Real Estate Markets Still Going the Seller’s Way

Canada has been cruising along positive territory after posting negative numbers in 2009. Market experts and real estate analysts are expecting record performance from resale and home building segments. However, they hasten to add that the industry is not in a bubble since there is no evident speculation in the real estate markets.

What is apparent in Canadian real estate markets is that they are more buyer-driven than seller-driven, which is not really surprising in a market that is experiencing tight inventory situation across all segments. Under the present condition, home prices may be going a little over their real value in some real estate markets, but this not necessarily mean that the markets are in a bubble.

The Canadian Real Estate Association, in a recent announcement, reported that the resale segment is expected to post record performance in 2010, especially in the first half of the year. The market for resale home units is forecast to hit 527,300-level for 2010. This is equivalent to 13.3 percent growth in sales from 2009. There are no indications that speculation is getting into the decision making of both active buyers and sellers in real estate markets in Canada.

Industry experts have attributed these events in real estate markets to the lower interest rates and the intention of home buyers to make the buy before the harmonized sales tax is implemented. This is the prevailing situation in real estate markets in British Columbia and Ontario. Real estate markets are expected to go through adjustment phase once higher interest rates take effect in the second half of 2010.

Riding on its positive performance in 2009, the new home segment is expected to be one of the most active sectors for 2010. The seasonally-adjusted growth rate has breached the 186,300-mark in January. This is equivalent to a 5.8-percent jump from December 2010 home-starts sales. On the other hand, Canada Mortgage and Housing Corporation predicted a sustained growth in this segment for 2010 when it reported a total of 149,081 units of home-starts sold for 2009. In the same report released by CMHC, sales of starter home units in urban territories reached 165,200 in January 2010 which is equivalent to 4.4 percent growth over the same period last year. On the other hand, total sales of multiple housing units posted a 4.4 growth, while detached home starts yielded a 3.3 percent in January 2010.

Some sectors believe that the fear of possible bubble is being fueled by the remarkable rebound of real estate markets after the major economic downturn a couple of years back. However, market experts believe that this industry-leading performance will not be sustained. The frenzied activity will ultimately taper off once markets make the necessary corrections.

These positive developments in the real estate markets come in the heels of the recent announcement by the federal Competition Bureau that it is challenging the rules that are being imposed by the Canadian Real Estate Association. The Federal Bureau contends that the prevailing condition limits the range of choices for homeowners. This has led to situations where consumers are forced to get services they don’t need or desire.

The Competition Bureau has already filed with the Competition their application seeking to repel the rules that are being implemented by CREA, particularly those that apply on the use of the MLS. There are ongoing talks between the Competition Bureau and the CREA to come out with a mutual agreement to resolve the contentious issues although there are no substantial results have come out from these talks.

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Source by Laurel R. Lindsay