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What does 2012 have in store for the Canadian real estate market?

As 2011 draws to a close it’s clear that Canadian housing has performed better than most expected this year. It’s also clear, that in some markets, buoyant conditions and aggressive price increases have some experts talking about a price bubble again. There are a wide range of commentary, opinions and predictions coming forward and I thought I’d share those that I’m currently aware of, from those who profess to be experts. So, what does 2012 have in store for the Canadian housing market? It depends on who you’re talking to.
 
BMO


BMO’s Douglas Porter expects the Bank of Canada to hold interest rates through 2012, perhaps even drop them further. According to Porter, Vancouver will lose its status as Canada’s hottest housing market being replaced by Calgary and Edmonton.


BMO’s five fearless forecasts for next year- Globe and Mail


TD Economics


TD also sees the most promising signs for a strong market in Calgary and Edmonton while Toronto and Vancouver will experience the most serious price corrections.


Estimating that Canadian home prices are 10-15 percent overvalued, TD predicts that resale activity across Canada will fall 2.4 percent in 2012 while prices decline by 1.9 percent on average.


In Saskatoon, TD expects sales to slide 2.3 percent while prices slip 2.1 percent. Meanwhile, new housing starts are expected to grow by 2.6 percent.


Get ready for housing market correction: TD - Financial Post Special Report: Regional Housing Markets- TD Economics


Bank of America Merrill Lynch


Merrill Lynch estimates that Canadian housing is 10 percent overvalued at the present time. They expect that weaker economic growth and an oversupply of condos will lead to a five percent drop in home prices through the first half of 2012 and further expect prices to end the year flat as economic activity accelerates.


Merrill: Classic bubble signs in Canadian market - Globe and Mail Home prices set to drop in 2012 - Star Phoenix


Canada Mortgage and Housing Corporation (CMHC)


Nationally, CMHC predicts housing starts will decline 2.2 percent while MLS sales rise roughly 1.9 percent and resale prices grow by 1.2 percent on average.


In Saskatchewan, CMHC expects that housing starts will increase a whopping 8.3 percent. Resale transactions will also grow but more moderately at six percent, while average resale prices gain two percent.


In Saskatoon, CMHC sees housing starts declining by 11 percent. Still, they’re predicting increases of roughly 1.4 percent in the cost of a new home. After reaching their highest level since 2007, resale activity will fall roughly 1.3 percent to 3,800 units while resale prices grow by 2.1 percent.


CMHC Housing Market Outlook, Canadian Edition, Q4 -2011 CMHC Housing Market Outlook, Saskatoon CMA, Fall 2011


RBC


“The oversupply of homes on the market continues to weigh on new construction especially given that sales activity is running at a below-average clip. This is even with rock-bottom mortgage rates and financial institutions putting an end to the tightening in lending standards for mortgages. The government continues to make efforts to encourage homeowners to refinance at today’s lower rates though the take-up rate on these initiatives has been limited. The bottom line is that until the supply of homes available for sale is reduced, construction activity will make a very limited contribution to economic growth. In turn, this will limit the improvement in prices restricting growth in household real estate assets.”


Economic and Financial Market Outlook: RBC Economics


The Economist


“In some countires, such as Australia, Canada and Sweden, prices wobbled and then surged to new highs. As a result, many property markets are still looking uncomfortably overvalued.”


House of horrors, part 2- The Economist


Remax


Nationally, Remax expects resale activity to increase marginally by one percent while prices grow by two percent.


In Saskatoon, the real estate company sees resale activity growing by approximately ten percent to roughly 4,500 units while prices rise about three percent (my estimates based on the charts included in the report).


Remax Housing Market Outlook, 2012


I have no doubt there are other bits of commentary and prediction that I’ve overlooked, so feel free to put them forward if you have them in the comments section below. More importantly, tell us where you think our real estate markets are headed next year.


Thanks for reading.


Happy new year!


I’m always happy to answer your Saskatoon real estate questions. All of my contact info is here. Please feel free to call of email me.


Norm Fisher
Royal LePage Vidorra

Norm Fisher, Author of the TeamFisher Saskatoon Real Estate Blog

About Norm

Licensed in 1993, Norm brings a wealth of experience to TeamFisher. He has worked in every imaginable capacity including sales agent, office manager, team leader, broker and now, broker/owner. Norm has written a weekly review of the Saskatoon real estate market for more than 650 consecutive weeks which may make him the most consistent industry blogger in the world.Less...

Licensed in 1993, Norm brings a wealth of experience to TeamFisher. He has worked in every imaginable capacity including sales agent, office manager, team leader, broker and now, broker/owner. Norm has written a weekly review of the Saskatoon real estate market for more than 650 consecutive weeks which may make him the most consistent industry blogger in the world.

Norm is known for his passion for technology and can most often be found exploring and experimenting with the next big thing in real estate marketing. He was the first Saskatoon real estate agent to promote a home online and has been an early adopter of new technologies ever since. “Everything about this business has changed over the past 20 years, and it will happen again in the next ten. An open mind and a curious attitude are all that’s needed to continue to find new ways to serve our clients by delivering a faster, smoother, worry-free transaction,” says Norm.

In his spare time, Norm enjoys Crossfit and cycling, some years accumulating over 2,000 kilometres on the road. He’s a strong supporter of the Royal LePage Shelter Foundation and enjoys raising funds by joining fun, fitness-related initiatives like the Grouse Grind for Shelter. In 2015, he trekked the Peruvian Andes to Machu Picchu. In 2017 he walked the southern highlands of Iceland across mountains, sand, snow, ice, lava fields and forest for seven days. Collectively those initiatives raised over a million dollars for Canadian women's shelters.
 

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