Not a single Canadian city will see house prices fall in 2011, according to a market forecast released by Re/Max.
The residential real estate brokerage said there will be “greater stability” in the market in 2011, with the national average price forecast to rise by 3 per cent to $350,000. It expects sales to stall, however, with about five per cent fewer transactions in 2011.
“Ample inventory levels, steady demand, and moderate growth, both in terms of sales and prices, will characterize the market in 2011,” said Michael Polzler, executive vice-president and regional director of Re/Max Ontario-Atlantic Canada.
The Canadian Real Estate Association (CREA) released a less optimistic report earlier this month that expects prices to fall 1.3 per cent and sales to plummet as much as 9 percent. CREA warned of “lackluster economic and job growth and the resumption of interest rate increases” in 2011.
However, the Re/Max report remarked that “low interest rates and improving customer levels” were the basis of it’s forecast. Indeed, recent economic troubles in the EU and a less than stellar reaction to economic stimulus in the US has set the stage for the continuation of low mortgage rates in Canada, at least until the fall of 2011.
BMO Nesbitt Burns economist Douglas Porter said that while house prices may not accelerate much in 2011, a harsh correction is unlikely.
Meanwhile, it said “almost all” markets are expected to see higher prices – and those that don’t will just see prices remain at 2010 levels.
“Housing demand and supply is stabilizing,” said Gregory Klump, CREA’s chief economist.
“That’s good news for home buyers, who will feel less hurried to make an offer than they did when transitory factors ignited housing demand in early 2010. It’s also good news for home sellers, who will feel more confident about price stability now that the housing market has become balanced.”