Canadian real estate is a tale of two markets – the Prairies, and the rest of the country – according to the latest resale forecast by the Canadian Real Estate Association (CREA). But the bottom line is lower national sales in 2015, due to decreased activity in Alberta.
“National sales are now projected to reach 475,700 units in 2015, representing an annual decline of 1.1 per cent. This would place annual activity slightly above but still broadly in line with its 10-year average,” CREA reports.
Looking into 2015, CREA predicts an uptick in activity across most provinces, thanks to the weakened Canadian dollar, mortgage rate declines and the boost in the U.S. economy.
But that won’t positively impact the resale forecast for the Prairie provinces, where sales are expected to drag thanks to further declines in oil prices prompting potential buyers to wait while sellers continue to list, list, list! The biggest impact will be in Alberta, where home sales in 2015 are expected to fall 19.3 per cent – well below the elevated pace set in the last three years of seller’s market conditions.
In the face of Alberta’s high-supply-low-demand scenario, Ontario and British Columbia are singing a very different tune with tightening inventory and increasing demand, resulting in price gains that surpass inflation this year at 2.5 and 3.4 per cent, respectively. This is no surprise in Vancouver, which has long been the priciest market in the country, and in Toronto, where the average single-family home surpassed the $1-million mark in February, according to the Toronto Real Estate Board.
Prices are expected to remain stable in other provinces, with the exception of Alberta, where “average price is forecast to fall by 3.4 per cent, reflecting a pullback in sales for luxury properties compared to homes in more affordable price segments,” according to CREA.
But as they say, what goes up must come down – and vice versa. Looking ahead at 2016, national home sales are expected to increase 1.7 per cent to 482,700 units in 2016, in line with the anticipated economic recovery in Alberta and Saskatchewan. “Meanwhile, anticipated mortgage rate increases are expected to keep activity in check in markets where homes are already less affordable and prices have continued rising,” according to CREA, which forecasts the national average price to rise by a further 1.9 per cent to $424,100 in 2016.