Stronger-than-expected activity in the local housing market has prompted Canada Mortgage and Housing Corp. to inflate its forecast for this year and next.
In its third-quarter housing market outlook, released on Tuesday, the national housing agency boosted its projection of the number of home sales to be processed through the Multiple Listing Service in Central Alberta this year to 4,100. That’s up from the 3,900 deals it was anticipating just a few months ago, and if accurate, would represent an 11 per cent jump over the 3,689 MLS sales recorded in the region last year.
During the first half of 2012, MLS sales in Central Alberta were nearly 20 per cent ahead of last year’s pace.
For 2013, CMHC is now forecasting that there will be 4,200 resales, as compared with the 3,985 it was calling for in its second-quarter housing market outlook.
CMHC is projecting increased MLS sales throughout Alberta. It explained in its outlook that employment and income growth should give aspiring homebuyers the means to act. Higher monthly carrying costs may slow demand in 2013, noted the Crown corporation, but this should be countered by continued job creation and new household formation.
As for resale prices, CMHC expects the MLS average in Central Alberta to reach $275,000 this year. That would mark a 5.3 per cent increase over the 2011 average of $261,258. For 2013, the figure is expected to be $282,000.
During the January-to-June period of this year, the average local price was five per cent higher than it was for the same six months of 2011.
CMHC said in its outlook that balanced market conditions should result in price growth in Alberta equal to 2.5 per cent in 2012 and nearly three per cent in 2013.
CMHC is also bullish about Red Deer’s residential construction industry. Its latest forecast projects that there will be 625 housing starts this year, up nearly 13 per cent from the 555 starts last year. In June, CMHC was forecasting 605 starts.
The agency expects starts on single-detached houses to hit 325, up from 295 in 2011, while starts on units in multi-family projects should reach 300, a jump from last year’s total of 260.
During the first six months of 2012, housing starts in Red Deer jumped 38 per cent over the tally for the same period the preceding year. Most of the increase reflected activity on multi-family projects, with construction starts on such units more than doubling from 2011 to 2012.
For 2013, CMHC is forecasting 640 housing starts in Red Deer: 335 single-detached and 305 multi-family. It said in its forecast that economic growth and job creation are fueling demand for new housing across the province.
Existing home owners will see the value of their property rise, which in turn will help with move-up buying, said CMHC. Improved balance in the resale market is encouraging more buyers to look to the new home market.
CMHC expects multi-family starts in Alberta to increase by 35 per cent in 2012, but added that developers will then likely slow production to guard against a rapid increase in inventory.
The agency is less optimistic when it comes to housing markets in other regions of the country. While it isn’t calling for a major decline, its third quarter outlook suggests that 2013 will be softer than it was estimating in June; however, 2012 may be somewhat stronger than previously expected.
CMHC said housing starts and home sales have been strong in 2012 — particularly when it comes to multiple-dwelling units such as condos and apartments — but these will soften moderately in the coming months into 2013.
“Balanced market conditions in most local housing markets will result in a slowing in house price growth as well,” said Mathieu Laberge, CMHC’s deputy chief economist.
With files from The Canadian Press.