Good news home owners! More evidence of Canada’s continuing insulation from the housing troubles in the USA comes in today’s Times Colonist newspaper. Our booming economy, strong dollar, and exploding job market are all combining to propel our housing market to new highs, despite the challenges faced by our cousins to the south. – Tim Ayres
Anne Howland
CanWest News Service
Tuesday, August 21, 2007OTTAWA — Exceptional strength in Canada’s resale housing market in the first six months of the year prompted the Canadian Real Estate Association yesterday to more than double its forecast for sales increases in 2007, the second time this year the association has revised its predictions upward. The news comes amid a growing crisis in the U.S. housing market, with prices falling and the number of defaults rising. The situation helped create the current meltdown of the U.S. subprime mortgage market, which made loans to high-risk people who are now unable to meet their financial commitments. The resulting investor unease spread from the subprime market to other areas of the American financial system and to markets worldwide, sending indexes on a freefall last week.
In Canada, national home sales are now forecast to rise by 8.1 per cent in 2007 to 523,100 units and set new annual records in most provinces, CREA said. In May, it had forecast a 2007 sales increase of 3.6 per cent, which was an update on its original 2007 forecast issued in February. At that time, CREA had predicted that sales activity this year would drop 1.6 per cent from 2006.
“The housing market has caught everyone by surprise,” said CREA chief economist Gregory Klump. “Everyone expected a gradual cooling in the second quarter, but [the market] heated up instead.
“We’ve changed our forecast to reflect reality,” Klump said, adding the market has now seen two consecutive record-breaking quarters. “Resale housing activity was a juggernaut in the second quarter of 2007.”
Next year, sales activity is forecast to edge slightly lower, but still reach the second highest annual level on record in almost all provinces. CREA had initially called for sales activity to cool 2.8 per cent in 2008, but is now calling for only a two-per-cent decline.
Prices are also forecast to set new records in every province this year and next, but price increases will be smaller in 2008, the association said. It is now looking for a 10.4-per-cent price increase for 2007, up from its previous forecast of 9.5 per cent. The price increase forecast of 5.5 per cent for 2008 has remained the same, Klump said.
The Canadian housing market has shrugged off the problems that have been experienced in the U.S., said Ann Bosley, CREA president.
© Times Colonist (Victoria) 2007