Good things lie ahead for Red Deer’s new and resale housing markets.
At least that’s the assessment of Canada Mortgage and Housing Corp., which is projecting that construction starts on single-detached homes in the city will jump 15.3 per cent this year. The national housing agency also anticipates that Central Alberta’s residential resale market will see an 11.2 per cent increase in transactions.
Both figures, which are contained in CMHC’s latest housing market outlook, are the highest for the seven largest urban centres in Alberta.
The CMHC forecast, released on Monday, predicts that total housing starts in Red Deer this year will number 625, up 12.6 per cent from the 555 starts in 2011. Single-detached homes will account for 340, up from 295, while work on multi-family units will add 285, a 9.6 per cent improvement over the 260 multi-family starts last year.
Medicine Hat is expected to enjoy a 30 per cent boost in housing starts in 2012, although this number is inflated by a projected 175 per cent increase in multi-family projects. Housing starts in Calgary are forecast to rise 10.8 per cent this year, in Edmonton they’re expected to improve by 8.2 per cent, and in the Regional Municipality of Wood Buffalo, CMHC has set the year-over-year change at 2.6 per cent.
The agency is anticipating that residential construction starts in Lethbridge will slip 3.4 per cent this year, while in Grande Prairie a 10.2 per cent drop is expected.
In the report accompanying its forecast, CMHC pointed to economic growth and job creation as factors spurring residential construction in Alberta.
Speaking to the Red Deer branch of the Canadian Home Builders’ Association two weeks ago, CMHC analyst Regine Durand said housing starts in the city would be positively influenced by an improved supply of residential lots, low inventories of unsold new homes, slow price growth and increased employment.
CMHC’s forecast predicts that the number of housing starts in Red Deer in 2013 will edge up another 3.2 per cent, to 645. That would be the smallest percentage increase among Alberta’s largest urban centres.
Medicine Hat is expected to see the biggest jump from 2012 to 2013, at 15.4 per cent, followed by Wood Buffalo at 12.5 per cent, Grande Prairie at eight per cent, Edmonton at 5.4 per cent, Lethbridge at 4.7 per cent and Calgary at 3.9 per cent.
Anticipated price gains and “modestly higher” mortgage rates should slow the pace of residential construction in 2013, CMHC said.
In the case of the resale market, 3,425 residential deals in the Red Deer region are expected to be processed through the Multiple Listing Service. That would mark an 11.2 per cent increase over 2011, when 3,080 sales closed.
The second greatest increase in resale activity is expected to occur in Wood Buffalo, where the year-to-year change is predicted to hit 5.1 per cent. Next would be Lethbridge at 4.4 per cent, Medicine Hat at 2.7 per cent, Calgary at 2.4 per cent, Grande Prairie at 1.9 per cent and Edmonton at 1.4 per cent.
CMHC pointed to Alberta’s “bright economic and demographic outlook” as reasons for more home sales both this year and in 2013. Durand also cited continued low interest rates and a narrowing gap between the cost of owning versus renting a home as factors at play.
In 2013, resale activity in the Red Deer area is anticipated to grow by 2.2 per cent, to 3,500. CMHC expects Lethbridge to lead the way in MLS sales next year, at 4.8 per cent, followed by Grande Prairie and Wood Buffalo at 4.5 per cent, Calgary at three per cent, Edmonton at 2.3 per cent and Medicine Hat at two per cent.
As for average prices, CMHC is looking for a 1.8 per cent increase in resale values in and around Red Deer this year — to $290,000 from $284,765. Elsewhere, the average price is expected to increase by 4.8 per cent in Wood Buffalo, 2.6 per cent in Edmonton, 2.1 per cent in Lethbridge, 1.5 per cent in Calgary and Medicine Hat, and 0.9 per cent in Grande Prairie.
For 2013, the average resale price in the Red Deer region is expected to rise 2.4 per cent, to $297,000. The biggest increase is expected in Edmonton, at three per cent, followed by Calgary and Wood Buffalo at 2.7 per cent, Lethbridge at two per cent, Grande Prairie at 1.6 per cent and Medicine Hat at 1.2 per cent.