Balanced Market in 2011?

CREA released a revised forecast Tuesday that estimates that 2011 home sales will be down 1.6%, and that prices are estimated to rise by 1.3%. With regards to the forecasts in sales activity, “CREA predicted Tuesday that some sales that would have been made later in the year will likely occur in the first quarter, as a result of the new rules.

Some economists have warned that a combination of higher interest rates and new mortgage rules that go into effect March 18 could put a chill on demand in the later months of this year”. “This is expected to produce a milder version of the volatility in sales activity that we saw last year which resulted from additional transitory factors,” said CREA’s chief economist Gregory Klump.

So we are looking at an active trading season over the spring, but does that mean the summer and fall will be slower than normal? Normally yes, as CREA said earlier – “some sales that would have been made later in the year will occur in the first quarter”, however, CREA also goes on to say that the market will gain traction in the second half of this year as economic conditions, job and income growth and consumer confidence improve, in contrast to 2010 when economic growth softened.

So all in all, it looks like we have some stability in the forecast. The spring will be a little exciting as usual, then it will likely slow at the tail end of the spring, then come back to normal throughout the summer.

RBC gives similar values and a similar story in this report: http://www.cbc.ca/money/story/2011/02/10/rbc-housing-forecast.html

It’s not a sexy market, but the word is FAIR.