The Canadian Real Estate Association has adjusted its original 2010 resale transactions after a weak start to the year. Rising mortgage rates and price spikes that have made homes unaffordable for many families is squeezing the Canadian market. The weaker sales are being seen in provinces such as Ontario, British Columbia and Alberta. With homebuyers facing tougher lending rules and new taxes in both Ontario and British Columbia, the anticipated strong housing market has been anything but. The new tax rules that are to take affect July 1 will add thousands of dollars to the final price of a new home, making qualifying even more difficult.
CREA president Georges Pahud said "Interest rates are expected to rise slowly and at a measured pace during a new era of government spending restraint, so home financing will remain within reach for many homebuyers,"
The previous housing price increase from CREA was aimed for a 5.4 per cent increase over last year, but has since been lowered to only 1.6 per cent over the 2009 year. Economists say that since the resale housing market has begun to drop significantly, prices should remain steady for the rest of the year and into the Fall of 2011.
The revision in numbers by CREA comes one day after the Bank of Canada announced the hike increase in its key-lending rate. CREA also said it expects the Canada wide resale numbers to be down around 40,000 from its original forecast of 527,300. CREA now anticipates 490,600 sales of units through the MLS, which is still up 5.5 per cent from 2009.
"Somebody who's in a position to buy can take the time to make sure they get the property they want at a price they're comfortable with,' said Will Dunning of the Canadian Association of Accredited Mortgage Professionals.
"We almost never see a balanced market, it's usually always one way or the other. We've had this immensely powerful sellers' market; there could be a very rapid transition so that it now becomes a buyers' market," he added.
The downturn in sales is being blamed on the sudden increase in home prices, especially in Ontario and British Columbia, where B.C. has accounted for more than half of the reduction in sales. CREA is now anticipating approximately 80,000 resales in British Columbia in 2010, down 22,000 than previously expected, creating a market decline of 5.9 per cent from 2009 when that province held the strongest housing market in the country. Alberta's total resales are expected to be 55,900, down from 63,050 while Ontario's resales are projected for 215,400, a decrease of 8,300.
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