ATD Bank Financial Group predicts the pace of resale home growth will slow over the next two years.
"A soft landing is anticipated says TD Bank"
A report released Thursday by TD Bank Financial Group says housing starts in Alberta as well as the number of homes sold will retreat in the next 2 years as the country on the whole experiences a cooling trend in the residential real estate industry.
Also, the yearly pace of resale home price growth in the province will slow down substantially from the highs recorded in the past two years.
"A soft landing is anticipated", said the report about the Canadian housing market. "This moderation will reflect the fact that the past rapid price appreciation has eroded affordability and has encouraged additional supply from new listings and new home construction. A weaker domestic economy will also contribute to the cooling."
The report said total housing starts in Alberta will decline by 16 per cent this year and a further 7.7 per cent in 2009. It said the number of existing homes sold will drop by 18.2 per cent this year in the province and another 4.6 per cent in 2009.
And the average resale home price growth will be five per cent this year and another 3.5 per cent next year following yearly increases of 12.1 per cent, 30.8 per cent and 24.8 per cent in the past three years respectively.
Richard Corriveau, regional economist for the prairies and territories region for Canada Mortgage and Housing Corporation, said the agency is now revising its forecast for 2008 / 2009. The CMHC's new forecast from 3 months ago predicted housing starts in Alberta would be down18.3 per cent in 2008 and 4.4 per cent in 2009, while resale numbers were expected to decline by 6.2 epr cent and 2 per cent this year and next year. The average resale price growth was originally forecast for 3.9 per cent in 2008 and five per cent in 2009.
"The evidence to date certainly cannot be ignored", said Corriveau, of the agency's revised forecast coming out in May. "Resale demand is retrenching in the face of weaker migration and escaleting prices from previous years. And our forecast revisions will be downward sharply."
The major cloud on the horizon is the huge number of listings on the market right now, said Corriveau.
"If some of this inventory disapears, then it bodes well for future price growth, but because we have such a major overhang, the prospect of price growth remotely comparable to even what we achieved in the early 2000s is off the table," he said.
As of Thursday morning, the Calgary Real Estate Board website indicated active listings for Mls single family homes in Calgary metro are at 6.476. There have been 1.389 single family homes sold in hte past 30 days with an average sale price of $470,044.
"Canada's major housing markets will experience cooler conditions over the course of 2008 and throughout 2009," said the TD Bank report authored by Craig Gauthier, economist.
"However, this moderation is not expected to lead to a housing downturn. Instead the deterioration in housing affordability from the past outsized price gains combined with additional supply from new listings and continued elevated housing starts amid a weaker domestic economy should gradually let the heat out of the real estate markets."
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