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1998 - What Does the Future Hold?

© Christina Neigel

1997 emerged as a year of terrific interest rates for home-buyers. The question that now tugs at us is whether or not 1998 will be an equally beneficial year for buyers. Because the real estate market depends on a variety of factors, it is difficult to predict what the new year will bring us in Canada. However, there are certain indicators and trends that can, at least, give us a peek at what to expect.

Last year the real estate was booming. Listings, according to theCanadian Real Estate Association rose in every category across the board with mid-priced and high-priced housing leading the way. Homes sales, CREA states, went up 3 per cent in total in 1997, making it a record-breaking year for the MLS. Interestingly, only half of all sales were by first-time home buyers which is a 20 per cent decrease since 1996. The change in type of buyer, however, does not appear to be threatening the housing market. Rather, it is simply altering its dynamics.

Katherine Macklem of the Financial Post quotes Frank Clayton of Clayton Research Associates Ltd. proclaiming that, "We expect 1998 to be roughly the same as 1997." Calgary, Toronto and Montreal show the largest sales growth and potential growth for 1998 as British Columbia sinks in sales. Glen Temes, president of the Real Estate Board of Greater Vancouver, states that the B.C. ". . . government's perceived anti-business bias has a negative effect on all sectors of the economy, including housing."

Alberta's welcoming attitude towards new business seems to be having the desired effect as housing sales climb and vacancy rates sink. The Vancouver Sun reported that Calgary took first place with lowest vacancy rate of 5 per cent in 1997. Vancouver took second place as its vacancy rates climbed from 4.9 per cent to 5.9 per cent. New construction is expected to stabilize the market.

Obviously the economic boom in Alberta has stimulated a growth in housing needs. However, the real estate industry, as a whole, in Canada is certainly aided by low stable mortgage rates. It will be interesting to observe how the Canadian dollar and economic twists in British Columbia affect the industry in 1998. Many towns in British Columbia are faced with a vacancy crisis as pulp and paper mills shut down and the forestry industry struggles with its decreasing supplies. Financial Post reports that Royal LePage, in its annual residential market forecast, shows there will be a 5 per cent decrease in the number of houses be bought and sold in 1998 but the average price for a home should rise by 2.2 per cent.

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