Real estate favoring sellers heading into 2012: CREA

Sales were up for a third straight month in November, and activity rose in 60% of all local markets. Average home prices are also up 4.6% from a year ago, but it is the smallest increase since January.

Prince Edward Island was an exception for the national price gain, with selling prices dropping about 11% there since last year. In Newfoundland, average prices were up more than 12% from a year ago.

“The Canadian housing market is proving resilient in the face of ongoing global economic and financial uncertainty, to the benefit of Canadian economic growth,” said Gary Morse, CREA’s president. “That said, some housing markets are picking up, while others are holding steady or consolidating.”

The Halifax-Darmouth region, for example, had a record amount of sales in November, offsetting a dip in Toronto.

National sales activity, like last year, picked up around November. But this year, the price gains are more modest, having already peaked in the spring, said Gregory Klump, CREA’s chief economist.

“With interest rates expected to remain low for longer, the housing sector will no doubt be closely watched for signs of excess,” Klump said. “That said, current trends for resale housing and new home constructions suggest that tightened mortgage regulations are working as intended and fostering economic stability in Canada.”

A quarterly economic forecast by TD Economics economists , also out today, suggested those “signs of excess” are already visible in the housing market..

“The housing market will enter 2012 in a position of moderate overvaluation in existing home prices and an overhang of unsold inventory in the new home market,” said the TD Economics authors. “We anticipate that these excesses will unwind over the next few years, partly reflecting prospects for a normalization in interest rates beginning in 2013.”

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