Economists Predict Real Estate Recovery
Bidding wars are back according to some prominent real estate experts and this might be a clear sign of recovery in the industry. As real estate prices have fallen and mortgage rates have been slashed, realtors are beginning to see improvements in house sales in Vancouver. In fact, many real estate agents are noticing quick sales on houses under $600,000.
These changes are a stark difference to the market even when compared to January of this year. Sales in January had dipped nearly 60 per cent from last year but as prices have dropped, sales have slowly recovered. May of 2009, for example, saw a 17 per cent improvement over a year ago marking the first year-to-year gains in several months.
Some economists are predicting that the worst of the downturn in real estate markets might be over signifying that we're in the early stages of recovery. Buyers are more confident to test the market as they see what will ultimately be a good return on investment. Not only are lower prices triggering sales but also lower interest rates.
The Canadian Real Estate Association is expected to release a national report with regards to the current market situation. Most records show that national sales have been gradually increasing over the past few months despite the fact that as of yet there have been no year-over-year gains in the national real estate market. Still, economists are even optimistic about this trend, expecting to see gains as early as this month.
Economists are expecting a quick recovery from January when real estate sales across the country dipped to a 10 year low. Seemingly, the worst of the recession in Canada was felt late 2008 and early 2009 which caused buyers to be wary. But, as mentioned, favourable mortgage rates and declining house prices are giving buyers more confidence. At the moment, first-time buyers seem to be mostly responsible for the upturn in the market meaning that houses on the more affordable end of the scale are selling more quickly. Take Calgary for an example where 7 out of 10 May sales were for houses under $400,000.
However, the story with regards to the real estate market is yet to be set in stone. Recent growth, which can be attributed to mortgage rates and pricing is also partially explained by built-up demand from the end of 2008. After the summer, the demand will likely be satisfied but unemployment rates will likely continue to rise. With economic uncertainty, there is every possibility that the market may stabilize again. So while economists will argue the worst is behind us there is nothing to indicate the strength of the recovery in the real estate market.
The Canadian Home Builders' Association also seems to be taking a positive outlook on the market scene as they have noted that selling prices are still down more than 3 per cent from a year ago. Last year's market was certainly at a peak and as a result the hottest markets have seen the steepest decline in prices. Materials, labour, and other production costs have come down quite a lot and these savings are being passed on to buyers. In addition, May saw the first upturn in residential construction since the economic woes that plagued throughout the winter. Across Canada, housing starts increased 9 per cent in May meaning that we may have reached the bottom with regards to home building as well. All these factors combined, low prices, low mortgage rates, and increased building all point to recovery. What happens with global economics will definitely impact Canada's real estate market but for the moment there is good reason for optimism.
These changes are a stark difference to the market even when compared to January of this year. Sales in January had dipped nearly 60 per cent from last year but as prices have dropped, sales have slowly recovered. May of 2009, for example, saw a 17 per cent improvement over a year ago marking the first year-to-year gains in several months.
Some economists are predicting that the worst of the downturn in real estate markets might be over signifying that we're in the early stages of recovery. Buyers are more confident to test the market as they see what will ultimately be a good return on investment. Not only are lower prices triggering sales but also lower interest rates.
The Canadian Real Estate Association is expected to release a national report with regards to the current market situation. Most records show that national sales have been gradually increasing over the past few months despite the fact that as of yet there have been no year-over-year gains in the national real estate market. Still, economists are even optimistic about this trend, expecting to see gains as early as this month.
Economists are expecting a quick recovery from January when real estate sales across the country dipped to a 10 year low. Seemingly, the worst of the recession in Canada was felt late 2008 and early 2009 which caused buyers to be wary. But, as mentioned, favourable mortgage rates and declining house prices are giving buyers more confidence. At the moment, first-time buyers seem to be mostly responsible for the upturn in the market meaning that houses on the more affordable end of the scale are selling more quickly. Take Calgary for an example where 7 out of 10 May sales were for houses under $400,000.
However, the story with regards to the real estate market is yet to be set in stone. Recent growth, which can be attributed to mortgage rates and pricing is also partially explained by built-up demand from the end of 2008. After the summer, the demand will likely be satisfied but unemployment rates will likely continue to rise. With economic uncertainty, there is every possibility that the market may stabilize again. So while economists will argue the worst is behind us there is nothing to indicate the strength of the recovery in the real estate market.
The Canadian Home Builders' Association also seems to be taking a positive outlook on the market scene as they have noted that selling prices are still down more than 3 per cent from a year ago. Last year's market was certainly at a peak and as a result the hottest markets have seen the steepest decline in prices. Materials, labour, and other production costs have come down quite a lot and these savings are being passed on to buyers. In addition, May saw the first upturn in residential construction since the economic woes that plagued throughout the winter. Across Canada, housing starts increased 9 per cent in May meaning that we may have reached the bottom with regards to home building as well. All these factors combined, low prices, low mortgage rates, and increased building all point to recovery. What happens with global economics will definitely impact Canada's real estate market but for the moment there is good reason for optimism.
posted by VancouverResidence
