Real Estate Market Going Strong for 2010

News just in from the Toronto Star:

Continuing strength in the housing market, including the highest ever sales recorded in October, have prompted the Canadian Real Estate Association to upgrade their forecasts for 2009 and 2010.

The national association now says activity will now reach 460,200 sales this year, up 6.2 per cent from 2008. The previous forecast in August had sales remaining flat. Before that CREA had forecast a 14.7 per cent decline.

"Pent up demand built in late 2008 and early 2009 as many buyers moved to the sidelines," said CREA president Dale Ripplinger in a report released today. "With the economic outlook having improved since then, the release of pent up demand will boost activity over the rest of the year and into 2010."

Home sales in 2010 are expected to increase by 7 per cent, from a earlier forecast of 5.2 per cent.

The new sales forecasts put activity on par with 2004 levels, but below levels experienced from 2005 to 2007, the peak years of the market.

"The fire in the Canadian housing market has clearly been rekindled as homebuyers take advantage of very favorable mortgage rates and the various fiscal incentives," said Millan Mulraine, an economics strategist with TD Securities. "We expect the recent strong gains in the housing market to remain largely intact, though we suspect the back to back double digit advance in sales seen earlier this year may not be repeated."

Residential sales on the Multiple Listing Service hit 42,288 units, the highest ever recorded for that month, and up 41.5 per cent compared to last October, according to the board.

The gulf between this October and last is particularly vast because October 2008 was the start of the financial crisis that hammered consumer confidence.

The October figure is 2 per cent higher than the peak recorded in 2007 for that month.

Average sale prices were also up by 22.1 per cent from the same month last year to $373,095.

The record figures were spurred on by activity in centers such as Toronto, where sales soared to 8,476 sales in October, up a staggering 64 per cent from the same month last year.

The average price for a home in October was up 20 per cent to $423,559, the highest on record.

This is fantastic news for the housing market after such a difficult year.

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Caution Helped Canadian Real Estate Markets Dodge the US Collapse

News Just in from the National Post: Canada has eluded the Real Estate collapse in the US

Despite gloomy prognostications from certain authors and pundits, thus far Canada has largely eluded the real estate collapse suffered by Americans. A survey released today from PricewaterhouseCoopers and the Urban Land Institute confirms that conservative banking practices and stricter regulation helped keep excessive lending in check. As a result, "most Canadian real estate investors were saved from overleveraging."

Even so, Canadians are still worried about suffering further economic shocks if America can't get its financial act together, PwC warns. The report, which takes input from some 900 real estate experts, developers and consultants on both sides of the border, finds total value losses in Canada will average 10 to 20% off previous highs but warns "some markets and sectors could suffer steep losses."

Frank Magliocco, leader of the PwC Canada Real Estate practice says the conservative approach has paid dividends for Canadian real estate players. While sideswiped by the U.S. fallout, "they experienced a manageable market correction rather than a full-blown credit crisis-precipitated market meltdown."

A mild buyers market

The Emerging Trends 2010 investment barometer forecasts a "relatively stable" transaction market that's slightly in favor of buyers over sellers. Across Canada, apartment investments get a rating of 5.44 out of 10 [slightly above a "fair" rating], while office is at 5.04, retail at 5.0, industrial/distribution 4.68 and hotels at 3.69. Development prospects are no better than 3.74 in any segment with hotel development prospects at a low 2.68.

Condos may stall until prices firm in Vancouver & Toronto

PwC partner Lori-Ann Beausoleil expects developers to curb their activity as bankers rein in construction loans in light of softened demand. "Certain condo projects will likely stall out until residential prices firm up in Vancouver and Toronto." While office markets in major U.S. cities are suffering from double-digit vacancy rates, Canadian markets are averaging only 8% vacancies. Builders in Calgary are experiencing a supply surge as demand wanes from deflated energy companies. Some smaller residential developers may be in "over their heads" in Toronto but Beausoleil says there could be an opportunity for larger more experienced players with solid lender relationships to take over some struggling projects.

Rush of condo and single-family home sales before HST kicks in

Vancouver is viewed as the strongest market but "many wonder what will happen after the Olympics." Toronto has better investment prospects than development prospects: single-family home and condo buyers are rushing to make deals before the harmonized sales tax comes into play on July 1st: developers fear a subsequent drop-off in demand afterwards.

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Real estate market in recovery: CMHC

News just in from the Canadian Mortgage and Housing Corporation:

Housing starts have begun to recover and should improve in the second half of 2009, according to the Canada Mortgage and Housing Corporation.

However, the CMHC also warned in its newly released report that the high level of activity in the first part of 2009 was the result of delayed transactions and would not likely continue at such a pace.

In its fourth-quarter "Housing Market Outlook," CMHC forecast that starts would reach 141,900 for the year and 164,900 for 2010.

Sales of existing homes are also predicted to increase from 441,300 units in 2009 to 445,150 units in 2010. The average home price is expected to reach $312,950 in 2009 and $324,500 in 2010.

CMHC referenced the Multiple Listing Service, owned by the Canadian Real Estate Association, for its information.

"We expect housing markets across Canada to strengthen leading into and over the course of 2010 as economic conditions improve," CMHC chief economist Bob Dugan said in a news release.

"Demand for existing homes has rebounded since the beginning of the year. In addition, lower inventory levels characterize both the new and existing home markets. As a result, stronger housing demand will be reflected in higher levels of housing starts in 2010."

However, the strong pace of MLS sales in the second and third quarters of this year reflects, in part, activity that was delayed in the previous two quarters and is not likely to be sustained, the report said.

The agency predicted the level of sales would move back closer in line with anticipated economic conditions.

Source: CBC

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