Housing outlook on upswing
Canada Mortgage and Housing Corp.’s assessment of Red Deer’s housing sector continues to improve.
In its latest housing market outlook, released on Monday, CMHC boosted its estimates of the number of residential construction starts and home resales that will occur locally in 2012 and 2013.
It now projects that work on 640 homes will have begun by the end of this year and another 680 by the end of 2013 — as compared with 555 last year.
If the 2012 estimate holds true, it would represent a 15.3 per cent improvement over 2011.
The 2012 figure includes 360 single-detached houses and 280 units in multi-family projects in Red Deer, with these number expected to hit 380 and 300 respectively in 2013. There were 295 starts on single-detached homes and 260 on multi-family units in 2011.
In the analysis included in CMHC’s outlook — which is issued quarterly — the national housing agency said economic growth, migration of people into the province and job creation were fueling housing demand.
It projects that single-detached starts will rise by 15 per cent across the province in 2012, but noted that the number of unsold units sitting in inventory has still decreased from last year.
Multi-family housing starts in Alberta are expected to skyrocket by 42 per cent this year, and then moderate in 2013.
In the case of the resale market, CMHC said it now expects 4,200 homes in the Red Deer region to trade through the Multiple Listing Service this year, and a further 4,300 in 2013.
The 2012 projection would mark a 13.9 per cent jump from last year, when there were 3,689 local MLS sales.
CMHC expects the average MLS price this year to hit $280,000, up 7.2 per cent from the 2011 average of $261,258. For 2013, CMHC is anticipating an average price of $286,500.
Provincewide, the agency said MLS sales are on track to rise 12 per cent in 2012. For 2013, it expects incremental increases in mortgage rates to slow this growth to less than two per cent.
Average resale prices across the province are expected to increase by more than two per cent in 2012.
Compared with Alberta’s other major urban areas, Red Deer ranks fourth when it comes to CMHC’s forecasted increase in total housing starts in 2012. Medicine Hat leads the way with a 90 per cent jump, followed by Calgary at 33.4 per cent jump and Edmonton at 28.6 per cent.
Starts in Lethbridge are projected to decline by 18.4 per cent, with the Regional Municipality of Wood Buffalo to slide 19.9 per cent and Grande Prairie to drop 21 per cent.
The number of multi-family unit starts in each community, which can fluctuate sharply from year to year as big projects arise, accounts for much of the discrepancy between total housing starts in the seven centres.
On the resale side, Red Deer’s 13.9 per cent increase in MLS sales from 2011 to 2012 would also put it in fourth place among the province’s bigger centres.
Grande Prairie would lead the way at 15.8 per cent, Calgary would be next at 15.7 per cent, then Medicine Hat at 15 per cent, Edmonton at 6.1 per cent and Lethbridge at 4.4 per cent. Wood Buffalo’s 2012 resales are expected to slip by 4.4 per cent.
In the case of anticipated average price increases, the Red Deer area’s 7.2 per cent would be the highest.
Wood Buffalo would follow at 6.5 per cent, with Medicine Hat at 5.1 per cent, Edmonton at 2.6 per cent, Grande Prairie at 3.2 per cent, Calgary at two per cent and Lethbridge at 1.9 per cent.
For Canada as a whole, CMHC says the market for existing homes will be softer this year than previously forecast, although the mid-point price will continue to rise from where it was in 2011. The agency nudged upward its expectation for housing starts across Canada this year, but is calling for reduced numbers in 2013.
“A weaker outlook for global economic conditions and the waning of the effect of pre-sales from late 2010 and early 2011, which contributed to support multi-family starts this year, will bring moderation in housing starts next year,” said Mathieu Laberge, CMHC’s deputy chief economist. “Nevertheless, employment growth and net migration will help support housing starts activity going forward.”
With files from The Canadian Press.