Canadian Real Estate Listing

Stable interest rates and rising prices in Vancouver have proved to be positive factors for Canada's housing industry, ( 8/18/2011 )

Stable interest rates and rising prices in Vancouver have proved to be positive factors for Canada's housing industry, according to the Canadian Real Estate Association, which had forecast declining sales but now expects them to increase in 2011.

The optimistic national forecast comes despite the fact that both sales and sale prices dropped in July from the previous month - sales edged down by 0.1 per cent, and the national average price of a home during the month was $361,181 - the lowest it's been since January, CREA said, though it's 9.3 per cent higher than in July 2010.

While year-to-date sales are 1.6 per cent below last year's figures, transactions are up 12.3 per cent from the same month last year.

"This increase reflects weakened activity in July 2010, when levels for the month reached their lowest point since 2002," CREA said.

The Ottawa-based industry group had been forecasting a slowdown, but now says there will be 450,800 sales in 2011 - a one per cent increase from a year ago. It says rising prices in Vancouver have helped push its forecast for the average sale price in 2011 to $363,500, a 7.2 per cent increase from a year ago.

Randi Masters, pastpresident of the Victoria Real Estate Association, does not expect local prices to rise. "I think they are going to hold steady."

Greater Victoria inventory rose 5,094 in July, up 14 per cent from the same month last year, the board said.

"Sellers have to realistically price. They have to be competitive because buyers have a lot to look at right now," Masters said.

Greater Victoria sales dropped to 523 in July from 618 in June, but were close to the 527 sales seen in July 2010. Overall housing prices slipped as well.

Dan Hagel, a Victoria developer and contractor who also holds a real-estate licence, said this is a buyer's market. "The HST has been an absolute kick in the teeth."

Ballots deciding the fate of B.C.'s harmonized sales tax are still being counted, but the uncertainty, along with concerns about the global economy, is affecting the market, he said.

Hagel has sold one of two townhouses his company built in James Bay, with two still to find buyers. Today's market is "difficult," he said.

However, Hagel is pragmatic and optimistic, saying the market has historically performed in cycles.

CREA expects national sales to fall less than one per cent in 2012 while prices will flatten next year.