A changing market has forced the Canadian Real Estate Association to dramatically revise its forecast for MLS sales this year.
In releasing its updated forecast Wednesday, the association said MLS sales in Alberta will drop 2.9% this year to 55,900 units and fall another 0.9% in 2011 to 55,400 units.
In its forecast of early February, the national association of realtors had predicted sales in the province this year to increase by 9.1% to 63,050 and gain another 1.5% in 2011 to 64,000.
"Sales activity in the first quarter of 2010 came in weaker than anticipated," said Gregory Klump, the association's chief economist.
"Other developments that followed the release of CREA's forecast earlier this year, including the Bank of Canada's having dropped its conditional commitment to keep interest rates on hold until the second half of this year and changes to mortgage regulations, contributed to the downward revision."
The forecast for the average MLS sale price in the province has also been lowered for this year. CREA now says it will increase by 2.1% to $348,400, down from the previous forecast of an increase of 4.7% to $357,300. However, its revised forecast calls for a 0.7% jump in 2011 to $350,800. Its previous forecast was for a 1.2% increase to $361,700 next year.
Lai Sing Louie, regional economist with Canada Mortgage and Housing Corp., is calling for a slight gain in Alberta MLS sales this year.
Lai said the organization's latest forecast, released in late May, said Alberta MLS sales would hit 58,100 this year, increasing by 0.5%, while the average sale price would jump by 3.8% to $354,100.
For next year, Louie said the CMHC forecast is for MLS sales to rise by 4.5% to 60,700 and the average price to increase by 3.3% to $365,700.
At the national level, the CREA said a lower forecast for sales reflects a weaker-than-expected start to the year in British Columbia and recent developments that pulled forward the timing as to when sales are expected to ease in other provinces.
In Canada, the organization is forecasting 5.5% growth in MLS sales this year to 490,600 units followed by an 8.5% decline in 2011 to 448,700 units. In February, it forecast a 13.3% hike to 527,300 transactions in 2010 but a drop of 7.1% to 490,100 units in 2011.
As for the national average price, the association is forecasting a 1.6% increase this year to $325,400, followed by a 2.2% decline in 2011 to $318,300.
Its previous forecast called for a 5.4% hike this year to $337,500 followed by a 1.5% decline next year to $332,400.
