CMHC forecasts more listings, lower prices
Canada’s national housing agency is projecting increased home resales and prices for Central Alberta this year.
In its latest housing market outlook, issued on Thursday, Canada Mortgage and Housing Corp. estimates that the number of Multiple Listing Service sales in the region in 2012 will reach 3,900. That would be 5.7 per cent more than the 3,689 residential transactions recorded in 2011.
CMHC expects resale prices to average $268,000, which would represent a 2.6 per cent improvement from $261,258 in 2011. For 2013, CMHC is calling for 3,985 MLS sales at an average price of $274,400.
In an analysis accompanying its forecast, CMHC pointed to higher employment, population increases and low mortgage rates as factors spurring Alberta’s resale market. It added that more than half of Alberta’s major centres remain buyers’ markets, with price growth there restrained as a result.
Meanwhile, CMHC now expects 605 residential construction starts in Red Deer this year, up nine per cent from the 555 starts in 2011. Most of the increase will occur on the multi-family side, with 305 starts there as compared with 260 last year. Single-detached starts are expected to number 300, up less than two per cent from the 295 last year.
For 2013, CMHC is anticipating 625 residential starts in Red Deer: 310 single-detached and 315 multi-family.
CMHC said in its analysis that building activity in Alberta is being fueled by “improving economic and demographic conditions,” although higher mortgage rates and increased inventory could slow activity in 2013.
Currently, it said, the market is being impacted by a decline in the inventory of multi-family units and an earlier drop in the pace of multi-family construction.
For the province as a whole, CMHC expects resale transactions to number 57,600 in 2012, which would mark a seven per cent increase over last year.
For 2013, CMHC is now anticipating 59,200 sales in Alberta.
Average resale prices in the province this year should move up 2.2 per cent, to $360,900, it said. For 2013, CMHC expects average prices to climb nearly three per cent higher, to $371,500.
After Red Deer, CMHC thinks Grande Prairie will post the highest year-over-year increase in MLS sales during 2012, at 16 per cent. It ranks Lethbridge and Calgary next, at about nine per cent each, followed by the Regional Municipality of Wood Buffalo and Medicine Hat at five per cent each, and Edmonton at four per cent.
Average prices for 2012 are projected to run from $648,000 in the Regional Municipality of Wood Buffalo, up six per cent from 2011, to $255,000 in Medicine Hat, up 1.5 per cent. In between will be Calgary at $420,000, up two per cent; Edmonton at $344,000, up 2.5 per cent; Grande Prairie at $262,000, up one per cent; and Lethbridge at $259,000, up 2.5 per cent.
With respect to new construction in Alberta, CMHC is calling for single-detached starts to number 17,500 this year, up 15 per cent from 2011, and to hit 18,000 in 2013. In the case of multi-family starts, the 2012 tally is expected to reach 13,200 units, a 25 per cent improvement over 2011. Next year, the figure is expected to slip to 12,800.
Among the province’s largest communities, the year-over-year increase in housing starts is expected to be greatest in Medicine Hat, at 30 per cent, followed by Calgary at 25 per cent and Edmonton at eight per cent. CMHC anticipates that Grande Prairie will experience a 43 per cent drop in housing starts this year, with Wood Buffalo to slide seven per cent and Lethbridge five per cent.
Across Canada, housing starts will be in the range of 182,300 to 220,600 units this year, CMHC said.
CMHC deputy chief economist Mathieu Laberge said condo construction helped drive housing starts in the early part of the year, but noted it varies significantly from month to month.
“Although economic conditions are expected to remain supportive of housing demand, housing starts activity is expected to moderate as 2012 progresses,” Laberge said in a statement.
“Similarly, balanced market conditions in the existing home market will result in modest house price gains through to the end of the year.”
CMHC expects housing starts for 2013 to range between 175,100 and 213,500 units.
It forecasts that the number of existing home sales will be in the range of 431,200 to 516,100 units this year and the 2013 range will be about the same at between 431,300 and 522,400 units.
The outlook suggests the average MLS price in Canada will range between $341,100 and $406,700 this year and between $346,000 and $419,900 next year.
It said the moderate increases in the average price, of two to three per cent, are consistent with the balanced market conditions that are expected to continue in 2012 and 2013.
The report came as Statistics Canada said its new housing price index rose 0.2 per cent in April, following a 0.3 per cent increase in March. On a year-over-year basis, the index was up 2.5 per cent in April, following a 2.6 increase in March.
The agency said the metropolitan regions of Toronto, Oshawa, Ont., and Edmonton were the main contributors to the March to April increase.
St. John’s, N.L., St. Catharines—Niagara and Windsor, Ont. all reported price declines of about 0.1 per cent.
Continued strength in the housing market, largely due to the staying power of low interest rates, has led some economists to warn the market is overvalued.
They have warned that could make homeowners vulnerable to a downturn, especially those who have used low interest rates to borrow more than they could otherwise afford.
The Bank of Canada and federal Finance Minister Jim Flaherty have warned Canadians repeatedly to moderate borrowing on real estate, declaring household debt to be the domestic economy’s number one enemy.
With files from The Canadian Press.