Forecast: Stable Home Sales, Mortgage Rates in 2011
Housing sales activity weakened in the latter half of 2010, but home prices didn’t tank like some feared after the boom earlier in the year. Statistics Canada figures released show that indexed new housing prices across Canada rose for the third consecutive month in October, albeit modestly. Leading the way was Saskatoon, driven by lower unemployment and higher labour costs than in other Canadian cities. Calgary was among those markets that saw a dip in prices.
The TD report predicts housing sales activity to increase in the first half of 2011 and prices to soften slightly, and the bank has adjusted its earlier sales forecasts to more conservative numbers. Other financial organizations go as far as to predict strong sales activity and upward pressure on prices will continue in hot markets. A crash is unlikely by all accounts.
Continued strife in U.S. and European markets has the Canadian economy in a holding pattern; until there are convincing signs of a recovery, home sales activity and prices here are unlikely to make momentous gains.
This week, the Bank of Canada released its decision to hold the overnight lending rate at one percent. Major lending institutions think a rise in interest rates won’t happen until mid-2011, which will help to keep Canadian housing affordability and sales activity stable in the meantime.
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