throughout 2008
TORONTO, December 17, 2007 – After experiencing an exceptional year characterized by strong average house price appreciation and record breaking unit sales, the momentum from 2007 is anticipated to carry over and position Canada’s real estate market for steady, yet moderate growth in 2008, according to the Royal LePage 2008 Market Survey Forecast released today.
Nationally, average house prices are forecast to rise by 3.5 per cent to $317,288 in 2008, while transactions are projected to fall slightly from this year’s record high unit sales to 500,927 (–4.0 %) unit sales in 2008. Despite the year-over-year reduction in unit sales, the number of homes trading hands in 2008 is expected to remain higher than in all years prior to 2007.
“Canada’s housing market in 2008 should continue to thrive on a balanced diet of strong economic fundamentals, including high levels of employment, resilient consumer confidence, modest levels of inflation and the relatively low cost of borrowing money,” said Phil Soper, president and chief executive of Royal LePage Real Estate Services. “Canada is currently enjoying one of the longest housing market expansions in history; however, as we move into 2008 it is anticipated that slowly eroding affordability will cause demand to ease, allowing the market to move toward balanced conditions, with lower levels of price appreciation, and fewer homes trading hands.”
With the most affordable major market homes in Canada, residents of Regina and Winnipeg are forecast to drive the greatest increases in house prices in 2008, as job opportunities and in-migration continue to soar in each city. While Calgary and Edmonton will continue to boast healthy economies and high levels of home sale activity, the excessively fast run-up of home values in 2006 and the first half of 2007 priced people out of the market, causing inventory levels to rise late in the year. Alberta home price increases will be much more moderate in 2008 as the regional market continues to adjust to the new house value reality.
With the country’s highest home prices, Vancouver’s steadfast market will continue to expand on the back of a strong provincial economy. As the city readies itself for the 2010 Olympic Games, there will be an abundance of new jobs created.
Ontario and Quebec markets are anticipated to maintain their relative strength and vibrancy throughout next year, weathering stormy financial markets and adjusting well to the high value of the Canadian dollar. The services based industries that have become the backbone of the Toronto and Montreal economies have tolerated the rise of Canada’s dollar to parity very well, despite increasingly price competitive offering from overseas markets.
In Atlantic Canada, a slight depletion of inventory coupled with high immigration levels will see the housing market growing at a strong and steady pace – Halifax is expected to have higher than national average growth in 2008.
The frenzied pace of price inflation that has characterized the real estate market over the past two years in the resource rich west were unsustainable and should ease substantially in 2008. In Central Canada, price increases peaked in late 2005, and have been moderating since.
From coast-to-coast, the homebuyer demographic is anticipated to swell with first-time purchasers, as many flock to take advantage of recently reduced lending rates, longer amortization periods and the resultant manageable mortgage payments.
Added Soper: “The year ahead presents opportunities for those people who have shied away from the frenetic real estate market of the past few years, with its bidding wars and unconditional offers; while prices should continue to rise, they are expected to do so at a more reasonable pace. Canada’s economy is strong, and the desire for home ownership remains a vibrant and attainable goal – real estate remains a solid long term investment.”
2008 Market Survey Forecast
|
Market |
08/07% |
2008 Forecast |
2007 Projected |
2007 / 2006 |
2006 |
2005 |
|
Halifax |
6.9% |
$233,000 |
$218,000 |
7.3% |
$203,178 |
$189,196 |
|
Montreal |
3.5% |
$238,000 |
$230,000 |
6.6% |
$215,659 |
$203,720 |
|
Ottawa |
4.2% |
$285,000 |
$273,500 |
6.2% |
$257,481 |
$248,358 |
|
Toronto |
3.5% |
$388,500 |
$375,500 |
6.6% |
$352,388 |
$336,176 |
|
Winnipeg |
11.4% |
$190,000 |
$170,500 |
12.2% |
$151,983 |
$134,028 |
|
Regina |
15.4% |
$188,600 |
$163,500 |
24.0% |
$131,851 |
$123,600 |
|
Calgary |
4.0% |
$429,000 |
$412,500 |
19.0% |
$346,675 |
$250,832 |
|
Edmonton |
1.0% |
$341,000 |
$337,500 |
34.5% |
$250,915 |
$193,934 |
|
Vancouver |
4.0% |
$587,500 |
$565,000 |
10.8% |
$509,876 |
$425,745 |
|
CANADA |
3.5% |
$317,228 |
$306,500 |
10.7% |
$276,974 |
$249,201 |
Highlight of 2008 Trends
Strength of the Canadian Dollar
The position of the Canadian dollar hovering at parity will continue to bolster the country’s high consumer confidence, and is anticipated to translate into continued growth in consumer spending. The negative impact of the high dollar on the country’s manufacturing sector for export trade will be mostly felt in Southern Ontario and Quebec; however, both regions are demonstrating considerable resiliency, with a concerted effort by both governments and industry underway to improve productivity and improve international competitiveness.
U.S. Economy
In sharp contrast to the weakening U.S. economy and deteriorating housing market, Canada’s economy and housing market continues to demonstrate staying power. Canadian mortgage products are markedly different from those offered in the U.S., and the sub-prime market makes up a significantly smaller portion of the overall Canadian mortgage market. It is unlikely that the residential real estate industry in Canada will have to endure the kind of sharp correction underway south of the border.
Employment
Employment rates across the country are expected to continue at the current very high levels, driven by the robust energy and general natural resource sectors specifically, and a very healthy services economy in general. In the year ahead, job market growth is anticipated to continue, especially in Regina, Winnipeg and Halifax.
The move by the Bank of Canada to reduce its overnight target-lending rate by a quarter of a percent in December 2007 will bode well for first-time buyers planning to enter the market in 2008. The relatively low current interest rates, and the possibility that rates could fall even lower in response to moderating inflation and lower rates in the U.S., will continue to attract new buyers to the housing market.
Call Hilary and Her Home-Sellling Team for assistance in buying or selling in Oakville, Burlington, Mississauga, Milton or Georgetown.
This entry was posted on Wednesday, December 19th, 2007 at 12:46 am and is filed under Latest Real Estate Market News & Stats, Mortgages, Economics, Finance, Real Estate News. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.
great overview of your market Hilary. The US market is much more spotty. Some good places and some bad places. But we will soon see what happens as people come out of their holiday bliss.
All things considered in many other markets, I have to say this is incredible news! In Oakville, Burlington, and the Greater Toronto Area, prices rose on average 6.6% from 2006 to 2007.
Hi Mary,
Thanks for stopping by. Hoping the U.S. market maintains resiliency in 2008 and that consumer confidence and energy prices remain strong.
Hilary
Be Ready! 2008 is going to be realy BAD
Hi Mike, thanks for taking the time to comment. I guess none of us has a crystal ball, but I hope Canada will remain stable in the real estate market, and I feel hopeful given the economic fundamentals we currently have.
As a West Toronto Realtor I cannot agree with Mike. I think we dont have to worry because of the situation in U.S., as this was caused by collapse of the sub-prime mortgage market and in Canada is the situation very different. You might argue, that there is a strong connection between our economics, but I think in this case the U.S. real estate crisis will have no impact on Canadas real estate market.