While most of the province’s real estate markets are expected to post declines in the coming months, increases in Alberta MLS® activity is expected to lead the country.
According to The Canadian Real Estate Association’s (CREA) revised resale housing forecast, sales in Alberta are expected to hit 61,150 by the end of 2012, marking a 13.8 per cent increase over the 53,756 sales in 2011. The increase would make the province the hands down leader in terms of activity increase with Prince Edward Island coming in a distant second with a 9.1 per cent increase.
Moving into 2013, CREA predicts Alberta will hold on to the role of Canada’s hottest market, with sales in the province moderating slightly, increasing by 1.7 per cent to 62,200. Should CREA’s forecast come to fruition, Alberta would, along with Manitoba, be the only provinces to post increases in activity for the year. Nationally, CREA is predicting national sales activity will recede by 1.9 per cent to 457,800 units in 2013. This is a larger decline than was previously forecast, reflecting the cumulative effects of previous and recent changes to mortgage regulations, and anticipated interest rate increases in the second half of 2013.
“Recent changes to mortgage regulations are likely to sideline some potential first-time home buyers, particularly in some of Canada’s priciest housing markets,” said Gregory Klump, CREA’s chief economist. “That’s likely to result in slower momentum for resale housing activity, with an increase in the amount of time it takes for moveup buyers to sell their current home. Job growth is widely expected to continue at a modest pace while interest rates remain on hold, so the economic outlook is absent the factors that typically result in forced sales and a dramatic swing in prices.”
Price-wise, Alberta homes are expected to increase in value, with the average sales price in the province forecast to rise by 2.6 per cent through 2012 to $362,600. In the following year, CREA predicts prices in the province will continue to rise, increasing by 2.2 per cent to $278,900.
Along with their revised forecast, CREA also released monthly sales statistics for August. Although MLS® sales in Calgary dropped by 5.8 per cent compared to July, they were far above the number seen last August, increasing by 15.7 per cent to 2,467.
In the light of stricter mortgage rules, the fact Calgary’s real estate market was still able to post a year-over-year increase should come as good news given predictions from Canadian economists.
“The Canadian housing market has indeed ratcheted down its growth pace. In fact, in most local markets, it has reversed course with price and sales contractions becoming more the norm,” said TD senior economist Sonya Gulati. “In the absence of a catalyst like an interest rate increase or external economic shock, there really is no reason to think that the housing market will rapidly unravel from the levels currently seen.”