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John Thomson  

Thomson report

New figures show the real estate market is cooling off across Canada, including the Okanagan with home sales down more than 30 per cent from that very high [winter] level.

Prices have basically leveled at this point with disincentives to buyers including higher interest rates, tighter credit and high housing prices leading to the prediction that the number of sales in B.C. will drop by about 22,000 to about 80,000 according to the Canadian Real Estate Association which was forecast Wednesday that home prices will fall in 2010/2011.

A slowdown in Ontario and British Columbia, the two largest housing markets in the country, will drag the national average down. "Canada is widely believed to be entering a typical demand-driven downturn due to recent price increases and rising interest rates," CREA chief economist Gregory Klump said, causing forecast sales activity to slow. CREA now forecasts that 490,600 homes will be sold on its Multiple Listings Service this year, much lower than the original forecasting for 2010. In 2011, an 8.5 per cent drop to 448,700 is expected. New mortgage rules unveiled by Finance Minister Jim Flaherty in April aimed at curbing speculation are expected to "marginally impact" activity, the agency said. Although mortgage rates are expected to rise further, a slow and measured pace expected during a new era of government spending restraint should keep home lending within reach for many homebuyers," CREA president Georges Pahud said.

National averages from our first quarter report are not particularly useful in painting a picture of the country’s neighbourhood real estate stories. House sale data from the past two year period shows tremendous variances in terms of how different cities reacted to the recession. In Vancouver and Toronto, for instance, the dramatic unit sales fluctuations exhibit a significant degree of market irrationality: inordinately fearful when faced with poorer markets and overly enthusiastic when the tables turned. Montreal is an example of a city where the market has been much more stable and homeowners there seem quite happy with the relatively slow pace of change. Even in our most frenzied pockets of market activity, the inevitable rise in interest rates coupled with home price appreciation will rein in demand as affordability erodes. Expect house prices to continue to rise, but the rate of appreciation should ebb steadily, month by month, throughout the remainder of the year, as balance returns to the industry.

Residential Sales By Price

Price Range 2010 2009

$0 to $200,000 5 3
$200,001 to $240,000 7 9
$240,001 to $280,000 19 15
$280,001 to $320,000 30 44
$320,001 to $360,000 87 95
$360,001 to $400,000 126 107
$400,001 to $440,000 132 86
$440,001 to $480,000 106 60
$480,001 to $520,000 89 68
$520,001 to $560,000 73 34
$560,001 to $600,000 42 31
$600,001 to $999,999 115 60
$1 Million and over 17 3


A Few More Stats

Average House Price in May 2010 $ 509,472
Median House Price in May 2010 $ 460,000
Number of houses listed last month: 528
Number of lakeshore homes sold last month: 0
Avg. Mobile Home Price May 2010 $ 110,427
Dollar value of sales in May 2010 $158,468,080
Dollar value of sales in May 2009 $157,359,232


More John Thomson articles

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About the Author

John Thomson is the Okanagan's pre-eminent business columnist writing his column, Rumours and Things, for over 24 years. Plugged in to the valley's who's who, John keeps his readers coming back for more with his straight talk and optimistic perspective on where we are headed next.

When John is not writing his column, he runs a sixteen year old think tank called the Executive Roundtable and holds his popular "Thomson Presents" quarterly business speaker seminars.

Have a comment, question, or tip for John? 

E-mail John at
[email protected]
or send him a fax at 250-764-8255.

 



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The views expressed are strictly those of the author and not necessarily those of Castanet. Castanet does not warrant the contents.

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