Sales to stabalize next year, prices to slip

Canadian home sales will stabilize in 2009 after a double- digit drop this year, while prices will edge down slightly following this year's single-digit decline, according to a national real estate firm.

"Nationally, 440,000 homes are expected to change hands in 2008, down 15 per cent from record 2007 levels,'' RE/MAX forecast Wednesday. "Canadian housing values are expected to hover at $300,000, a nominal three per cent decline from last year's historic peak.''

Sales are expected to drop further in the early part of 2009 before recovering by the end of the year at the 440,000 level, RE/MAX said. However, the average price is expected to slip by two per cent to an average of $293,000, it said.

"Global economic uncertainty weighed heavily on residential real estate activity in most major Canadian centres during the latter half of 2008,'' it noted. "Although the forecast for 2009 promises more of the same, most markets are expected to weather the storm.''

And average prices have held up "remarkably well'' across the country despite what were double-digit declines in 13 of 22 markets, thanks to solid gains early in the year, it said.

The outlook is for "somewhat static'' activity in the first six to nine months of 2009, given continued volatility in financial markets and the threat of recession. However, as stability returns to the financial sector, housing markets are expected to recover.

"The landscape is definitely changing - with most markets shifting into either balanced or buyer's territory,'' said Elton Ash, RE/MAX regional executive vice-president Western Canada. "Sellers no longer rule the roost.

"Opportunities exist for purchasers like never before, including lower interest rates, greater inventory levels, the luxury of time to make decisions, and the upper-hand at the negotiating table,'' he said, adding that sellers now need to take that into account in setting their asking prices.

Still, of the 22 major markets in Canada, half are expected to see home sales in 2009 match or exceed this year's levels.

The highest percentage increase in sales, three per cent, is anticipated in Saskatoon, while St. John's, N.L, Montreal, Kingston, Ont., London, Ont., Winnipeg, Saskatoon, and Regina are likely to post modest gains.

The steepest declines in sales next year will be in Montreal and Victoria, at 11 per cent, while the steepest drop in average prices will be in Victoria and Kelowna, B.C., at 10 per cent.

The performance of markets will reflect the economic performance at a local, provincial, and national level in 2009, said Michael Polzler, RE/MAX's Atlantic and Ontario director.

"Issues affecting the overall economy are impacting housing markets across the country and the situation is not expected to be remedied until consumer confidence is restored,'' said Polzler. "That said, we could see a bounce back as early as spring - if inventory levels remain stable, pent-up demand kicks into gear, and lower interest rates stimulate home-buying activity."

Meanwhile, RE/MAX's Quebec executive vice-president Sylvain Dansereau said that in the current market, buyers "may choose to play their investment strategy safe and purchase a home.''

"The comfort of a tangible investment like real estate goes a long way in tough times," Dansereau said.

(Source: Vancouver Province)