Home Front: Canada's housing markets keep a steady pace
Photo sourced from obxmarketreport.com
Canada's housing markets are forecast to remain steady for another two years, according to a new report released on Monday.
The national housing agency, Canada Mortgage and Housing Corporation (CMHC), is predicting continued low interest rates and "moderate" increases in the average multiple listing service (MLS) price for 2012.
“With the Canadian economy set to expand at a moderate pace and mortgage rates expected to remain low, activity levels in 2012 in both new home construction and sales of existing homes will stay close to levels seen in 2011,” said Mathieu Laberge, deputy chief economist for CMHC in a press release.
- Existing home sales will be in the range of 406,000 to 504,500 units with a point forecast of 457,300 units.
- Housing starts will be in the range of 164,000 to 212,700 units with a point forecast of 190,000 units. They're expected be in the range of 168,900 to 219,300 units with a point forecast of 193,800 units in 2013.
- The average MLS price is predicted to be between $330,000 and $410,000 in 2012 and between $335,000 and $430,000 in 2013. CMHC’s point forecast for the average MLS price is $368,900 for 2012 and $379,000 for 2013.
What does this mean for Vancouver?
Vancouver's housing market may see prices go up "slightly," but the sales are expected to be the same as last year, Bill Binnie, owner and broker of Royal LePage North Shore, said.
The average price of homes in Vancouver will be 2.3 per cent higher than it was at the end of 2011.
While Binnie said that he "completely agrees" with the sunny national reports, saying it's a "fairly predictable" market, he added:
"There have been a few reports out that were negative in nature. I just read one from some bank economist talking about a bubble in the condo market."
Looking at Binnie's local statistics and surveys, he observed that there aren't many investors. He said that "between the local investor and the foreign investor, (the difference) is never more than 20 per cent."
"We're only seeing maybe half as many Chinese buyers as we did last year thus far, but I think that will grow," he said.
"I think there's some urgency in China to buy this year because of a [government central committee] change happening there, so that will be a steady influence in the Vancouver market all year, as it was last year. I don't see much change."
Foreign buyers still moving the real estate market
"Vancouver is very much still under the influence of offshore buyers," Kim Little, a real estate agent and Vancouver Observer housing blogger, said.
"Locally, we are seeing starter homes, which are now condos and townhouses, carry on steadily."
Royal LePage North Shore House Price Survey and Market Survey Forecast for the fourth quarter showed year-over-year price gains for all housing types surveyed in Vancouver:
- Detached bungalows rose 14.1 per cent year-over-year to $1,017,500, largest year-over-year price increase
- Prices for standard two-storey homes rose 10.9 per cent year-over-year to $1,117,250
- Standard condominiums saw an increase of 10.7 per cent year-over-year to $536,500
Royal LePage is Canada's leading provider of services to real estate brokerages, with 14,000 real estate professionals in over 600 locations countrywide.
(2) Comments
Well, in fact, national sales of existing homes in Canada increased 1.2% from the previous month, creating on a gain of 2.5% in September. Price gains however cooled to 5.5%, the smallest gains since this January. Thus, it is clear for me that third-quarter sales activity in the province was stronger than forecast, whereas the rest of the country came in broadly in line with expectations. Guess many people will now stop borrowing money for mortgages. What is remarkable, the moderating prices in Vancouver in the third quarter compared with the first half of the year, with sales of multi-million dollar properties in that city now returning to a more normal level.
The U.S. is a special case, given its status as the world’s largest economy and printer of the world’s reserve currency. If your personal credit score fell, you would almost certainly have to pay more to borrow. But because so many investors want to hold Treasurys and the dollar, the U.S. can get away with a slight credit-rating downgrade without having to pay more to borrow.
Lenders in Canada have greater recourse rights, meaning they can go after people who walk away from their mortgages for a Calgary short term suites (Alberta might be an exception). Also, the subprime mortgage market was less advanced in Canada.