Quiet Housing Market
In a possible sign of a housing market cooldown, a new survey suggests fewer Canadians are "very likely" to buy in the near future amid high prices and rising interest rates.
The Royal Bank survey of buying intentions over the next two years found the share of those people saying they were very likely to buy had dropped to 10% -- down from 13% last year and at the lowest point in more than five years.
The percentage of those who plan to buy a home in the next six months also fell to 8% from 10% last year.
GOOD INTENTIONS
Yet overall intentions to buy a home within two years remained the same as in 2005 at 29%, with 90% of current homeowners saying they thought their home was a great investment.
"It's the same intent in terms of a general basis, but when you look at the very top box of those who are 'very likely' to buy a home, that's where you're seeing the decrease," said Catherine Adams, RBC Royal Bank's v-p for home equity financing.
The decline, she said, appears to be the result of higher interest rates, rising home prices and the fulfillment of much of the pent-up demand that has been driving the market for the last few years.
"It definitely is a signal of change -- this engine is not just continuing on at the same pace as it was in the past," Adams said.
Royal LePage Real Estate Services Ltd. agrees home sales could slow between 3% and 5% in 2006, but the year would still be the second-best on record, the firm said.
"We're talking degrees of perfection here," said Gino Romanese, Royal LePage senior v-p.
"The real estate market is a very, very healthy one right now. Whether or not it's equal to last year or a little bit better or a little bit off -- any one of those three scenarios spells a really good market."
Still, 70% of those polled said they expect a rise in mortgage rates, which would increase the cost of buying -- versus 54% last year.
Royal Bank said the only part of the country likely to see increased home-buying activity this year is Atlantic Canada.
Alberta held steady at 18%, but the numbers decreased in other regions, with British Columbia going from 16% to 11%; Saskatchewan and Manitoba from 12% to 10%; Ontario from 14% to 10%; and Quebec down to 7% from 11%.
HIGHER INTEREST RATES
Interest rates have been rising gradually over the past few months, and while RBC is forecasting a slight rise, it is not known how much they may climb.
"There's a little less pressure for interest rates to go up than there may have been three months ago, just because of the ever-increasing strength of our Canadian dollar," Romanese said.
The Royal Bank survey of buying intentions over the next two years found the share of those people saying they were very likely to buy had dropped to 10% -- down from 13% last year and at the lowest point in more than five years.
The percentage of those who plan to buy a home in the next six months also fell to 8% from 10% last year.
GOOD INTENTIONS
Yet overall intentions to buy a home within two years remained the same as in 2005 at 29%, with 90% of current homeowners saying they thought their home was a great investment.
"It's the same intent in terms of a general basis, but when you look at the very top box of those who are 'very likely' to buy a home, that's where you're seeing the decrease," said Catherine Adams, RBC Royal Bank's v-p for home equity financing.
The decline, she said, appears to be the result of higher interest rates, rising home prices and the fulfillment of much of the pent-up demand that has been driving the market for the last few years.
"It definitely is a signal of change -- this engine is not just continuing on at the same pace as it was in the past," Adams said.
Royal LePage Real Estate Services Ltd. agrees home sales could slow between 3% and 5% in 2006, but the year would still be the second-best on record, the firm said.
"We're talking degrees of perfection here," said Gino Romanese, Royal LePage senior v-p.
"The real estate market is a very, very healthy one right now. Whether or not it's equal to last year or a little bit better or a little bit off -- any one of those three scenarios spells a really good market."
Still, 70% of those polled said they expect a rise in mortgage rates, which would increase the cost of buying -- versus 54% last year.
Royal Bank said the only part of the country likely to see increased home-buying activity this year is Atlantic Canada.
Alberta held steady at 18%, but the numbers decreased in other regions, with British Columbia going from 16% to 11%; Saskatchewan and Manitoba from 12% to 10%; Ontario from 14% to 10%; and Quebec down to 7% from 11%.
HIGHER INTEREST RATES
Interest rates have been rising gradually over the past few months, and while RBC is forecasting a slight rise, it is not known how much they may climb.
"There's a little less pressure for interest rates to go up than there may have been three months ago, just because of the ever-increasing strength of our Canadian dollar," Romanese said.
posted by PondPine.com at 10:14 PM
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