Home prices could hit new highs in 2010

October 22, 2009

As reported by By Derrick Penner, Vancouver Sun, October 21, 2009:

The rebound in B.C. housing sales from the recession is the strongest on record, Central 1 Credit Union said Tuesday, predicting that property prices will regain all of their downturn losses by the end of this year.

Central 1 chief economist Helmut Pastrick said the housing sales rebound has already surpassed the strength of the recovery from the 1991 recession.

Pastrick said the resurgence has combined with diminishing inventories of unsold homes to force prices upward.Read the full report here.

Are we near the top of the housing cycle?

Implementation of the new HSTin B.C. will add to the cost of ne homes. This will result in higher new home prices, and it has a negative effect on demand. Any significant spike up in interest rates from current level will affect housing demand as home become less affordable.

Good time to sell?

When sales and home prices are now back to previous height before the price correction in early2008, some home sellers are taking advantage of the recovery to sell their real estates. The general Canadian economy is still weak. Credit contraction and uncertainty in the recovery of the US housing market are major factors affecting the US economy. Higher interest rates and contraction in consumer spending in the US will negatively affect the housing market, which in turn will affect Canada’s export to the US.

The housing price charts by Brian Ripley help to illustrate the pricing trends for the major Canadian cities. The risk of a reversal in housing sales and price gain in Canada could happen if the market is negatively affected by what happens in the U.S.

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