Activity in the local residential resale market will remain subdued for the rest of this year, with only a slight improvement expected in 2011, says Canada Mortgage and Housing Corp.
In its latest housing market outlook, released on Tuesday, the national housing agency predicted that 3,000 Central Alberta homes will be sold through the Multiple Listing Service this year. That would be a 20.4 per cent drop from the 3,770 sales that closed in the region last year.
CMHC is projecting weaker year-over-year sales in five of Alberta’s seven larger urban centres, but the decline in Red Deer would be the greatest. Home resales in Calgary are forecast to fall 14 per cent, with Edmonton 11.2 per cent lower, Lethbridge down 8.4 per cent and Medicine Hat slipping 1.7 per cent.
MLS residential sales in Grande Prairie are expected to rise by 4.5 per cent, and the figure for the Regional Municipality of Wood Buffalo to jump 13.3 per cent this year.
In CMHC’s previous housing market outlook, issued in May, MLS sales in Central Alberta this year were anticipated to reach 3,500.
Looking further ahead, CMHC is calling for resales of local home to improve to 3,100 in 2011. Three months ago, it was forecasting 3,700 sales next year.
In its quarterly report, CMHC said resale transactions in Alberta received a boost during the first half of this year as buyers rushed to take advantage of market conditions — a trend that hasn’t continued.
Low interprovincial migration and higher monthly carrying costs for homeowners have also slowed sales.
Next year, said CMHC, “a tighter labour market, combined with wage growth and improved migration will expand sales in the low single-digits.”
For the Red Deer area, home resales are projected to reach 3,100 in 2011, as compared with the 3,700 that CMHC was forecasting in May.
Despite the drop in sales this year, CMHC expects the average price of MLS transactions in Central Alberta to hit $270,000 — 2.1 per cent higher than the $264,417 average last year but down slightly from the $273,000 it was forecasting in May. Next year, it anticipates that resale prices will average $275,000, a downward adjustment from the $282,000 it was previously projecting.
An increase in the number of home listings will continue to constrain prices, said CMHC.
The housing market outlook is rosier when it comes to new construction.
CMHC is anticipating 720 housing starts in Red Deer this year: 440 single-detached dwellings and 280 units in multi-family projects. Those figures are unchanged from the agency’s May forecast and much higher than the corresponding stats from 2009.
Specifically, residential starts this year are expected to be 44.9 per cent higher than last year’s 497, with the single-detached category up 32 per cent from the 333 starts last year, and multi-family units up 70.7 per cent over the 164 posted in 2009.
Compared to Alberta’s other large urban centres, the anticipated year-over-year jump in Red Deer’s total housing starts would be second only to Edmonton’s 50.4 per cent. And the local increase in the multi-family category would be the highest among the big cities.
Next year, housing starts in Red Deer are projected to number 770, with 460 single-detached homes and 310 multi-family units.
Those numbers are much more conservative than the figures CMHC was offering in May, when it projected 900 residential construction starts in 2011: 530 single-detached and 370 multi-family.
In its report, CMHC said the rising number of homes being built and increased competition from the resale market should impact demand and lead to a slowdown in the pace of construction.
“Wage and employment growth, as well as more balanced market conditions in 2011, will allow single-detached starts to increase in the single-digits.”
Nationally, CMHC is expecting housing starts to moderate during the remainder of this year and stabilize in 2011.
Bob Dugan, CMHC’s chief economist, said in a news release that existing home market conditions will remain balanced over the next two years as MLS resales ease and inventory levels remain elevated.
In 2011, MLS sales will move lower, CMHC said. And with an improved balance between demand and supply, the average MLS price is expected to edge lower through the end of 2010 and then rise modestly in 2011, it added.
With files from The Canadian Press.