Housing Construction, Sales and Price Forecasts are Stable, CMHC Reports
Stability is the name of the game in B.C. real estate, according to the latest housing market forecast from Canada Mortgage and Housing Corporation.
CMHC’s fourth quarter Housing Market Outlook calls for a slight increase in housing starts and sales numbers with a slight decrease in average prices.
“In 2013, multiple-family housing starts are forecast to level off, while single-detached home starts are forecast to rise but remain below their ten-year average,” explained Carol Frketich, CMHC’s B.C. regional economist. “Actual housing starts so far in 2012 have been in line with CMHC’s forecast. This year, growth was concentrated in multiple-family housing with a similar level of single-detached starts to 2011.”
The forecast calls for an increase in housing starts for 2013 to 29,100 homes from the 28,500 homes projected this year. To put these numbers into context, in 2007 there were 39,000 housing starts in the province, Frketich said, adding that the province is now in line with a 10-year average.
“Single detached homes are still below their 10-year average, so that’s why the growth is coming up,” Frketich said. “Today, Statistics Canada put out their building permit data which showed an increase for single detached permits in B.C.”
The building permit data from Statistics Canada shows that the value of B.C. residential building permits is down three per cent between August and September, 2012, and up 14.4 per cent between September 2011 and September 2012. The value of non-residential building permits is up 43.7 per cent between August and September and up 163 per cent between September 2011 and September 2012.
In Metro Vancouver, the value of residential building permits is up 20.9 per cent between August and September and 81.1 per cent between September 2011 and September 2012.
The resale market is projected to move from a buyers’ market to a more balanced market by mid-2013 in B.C., Frketich said, adding that a shift to lower-priced homes and a larger share of sales occurring outside the Metro Vancouver area will dampen price growth.
“We see a pick up in growth in both employment and the economy next year, and that’s what leads to a slightly stronger outlook for housing,” Frketich said.
The number of resales is projected at 77,700 transactions, an 11-per-cent increase from this year, she said. The average annual MLS price in B.C. is forecast to remain relatively stable in 2013 at $515,000, following a projected 7.8-per-cent decline in 2012 to $517,400.
Housing starts in Metro Vancouver are forecast to remain flat in 2013 — the CMHC numbers call for 19,000 housing starts in 2012 and 19,100 in 2013.
The average annual MLS price in Metro Vancouver is projected to end 2012 down 6.4 per cent to $730,000 and then drop a further 0.3 per cent in 2013 to $728,000 as people shift toward more moderately priced homes, including those in the Fraser Valley and show a preference for condominiums over single-family detached homes.
The number of sales in Metro Vancouver is forecast to end 2012 18 per cent lower than 2011, but then to increase 11 per cent in 2013, shifting the market back to balanced territory before the end of next year, the CMHC forecast says. A sales-to-new-listings ratio between 45 and 60 per cent is considered balanced, while a lower ratio represents a buyers’ market and a higher ratio represents a sellers’ market, Frketich said.
Anne McMullin, president and CEO of the Urban Development Institute, said the housing starts numbers and sales forecasts show that there is still a very healthy market in Vancouver and in B.C.
“We saw record numbers in the last decade and I think now we’re at more normal levels,” McMullin said. “We still see 30,000 people moving to the region per year and we do see a bit of a demographic shift as people move out of single family homes into condos. The development industry is still strong.”
She said new condo developments close to transit stations are still selling out fast.
“There are still stronger areas than others, but it’s still a stable, strong market for B.C.,” McMullin said.
Frketich said the fact that interest rates are not expected to increase in the near future has somewhat countered more negative economic news such as slow growth in gross domestic product and fears about the global economy.
“We’re watching it all carefully and ... seeing stability with some growth in some sectors,” Frketich said.
Frketich said there were only minor changes from the outlook released three months ago, including a decrease in the forecast for home resales in Vancouver to 30,000 in 2013 from 32,500 in their forecast three months ago. “Vancouver seems to the be market where the adjustments are happening,” Frketich said. “The outlook is still similar, we’ve just adjusted the levels down a bit.”
The CMHC forecast also says that many sellers took their homes off the market rather than sell for a price significantly lower than their asking price. Homes priced at more than $3 million comprised four per cent of sales of single detached homes, down from five per cent a year ago. Single detached homes made up 40 per cent of all home sales in Metro Vancouver, down from 44 per cent a year ago.
Across the country, CMHC is also calling for stability, saying that existing home sales have a point forecast of 461,500 homes in 2013, compared to 457,400 in 2012. The national average annual price is forecast to be between $363,200 and $367,000 in 2012 and between $363,100 and $377,900 in 2013, CMHC said.