CREA capitulates…sort of

Crea has revised their annual resale forecast to reflect a slowing resale market, which somehow caught them off guard.  Clearly their ‘econo-chumps’ weren’t looking at the same data we’ve been looking at here.  This slowdown was entirely predictable.

“Improving momentum for home sales activity suggests the resale housing market is stabilizing, but weaker than expected third quarter activity has reduced CREA’s annual forecast….National sales activity is now expected to reach 442,200 units in 2010, representing an annual decline of 4.9 per cent.”

Given the extreme strength of the resale market through the first half of the year, this is a clear acknowledgement of the significant weakening in the second half of the year.

“Lackluster economic and job growth, muted consumer confidence, and the resumption of interest rate increases are expected in 2011. Against this economic backdrop, national home sales activity is forecast to decline by nine per cent to 402,500 units.”

I disagree with the rising interest rates in 2011, but they are bang on about lackluster job growth and muted consumer confidence, though they don’t grasp, or perhaps can’t acknowledge how far consumer confidence will fall.

“Housing demand and supply is stabilizing,” said Gregory Klump, CREA’s Chief Economist. “That’s good news for home buyers, who will feel less hurried to make an offer than they did when transitory factors ignited housing demand in early 2010. It’s also good news for home sellers, who will feel more confident about price stability now that the housing market has become balanced.”

I love it:  It’s always a great time to buy OR sell!  I guess realtors everywhere are cut form the same cloth.

Canadian home prices peaked earlier in the year at $347K.  They are now sitting around $330K.  CREA expects home prices to decline by just over one percent next year, hitting $326K.  They still don’t get it!

-Ben