House prices to cool in second half of 2010

Posted on 09. Jul, 2010 by in News

Buyers can expect more choice – likely to become a buyer’s market

By LUANN LASALLE The Canadian Press
Thu. Jul 8 – 4:53 AM

MONTREAL — Home buyers can expect more choice and lower prices in the second half of 2010, while sellers can expect fewer offers for their homes, says one of Canada’s leading real estate brokers.

“Accurate pricing is going to be really key,” said Phil Soper, president and chief executive of Royal LePage Real Estate Services.

In its latest housing survey, Royal LePage said Wednesday the real estate market will start to slow in the second half of 2010 with the number of sales expected to fall compared with the hot activity earlier in the year.

“I would say if you’re a seller, the first thing you should expect is fewer multiple offers on your home,” Soper said in an interview from Toronto.

Sellers who try to squeeze extra money out of their homes will likely have their homes “languish” on the market, unless they’re exceptional properties, he said.

“I believe we are through the highly volatile spiking of prices and activity levels, both up and down,” Soper said.

“We’ll see a much a more stable, but frankly less exciting in a good way, real estate market in the next 18 months,” he said.

The Canadian housing market has been a strong pillar under the economic recovery in Canada, mainly because of low mortgage rates and positive consumer confidence. However, interest rate increases and stiffer bank lending rules have taken some of the steam out of the sector since the early part of the year.

Soper said a lot of buyers were frustrated by a tight supply and “over-exuberant competition,” particularly in the 2010 first quarter, but that’s easing with increased listings.

In the first six months of 2010, about half of real estate transactions involved first-time buyers, he said.

“It took a while for sellers to get comfortable that the recovery from the recession was real. We had an all-time record number of new homes come on the market in the first quarter of 2010. It started to impact prices in the second half (of 2010).”

Soper also noted that “fiscally aware 20-somethings,” especially women, are now much more interested in buying homes than they were in the past.

Canada’s two main real estate markets could have a lower pace.

RBC senior economist Robert Hogue said the Vancouver real estate market is showing signs of slowing and Toronto “might be ripe for some slowing.”

Consumers could also be relieved since there have been concerns about affordability, Hogue said from Toronto.

“With prices moving up and up, some households felt left out and so it might offer an opportunity for the market to catch its breath a bit and let a stronger economy raise incomes and give more opportunities to households,” he said.

Derek Burleton, vice-president and deputy chief economist at TD Bank Financial Group, said the decline in homes sales is expected to accelerate and selling prices will also go down.

“The market is frothy and it’s going to come back down to earth for the usual reasons,” Burleton said.

In the survey, Royal LePage said some markets will see a decline in home prices and sales volumes towards the end of 2010 but that should be seen more as a reaction to the highs reached late last year rather than a major slowdown.

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