According to a report released recently by the Canadian Mortgage and Housing Corporation ( CMHC) , 2012 will bring unprecedented growth in home values for the Capital region after more subdued increases in 2011.
The CMHC’s first-quarter housing market outlook projects the average Multiple Listing Service price in 2011 for the Edmonton area will be $331,500 — an increase of about 0.8 per cent from 2010 when it was $328,803. However, the average house price is expected to rise 2.26 per cent in 2012 to $339,000, according the report.
In 2011, month to month price gains are expected but they will be fairly minimal. The report attributes this to ‘buyers market’ conditions in most Alberta markets, with plenty of inventory on the books and low interest rates. However, the tables will turn in 2012, says CMHC, when, “a higher level of net migration will support demand, as will low interest rates. Rising income and employment will also encourage home buying.”
As the oil sands get back to business in the coming months, the report indicates that more Canadians will set their sights on calling Edmonton and surrounding area home, driving up demand for housing, especially newly constructed homes.
“Balanced market conditions and rising wages will encourage new home buying in 2012, providing a lift to new construction by around eight per cent (in Alberta),” according to the forecast. This, in turn, will result in further job creation in construction as well as in the retail and services sectors. More jobs equals more buyers looking to enter the market or to make a move up the housing ladder.
“Supply and demand will be more balanced, generating price growth of over two per cent and lifting the annual average price above the record set in 2007.”, says the federal agency.
Did any one catch that? 2007! Many who purchased a home just prior to the 2007 real estate boom gained about $100,000 in equity over the course of a couple of months. If CMHC is correct in it’s predictions, 2011 is the new 2006, where house prices are presently very reasonable, but are set to gain huge value just as the ink dries on the title change! If you already own a home, 2012 will be an excellent year to consider refinancing. Tapping into the equity the market will be gifting could afford you the opportunity to consolidate debt, build that addition or invest for your future.
The downside to all of this growth hearkens back to late 2007 when Edmonton buyers had to fork over half a million for a handy man special. To make things even more challenging, the wild and wacky, pre-crisis mortgages that allowed some to enter the housing market at that time, have since gone the way of the dodo bird.
Mortgage rules are tighter, rates are expected to rise and a stronger economy will result in a higher cost of living. CMHC points to a banner year for home values and new construction sales in 2012 but it also reveals that it may be a very expensive time to enter the real estate market in Alberta.
Tell us what you thing about CMHC’s forecast! If you are considering moving your home buying plans up to 2011 to beat the predicted high prices and interest rates of 2012, contact us today to find out more about the options available to you.