Nov 9, 2010, Alberta house prices, sales to drop next year

The Canadian Real Estate Association is forecasting house prices and sales will fall next year in Alberta.

In a revised forecast released today, the national association of realtors, predicted total sales in the province will decline by 5.6 per cent in 2011 to 46,550 transactions. This comes after a 14.3 per cent decline in sales predicted for this year.

CREA also projects the average MLS sale price in 2011 to fall by 0.3 per cent in Alberta to $349,100 following a 2.6 per cent hike for this year.

Weaker than expected third quarter activity has reduced CREA’s annual forecast at the national level as well.

National sales activity is now expected to reach 442,200 units in 2010, representing an annual decline of 4.9 per cent. In 2011, the association is forecasting another nine per cent decline to 402,500.

“Lacklustre economic and job growth, muted consumer confidence, and the resumption of interest rate increases are expected in 2011,” said the association.

CREA is also forecasting the national average sale price to drop by 1.3 per cent in 2011 to $326,000. For this year it expects an increase of 3.1 per cent to $330,200 from the previous year.

“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.

“Interest rates are widely expected to remain low for some time due to recent downward revisions by the Bank of Canada to its outlooks for economic growth and inflation. Consumer sentiment will likely remain under pressure until economic prospects improve meaningfully.”

According to the Calgary Real Estate Board, year-to-date MLS sales in the single-family home market up to the end of October were 16.6 per cent lower than the same period in 2009. The 10,472 transactions this year were for an average sale price of $462,997, up 5.3 per cent from a year ago.

In the condominium market, year-to-date sales of 4,553 have decreased by 17 per cent from 2009 and the average sale price of $290,536 is up by 2.9 per cent.

Diane Scott, president of CREB, said buyers are remaining cautious in the local market, waiting to feel more confidence in the Calgary economy and their own job security.

“We believe economic recovery will build momentum into 2011 as the outlook for oil and gas and other sectors continues to improve,” said Scott earlier this month when the October MLS data was released. “This, coupled with low interest rates and improved affordability, should eventually help to stimulate Calgary’s housing market.

“Overall, we’re cautiously optimistic that Calgary’s economic recovery will pick up as we move into 2011 – but in-migration will be needed to fuel a sustained recovery in Calgary’s housing market.”

By Mario Toneguzzi, Calgary Herald