All indicators suggest that the Canadian housing market will be stable in 2012. Low interest rates will prevail, with a couple of economists suggesting that the prime rate will drop from its current 1% up to .50 basis points. The bond market seems to be stable and will probably continue that way given the current European economic woes.
Canada Mortgage and Housing Corporation (CMHC) released its Fourth Quarter market update recently and reported that housing starts will stay near current levels and resale values will hold steady. So, for market watchers, 2012 may be a boring year. Or maybe not?
Depending on what part of the country you’re in, those working in the industry – mortgage brokers, real estate lawyers and Realtors – are telling a different story. In the Golden Horseshoe area of Southern Ontario, sales have been brisk and industry insiders have been busy. Realtors are predicting increases in resale prices for the Spring of 2012.
Housing market insiders in Saskatchewan and Nova Scotia are predicting a busy Spring in 2012. In Alberta, the Calgary market is hot.
With the wide range of predictions out there, what can consumers believe? It really comes down to one major factor – employment. If we can predict employment growth, then we can safely predict housing sales, no matter the interest rates. Back in the early 80s, when interest rates were in double digits, consumers were still buying houses in areas where employment was high. In other areas of the country with low employment rates, the housing market was soft.
Nova Scotia’s housing market will be busy in 2012 because Halifax just recently signed a billion dollar ship building contract, which will create jobs. The employment rate in the Golden Horseshoe is bucking the national trend and creating more jobs.
Looking at the employment outlook for 2012, there are some upsides. Statistics Canada released its Labour Force Survey on November 4, 2011 and found the following:
· Over the past 12 months, employment in Ontario has grown by 1.5% (+101,000)
· Since October 2010, employment in British Columbia has grown by 0.9%, slower than the national rate of growth (+1.4%)
· In Nova Scotia, (survey conducted prior to ship building contract announcement) employment fell by 3,900, and in Prince Edward Island it decreased by 1,300
· Newfoundland and Labrador experienced notable employment gains. Employment in the province grew 0.9% compared with 12 months earlier
· Employment in Alberta edged up in October, and the unemployment rate declined 0.3 percentage points to 5.1%. Compared with October 2010, Alberta has had the fastest rate of employment growth of all provinces, with an increase of 4.3%
Adding the possibility of a stronger economic recovery in the US, which would boost employment growth in Canada, perhaps the housing market insiders, who work every day in the field, have predicted correctly that 2012 will indeed, be a busy year for real estate.