"In 2009 many first-time buyers made the move to home ownership, taking advantage of record-low mortgage rates and prices that had fallen from their previous peak level," CMHC said in its report.

For 2010, CMHC said anticipated higher mortgage rates on top of prices that have rebounded sharply will squeeze buyers out and reduce housing demand along with the early departure of many first-timers.

CMHC is forecasting that Metro Vancouver will see 35,000 property sales cleared through the realtor-controlled Multiple Listing Service, a 3.5-per-cent decline from 2009 and will slip another three per cent to 34,000 transactions in 2011.

On prices, CMHC is forecasting that Metro Vancouver's average price to top $655,000 in 2010, up 10.6 per cent from 2009. In 2011, however, the federal mortgage insurer estimates price growth will edge up 3.1 per cent to $675,000.

CMHC's forecast for housing starts estimates 12,000 new-home starts in 2010, up 44 per cent from a year ago, and that prices will essentially stall out. It calls for its new-home-price index to shrink by one per cent in 2010, before gaining that measure back in 2011.

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