CREA revises home sales forecast upwards after strong Q2

Much stronger than expected MLS sales throughout the country in the second quarter of this year has forced the Canadian Real Estate Association to revise its home sales forecast for this year and 2010.

The national organization of realtors said activity has climbed throughout the quarter and into July and the “remarkable recovery of resale housing” has prompted the change to its forecast.

“The speed and magnitude of the rebound in sales activity to date has lifted CREA’s national forecast for the number of transactions to 432,600 units. This represents an annual decline in activity of 0.4 per cent compared to levels set in 2008, and is a significant upward revision from the previously forecast decline of 14.7 per cent in CREA’s forecast issued last May,” said the organization.

The difference in the resale housing market now, compared with the beginning of the year, is night and day, and nowhere is this more evident that in the West,” said Dale Ripplinger, president of CREA.

The organization said forecast declines in annual activity were trimmed significantly in Alberta.

Nationally, MLS sales are forecast to rise 5.3 per cent to 455,400 units in 2010.

This is a smaller rise in activity than previously forecast. “Low interest rates are boosting sales by returning homebuyers to the market who moved to the sidelines late last year, and shifting ” said Gregory Klump, the organization’s chief economist. “Buyers are also shifting purchase decisions forward as they take advantage of attractive interest rates now before financing costs increase.”

The national MLS average home price is forecast to edge up 1.5 per cent in 2009, as the strong rebound in sales activity, not price, in some of Canada’s most expensive markets continues to skew the national, and some provincial, average prices upward. Alberta is the only province with a forecast decline in average price in 2009 (- 4.4 per cent).

CREA’s previous forecast predicted a decline in the national average price of 5.2 per cent in 2009.

The association is forecasting sales in Alberta to fall by 2.5 per cent this year to 55,000 units but increase by 10.5 per cent in 2010 to 60,750 units. The average sale price in the province is forecast to be $337,300 this year and increase by 1.7 per cent to $343,200 next year.

Nationally, CREA’s forecast average sale price is $309,500 this year and increase another 2.1 per cent in 2010 to $315,900.

“The speed with which the Canadian resale housing market has rebounded is unprecedented,” said Klump. “The economic recovery is expected to be slow and protracted, so the dramatic swings in activity seen in late 2008 and this year are unlikely to be repeated in 2010.”

(prepared by By Mario Toneguzzi/Calgary Herald)