OTTAWA -- Canada's housing market is expected to ease in 2010 and 2011 as the market returns to more balanced conditions, Canada Mortgage and Housing Corporation said Wednesday.
"Canadian housing markets have recovered from the low levels posted in early 2009," Bob Dugan, chief economist for CMHC, said in a release.
"Moving forward, housing starts will moderate as activity becomes more in-line with long term demographic fundamentals. New measures for government-backed mortgage insurance introduced by the government of Canada that took effect on April 19, 2010 will continue to support the long-term stability of Canada's housing market."
The mortgage insurer said in its second quarter market outlook it expects housing starts in 2010 to be in a range of 166,900 to 199,600 units with a "point forecast" of 182,000 units.
In 2011, it expects starts to be in a range of 148,600 to 208,800 units with a forecast of 179,600 units.
Resales, meanwhile, are forecast in 2010 to be in a range of 484,000 to 513,300 units with a forecast of 497,300 units. In 2011, they are forecast to be in a range of 443,500 to 504,900 units with a forecast of 473,500 units.
Dugan said the existing home market will move toward balanced conditions over the next two years as inventory levels increase, a trend already occurring according to figures released Monday by the Canadian Real Estate Association, which showed April inventories rising to record levels.
The market was influenced in late 2009 and early 2010 by pent-up demand and record low borrowing cost, Dugan said.
That resulted in what many feared was an overheated housing market, driving average Multiple Listings Service prices up almost 20 per cent in 2009.
"Once this demand is exhausted, and as mortgage rates gradually rise, the pace of activity in the resale market will ease," Dugan said.
As seen in the Vancouver Sun - by the Financial Post