Experts predict 2006 will be a runner-up to last year’s crown
Last year, everyone predicated house prices and sales would decline compared to 2004 and instead look what happened: 2005 turned out to be the biggest year on record for both the Fraser Valley and Greater Vancouver residential housing markets.
Can Realtors hope for a ‘repeater’? Yes and no, according to numerous expert predictions.
According to recent forecasts from some of Canada’s most respected market watchers, 2006 will remain strong thanks to economic conditions, particularly in the west. However, we won’t see the record-breaking numbers that we saw in 2005.
The average price of a detached house in the Fraser Valley in December 2005 was $410,246, 17.5 per cent higher than the same month a year earlier. Similarly, in Greater Vancouver the benchmark price of detached homes rose to $567,417, up 18.5 in one year. Both Boards broke sales records and posted the largest dollar volume of sales ever in their history.
The Canada Mortgage and Housing Corporation, the Bank of Montreal’s Nesbitt Burns, Re/Max, Royal LePage and the Canadian Real Estate Association all predict a little more moderation for the year ahead, with smaller increases in prices and a slight decline in sales.
Royal LePage Real Estate Services’ 2006 Market Survey Forecast predicts house prices will rise by about 6.0 per cent this year on average, with price increases likely higher in the west thanks to energy prices, whereas the CMHC foresees only a 4.9 per cent increase in prices.
Re/Max anticipates sales will drop by only 2.1 per cent in 2006 in Canada however the CMHC is forecasting a decline of 4.7 per cent. Royal LePage comes up the middle foreseeing sales will fall by 3 per cent.
Phil Soper, CEO of Royal LePage said in their report that people have to put a sales decline in perspective, “There will be less homes sold, but just barely, making it the second most active year in history.”
All market predictors agree on the key reason behind the optimism for 2006 - interest rates. In fact, in CREA’s December stats release, chief economist Gregory Klump credits interest rates as “the key factor underlying these positive predictions.”
None of this will be news to Fraser Valley members who attended CMHC’s most recent Housing Outlook Conference in Vancouver. Senior Market Analyst Cameron Muir told Realtors and other audience members that there is good news on the horizon specifically for the Fraser Valley. “Lots of people heading to BC from other provinces will choose the Fraser Valley because it is more affordable.”
Even with a 5 per cent increase in prices forecast for 2006, the average home in the Valley will remain an attractive investment for people migrating to BC.
The Schacter Team - Your Langley Real Estate Experts.