The third quarter housing market outlook came across my Blackberry last week courtesy of Canada Mortgage and Housing Corporation and the operative word is “stabilization.”
Normally, when I hear the word stabilization, I assume it’s what happens after a period of uncertainty and upheaval, however things don’t feel all that unstable right now. It’s true that the market has eased off from the euphoric levels posted during the recovery phase following the global economic crisis, but they’re still humming along, albeit at a more sustainable pace.
According to CMHC, the resale market will moderate from peak levels but will stabilize by the early part of 2011 and strengthen later in 2011 thanks to improved affordability. As for resale home prices, CMHC predicts the same pattern with prices stabilizing later this year.
“Recovering demand will boost prices through 2011,” the CMHC news release states.
CMHC doesn’t specifically comment on new home sales or prices but its housing starts forecast is reflective of the sales trend line, which means that housing starts will be higher this year than next.
Given the shortage of supply of new, low-rise housing in the GTA, combined with increasing government-driven costs such as the HST and municipal development charges, I can’t see new home prices easing at all, although as CMHC points out, demand for single-detached homes may weaken in pricier Ontario markets.
What does it all mean? According to Ted Tsiakopoulos, CMHC’s Ontario Regional Economist, “this transition in housing activity should be orderly thanks to improving job markets, historically low interest rates and further gains in household incomes.”