The Reminder is making its archives back to 2003 available on our website. Please note that, due to technical limitations, archive articles are presented without the usual formatting.
Existing homeowners in major Canadian centres can expect average price to exceed peak levels set in 2004, despite an anticipated increase in the number of homes listed for sale next year, according to a report released this week by RE/MAX. Housing Market Outlook 2005 found that rising inventory levels were a major factor in the 18 residential housing markets surveyed. All but six cities - St. John's, Halifax-Dartmouth, Kitchener-Waterloo, London-St. Thomas, Vancouver, and Victoria ? forecast continued stability in home sales, with 12 markets expected to remain on par or experience further increases next year. Average price projections include across the board gains ranging from just under one per cent in London-St. Thomas and Kitchener-Waterloo to close to 12 per cent in Edmonton in 2005. National home sales are expected to climb two per cent to 477,800 units by year-end. Average price is expected to post a healthy six per cent increase, bringing the value of a Canadian home to $237,900 in 2005 - topping 2004's record $224,729 by more than $15,000. "Homeowners who invested in real estate over the past several years will continue to benefit from strong upward momentum in 2005," says Michael Polzler, Executive Vice President, RE/MAX Ontario-Atlantic Canada. "Without a doubt, records will be broken in many major centres. Unit sales figures will reflect an active marketplace that will continue to be buoyed by strong economic fundamentals. GDP growth is forecast to hover at three per cent yet again next year. Overall unemployment levels are expected to decline further, falling to 7.0 per cent. The quality of employment is trending upward, a fact that is noted in increased disposable income. Perhaps most important is the fact that interest rates are not expected to rise sharply in the next 12 months." Leading the country in terms of percentage increases in unit sales next year are Edmonton (10 per cent), followed by Kelowna and Calgary (eight per cent), Barrie (seven per cent), and Saskatoon (five per cent). Not surprisingly, four of the five top markets are located in Western Canada, where strength in the oil and natural gas sector is spurring energy investment and non-residential construction. "Alberta certainly stands to benefit from strong global demand for crude at close to $50 US a barrel," says Elton Ash, Vice President and Regional Director, RE/MAX of Western Canada. "Foreign demand is also expected to bolster coal mining projects in British Columbia and give strength to the potash and uranium industries in Saskatchewan next year. Clearly, the overall health of the economy will be a key factor in determining housing market performance in 2005." In 2005, average price appreciation is expected to be highest in Edmonton (12 per cent), Quebec City (11 per cent), Kelowna (10 per cent), Halifax-Dartmouth and Vancouver (eight per cent). Two markets will break through major thresholds next year, including Vancouver, Canada's most expensive housing market. Average price in that city is forecast to top $400,000 by year-end, while Edmonton is expected to surpass $200,000 in 2005. Homeownership still remains an affordable option for most Canadians. In six markets, average house prices are expected to remain under $150,000 in 2005. In larger centres where average prices are up over the $150,000 mark, a growing number of housing alternatives are available, including condominium apartments and town homes. "Condominiums have proven to be an excellent investment vehicle in most markets," says Ash. "For first-time buyers, they offer an opportunity to buy into real estate at an affordable price. They're also ideal for young professionals and empty nesters from a lifestyle perspective - offering low maintenance and location at a fraction of the cost of a freehold property." A solid economy, coupled with relative job security and strong consumer confidence, generally bodes well for the housing market. Given that interest rates are unlikely to climb more than 100 basis points in the coming year, any upward momentum will actually encourage more buyers to enter the housing market. "Although housing markets are expected to be more balanced in 2005 - with supply meeting demand - vendors will continue to call the shots, especially in areas with tight sales to listings ratios," says Polzler. "As was the case in 2004, homes priced realistically will be snapped up, while those that are overpriced will stagnate. There's no question that purchasers may have greater choice next year, but that won't necessarily translate into more time to make housing decisions."
