The financial meltdown of 2008 and the deep recession that ensued were caused by many different factors and events. Unquestionably, the largest contributing factor was the sub-prime mortgage crisis in the US and the rapid collapse of housing markets around the world. Thus, it is a commonly held belief among those that study such things that the recovery of housing markets around the world will signify a sustainable economic recovery.
So why is housing so important to the economy and how is the future of the real estate market looking for Canadians? More importantly, how are the prospects for those of us that live in Dawson Creek? By most accounts, thing are looking quite a bit better than they were one year ago.
Housing is the greatest source of individual wealth for many Canadians. Home equity makes up a significant proportion of our net worth. If the housing market is healthy, we tend to feel good about our prospects for the future; thus, we spend more, priming the economy to growth.
A healthy housing market is indicative of the strength of the economy. For example, the more secure people are in their jobs, the more likely they are to buy real estate. It is also a source of fuel that adds to that economic strength. For example construction jobs tend to be well paying and longer term. There are also all kinds of services that are attached to real estate sales: Agents, lawyers, home inspectors, bankers and appraisers to name a few. The more those people are working, the more they are spending – stimulating economic growth.
By most accounts, things are looking good for real estate markets at a national and provincial level. Current data on the local market tells us that things are stabilizing here at home as well.
In Canada, the good news is starting to come at an even pace. In a report published on November the 16th, The Canadian Real Estate Association boosted their home sales forecast for the year by 6.6% and projected a price increase of 4.2% to a record of $317,000. In fact, nationally the housing market has rebounded so strongly that there is new discussion of the possibility that another real estate bubble is already starting to inflate. Scotia Capital released a report over the weekend suggesting as much.
At the provincial level, The BC Real Estate Association recently predicted that when all is said and done BC home sales in 2009 will outpace 2008 numbers by 20% with 82,900 sales. Sales are expected to increase province wide by 8% next year for a total of 89,600 units. Healthy, but still well off the record paces of 2002 to 2007.
The Conference Board of Canada released a report last week predicting that BC will have the fastest growing economy in Canada. Economic growth is predicted at 4.2%. This is very good news for our province. The results will be seen in the real estate market as well. A strong economy is good for the housing market and vice versa.
National and provincial activity is the result of record low interest rates and pent up demand as people waited on the sidelines throughout the worst of the recession. With more certainty in the future of the economy and increased affordability people got back in the real estate market en masse. Sales and price levels are far stronger right now than anyone predicted back in February or March.
Here at home, signs point to a stable, healthy market in Dawson Creek. Transaction levels in the past three months are off of last year’s pace by 11%. However, median price in the region over the past three months is $230,000 – an increase of 10% over last year. Low interest rates and increasing activity in the resource sector have given people some confidence in their future prospects. Sales levels are following slowly but surely.
Real Estate is a key economic indicator and driver. Current information about what is happening in your town, your province your country and around the world is important to have in order to make the right real estate decisions. As the health of the world wide economy improves, expect to see continued improving health the real estate sector.