While the national average home price dropped $10,000 in July to its lowest point since January, CREA points out prices are still 9.3% higher than a year ago.
And because sales activity has been stronger than expected thus far this year, CREA this week revised its forecast to reflect sales will be 0.9% higher in 2011 than in 2010, up to 450,800 sales. Prices are also still expected to rise 7.2% over 2010 by the end of this year to reach an average of $363,500.
While other predictions by national analysts this year have said prices would begin dropping in the second half of the year and continue through 2012, CREA President Gary Morse doesn’t see it that way.
In fact, CREA’s forecast for 2012 shows sales will drop 0.7%, but prices will remain virtually the same due to a rising level of inventory, with the national average up $100 to $363,600.
“While there had been some talk of potential interest rate increases, that hasn’t happened,” Morse said. “In fact, rates have actually come down, and are now expected to remain low for the remainder of this year and into 2012. It’s a great opportunity to purchase a property with financing at very favourable rates.”
But CREA sees affordability increasingly becoming an issue for Canadian buyers and has revised its 2012 sales outlook to show a 0.7% drop nationally, highlighted by a 3.4% drop in Ontario.
Of all provinces, only British Columbia is expected to see a drop in average prices in 2012, however. CREA predicts B.C. average prices will drop 1.8% from $564,700 in 2011 to reach $554,800 in 2012. But that’s coming off average price gains of 8.5% in 2010 and 11.8% in 2011 in the province.
From 2010 to 2012, only Prince Edward Island will experience no price gains at or above 1%, according to the CREA predictions. The price there will remain relatively unchanged from the 2010 average of $147,196 to the 2012 average of $148,300.
Canadians might notice prices take a temporary dip in the second half of 2012, however, said Gregory Klump, CREA’s chief economist.
“Some of the expected moderation in the national average price is seasonal, with average price peaking in many local markets during the second quarter of any year,” said Klump. “Elevated shares of provincial and national sales activity in Vancouver and Toronto are also expected to return to more normal levels, contributing to an anticipated moderation in average price in British Columbia, Ontario, and nationally.”
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