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January 2011 Newsletter - Royal LePage Kelowna

TORONTO, January 6, 2011

The low cost of borrowing stimulated the housing market in 2010, and this trend is predicted to continue in the first half of 2011. The widely held consumerbelief that rates will rise in the latter part of 2011 may prompt an increase in buying activity early in the year.

“Trends in the housing market continue to be driven by the lingering after-effects of the recession,” said Phil Soper, president and chief executive of Royal LePage Real Estate Services. Canadians realize that interest rates are unsustainably low and that homes will become effectively more expensive when mortgage rates return to normal levels. We will likely see more price appreciation early in 2011 as some buyers complete transactions in advance of anticipated higher borrowing costs.

Across Canada, the average price of a home is forecast to rise 3 per cent in the coming year to $348,600 while the number of transactions is expected to drop 2 per cent. During the fourth quarter of 2010, average home prices either increased or stabilized year-over-year, Nationally, the average price of detached bungalows rose to $324,531 (up 4.6 per cent), the price of standard two-storey homes rose to $360,329 (up 4.4 per cent).

For 2011, price increases are expected to be very modest at approximately 1 per cent.

Information provided by the Dion-Ivans Group and Royal LePage.
– The average price of a home in Canada increased between 3.9 and 4.6 per cent in the fourth quarter of 2010, compared to the previous year, as markets shrugged off a lackluster third quarter and returned to a post-recession growth profile. Home values are forecast to continue a moderate and steady climb in many of the country’s key housing markets through 2011 with sales activity skewed to the first half of the year, according to the Royal LePage House Price Survey and Market Survey Forecast just released.

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Royal LePage Forecast

OTTAWA — Home prices will continue a “moderate and steady climb” this year, helped along by an improving economy and low interest rates, according to a report released Thursday.

Real estate services firm Royal LePage said the average price of a home in Canada will rise 3% to $348,600, even as the number of transactions falls 2%.

It said that after a “lacklustre” third quarter in 2010, home prices were up between 3.9 and 4.6%, year over year, in the year’s fourth quarter. This marked a return to growth more typical of trends since the end of the recession, Royal LePage said.

The report said, similar to trends of last year, sales will be more robust in the first half of the year as homebuyers take advantage of low interest rates that could be on the rise in the near future.

“Canadians realize that interest rates are unsustainably low and that homes will become effectively more expensive when mortgage rates return to normal levels,” said Phil Soper, CEO of Royal LePage Real Estate Services. “We will likely see more price appreciation early in 2011 as some buyers complete transactions in advance of anticipated higher borrowing costs.”

The report said the strongest prices gains will happen in mid-sized cities where homes are priced below the national average. It noted places like Winnipeg, St. John’s and Fredericton, where single two-storey homes are still widely available for less than $300,000.

Alberta’s housing market is also expected to be strong in the coming year, as the energy sector helps fuel a strong hiring climate.

Read more: http://www.financcialpost.com

Derek Abma, Financial Post · Thursday, Jan. 6, 2011

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