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Canadian home sales will ease, prices to rise in 2008: Report

The Re/Max real estate company sees Canadian home sales slowing in 2008 while prices rise 6 per cent, on average.

After extraordinary gains in 2007, the houseing market's performance is expected to moderate in most major Canadian centres, the firm recently said in an outlook report covering 18 Canadian markets.

While economic prospects should continue to improve, few major markets are expected to exceed record sales levels set in 2007.

Nationally, the number of homes sold is expected to break through the half-million threshold this year, climbing 13 percent to an estimated 545,400 units, up from 483,770 units one year ago.

The average price is projected to appreciate 9 per cent in 2007 to $303,000, up about $25,000 over 2006 levels. And in 2008, home sales are expected to retreat to 500,000 units while Canadian housing values are forecast to continue their ascent, rising 6 percent to $321,000.

The average price is forecast to increase next year in 78 percent of markets surveyed, with the lowest price increase expected in Edmonton and highest in St. John's, N.L.

"Western markets were first out of the gate in 2007, but those in the East followed suit," says Michael Polzler, executive vice-president and regional director for Re/Max in Ontario and Atlantic Canada. "By year-end, some of the most impressive gains in home sales will be realized in Ontario and Atlantic Canada. Solid economic fundamentals, including billions of dollars in capital projects, a positive unemployment outlook, and solid consumer confidence levels will propel markets forward. A slow and steady growth trajectory, minus the peaks and valleys experienced in 2007, is forecast for next year."

Major market leaders for price appreciation in 2008 include St. John's, 12 percent; Regina and Kelowna-Central Okanagan, 9 percent, Hamilton-Burlington, and Saint John, N.B., 8 percent; and Greater Vancouver, 7 percent.

Leading the country in predicted sales growth next year are Kitchener-Waterloo, at 7 percent, followed by Hamilton-Burlington, London-St. Thomas, Sudbury, and Halifax-Dartmouth, N.S., each forecasting a 5 percent gain.

By the end of 2007, housing values across the country are expected to shatter existing records.

Double-digit increases in average price this year are forecast for Saskatoon, 49 percent; Edmonton, 31.5 percent; Regina, 21 percent; Calgary, 20 percent; Sudbury, 20 percent; Kelowna, B.C., 19.5 percent; Saint John, N.B., 17 percent; St. John's, N.L., 12 percent; and Greater Vancouver, 10 percent.

Saskatchewan reported some of the highest percentage increases in unit sales in 2007.

South of the border, U.S. housing starts plunged to more than forecast to a 14-year low in September, keeping the real estate market the Federal Reserve's top concern.

The 10.2 percent decrease to an annual rate of 1.191 million followed a 1.327 million rate the prior month, the Commerce Department recently said this Wednesday. Building permits fell 7.3 percent to a 1.226 million pace.

Higher mortgage costs and stricer lending rules will further depress home sales and feed the declinein construction. The number of starts was the lowest since March 1993. The decline was led by a plunge in construction of townhouses, apartments and condominiums.

The Canadian Press Bloomberg News
The Toronto Star - New in Homes
October 20, 2007

Posted on Friday, October 26, 2007 at 10:41AM by Registered CommenterElaine in | Comments1 Comment

Reader Comments (1)

aw, with that increase in the real estate prices, that's gotta hurt the buyers :(
October 26, 2007 | Unregistered CommenterOntario Mortgage

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