Housing market to rebound for 2010

Housing sales have decreased, listings are down, and you’re trying to save money wherever you can. The good news? Positive expectations for the housing market are predicted for 2010. “Sales are expected to jump as soon as consumers feel a bit more confident,” said Mardig Noubarian, senior financial planner at Caisse Populaire in Pierrefonds. “If you have the slightest bit of reassurance that your job is stable, it’s a great time to buy.”

This may seem contradictory to recent statistics. Montreal’s housing sales plummeted by almost 40 per cent in January, numbering 1,662 units—a drop from 2,631 units in January 2008, according to the Greater Montreal Real Estate Board. Montreal’s listings, too, have decreased by 14 per cent in January 2008 as compared to January 2009, according to the board.

But it’s not all bad. Interest rates today are under 4.5 per cent for a five year mortgage—a rate not seen for generations, said Noubarian. Usually, interest rates are well above five per cent, in the per cent per cent range. “Consumers have more negotiating power now than ever,” said Noubarian.

And that’s being reflected in an upsurge of confidence, on the rise since December, according to a Harris-Decima poll. The survey of 2,000 people found 27 per cent predicting they'll be better off a year from now, against 13 per cent who expect to be worse off in early 2010.

The reduced number of home sales in 2008 was directly linked to the slowing global economy and flagging consumer confidence, Bob Dugan, the Canadian Mortgage and Housing Corporation’s chief economist, said in a statement.

But by 2010, MLS home sales are expected to begin to bounce back, with a projected increase of 9.3 per cent to 405,000 units, according to the Multiple Listing Service. Prices are also expected to drop, the CMHC reports, with the average home price predicted to fall to $287,900 this year—a decline of 5.2 per cent from 2008.“In Quebec there’s not as many listings on the market as there are usually, which is why prices have not gone down,” said Noubarian. “Though there’s not a lot of choice out there right now,” that’s expected to change in 2010, said Noubarian.In its Monetary Policy Report, the Bank of Canada said growth is expected to pick up over the remainder of 2009 and to shoot to "above-potential" in 2010, as credit conditions improve and interest-rate cuts take hold. The bank said it sees GDP growth of 0.6 per cent in 2009. That is forecast to rise to 3.4 per cent in 2010.