CREA Forecast May 2005

For Immediate Release

OTTAWA - May 13, 2005 - Canada's resale housing market is headed for its second-best year on record, according to a forecast prepared by The Canadian Real Estate Association (CREA). The Association represents more than 76,000 REALTORS® and owns the MLS® trademark in Canada.

CREA estimates 446,200 properties will be sold through the Multiple Listing Service® in 2005. This is down slightly from the annual MLS® sales record set in 2004, when 461,098 units were sold.

The province of Alberta will go against this trend and set a new annual record for MLS® home sales this year, according to the Association's forecast. CREA estimates 59,100 resale homes will trade hands via the MLS® in Alberta in 2005, representing an increase of 2.9 per cent compared to the previous annual record of 57,460 units set in 2004. The CREA forecast also shows that British Columbia will come to within one per cent of the sales record set in 2004.

National residential MLS® homes sales hit 113,265 units in the first quarter of 2005, up 0.4 per cent from the 112,819 units sold in the fourth quarter of 2004. "Low interest rates are continuing to fuel housing market activity in all regions," says CREA Chief Economist Gregory Klump. "First quarter statistics show that homebuyers took advantage of lower mortgage interest rates in many markets across the country, especially in British Columbia and Alberta."

"Further price increases combined with an expected rise in mortgage interest rates will dampen activity toward the end of the year and prevent sales activity in most markets from setting a new annual record," Klump explains. "Sales activity is forecast to be the second-highest year on record, surpassed only by transactions in 2004. The exception will be Alberta, where annual sales are expected to shatter all previous records in 2005."

The CREA forecast estimates the annual MLS® average home price in Canada will be $244,700 in 2005, up 8.2 per cent from 2004. The national average price at the end of the first quarter of 2005 was $238,800.

"Low mortgage interest rates will continue to enable many homebuyers to finance more expensive homes. This, combined with fewer sales of lower priced homes due to rising prices and the resulting lack of lower-priced inventory, will keep the MLS® average home price well above where it stood last year."

A survey of REALTORS® across Canada conducted in March 2005 pointed to the affordability of housing as the most important issue facing the real estate profession this year. "Housing affordability is an issue in many markets," Klump explains. "We are getting to the point where recent price increases are resulting in a growing shortage of inventory for lower-priced homes."

CREA MLS® Residential Market Forecast:

For more information:

Gregory Klump
CREA Chief Economist
613-237-7111 ext. 2247
gklump@crea.ca

Bob Linney
CREA Communications Director
613-237-7111 ext. 2270
rlinney@crea.ca