Residential real estate outlook is optimistic
Canada Mortgage and Housing Corp. expects Red Deer’s residential real estate market to perform well this year and next — although the national housing agency doesn’t anticipate a surge like the one that took place in 2013.
In its first quarter housing market outlook, released on Thursday, CMHC projects that there will be 820 housing starts in the city this year, up 4.6 per cent from the 2013 tally of 784.
It’s forecasting a further 2.4 per cent increase in 2015, to 840.
In the case of the resale market, which includes the region around Red Deer, CMHC’s outlook calls for 5,050 Multiple Listing Service sales this year, up 3.2 per cent from the 4,893 transactions in 2013. The tally is expected to increase by a further two per cent in 2015, to 5,150.
CMHC is expecting the average MLS resale price in Central Alberta to hit $306,000 this year and $312,000 in 2015.
The 2014 figure would represent a 2.6 per cent increase over the $298,245 average last year, and the 2015 price a further two per cent rise.
CMHC expects 2014 housing starts to grow by 12 per cent in Calgary and 6.1 per cent in Medicine Hat, while dropping by 4.4 per cent in Grande Prairie, 7.4 per cent in Lethbridge, 10.1 per cent in Edmonton and 15.2 per cent in the Regional Municipality of Wood Buffalo.
When it comes to MLS sales, all seven of Alberta’s major urban centres are projected to post increases this year, ranging from Calgary’s 4.5 per cent improvement to 1.3 per cent in Edmonton.
Looking back on 2013, Red Deer builders combined to post a 38 per cent jump in housing starts — an increase that was bettered only by Wood Buffalo, thanks to a spike in multi-family construction in the northern city.
On the resale market, Central Alberta had the greatest year-over-year percentage increase in sales and the second biggest jump when it comes to average price growth, behind Grande Prairie.
In an analysis that accompanied its forecast, CMHC said a record level of migration into Alberta last year should continue to propel the resale market, although increased supplies of housing are expected to slow average price growth. This activity should in turn support residential construction in 2014.
Nationally, CMHC expects housing starts to taper off in 2014 and 2015 as a result of rising interest rates and a slowdown in demand from first-time buyers.
MLS sales are forecast to climb by just under two per cent this year and 1.8 per cent in 2015, with the average price to rise 2.1 per cent to $390,400 this year and another 1.7 per cent to $397,100 in 2015.
The CMHC outlook follows a report earlier this week by TD Bank that suggested home prices in Canada were about 10 per cent overvalued, based on current expectations for interest rates. However, TD cautioned that the overvaluation in markets like Toronto, Vancouver, Montreal and Ottawa was likely higher.
The Canadian housing market and the risk of a downturn has been highlighted as a key concern for the economy by policy-makers. Recent indicators have suggested, that a soft landing may be in the works for the market, but worries about a bubble bursting have persisted.
CMHC said housing starts will moderate in seven out of 10 provinces this year, with Alberta, British Columbia and Quebec expected to post gains. Housing starts in 2015 are expected to post a modest rebound in Manitoba and in Quebec, with British Columbia showing no change. The other provinces are forecast to see housing starts moderate.