Tuesday, August 21, 2012

Housing Market Forecast - BC third quarter

Economic Outlook

Economic fundamentals point to a pickup in housing demand during the last half of 2012 following modest growth in the first two quarters of 2012. Although the level of employment was flat during the first quarter, full-time employment rose while part-time employment declined compared to year-ago levels. Total employment picked up during the second quarter of 2012 and the shift no full-time employment continued. This trend is expected to support homeownership demand in the second half of this year. 

Population-driven demand from individuals moving to the province from other countries is the main source of demographic demand for new and resale housing. First quarter international migration was higher than the level recorded during the first quarter of 2011. However, net interprovincial migration was negative during the first quarter. Overall, though, total net migration was positive.

Housing Market Outlook

Housing starts in British Columbia are forecast to increase gradually in the second half of this year and in 2013 to a level consistent with economic fundamentals and household formation. This year, growth will be concentrated in multiple-family housing with a stable level of single detached starts. Meanwhile, 2013 will see multiple-family housing starts level off, while single-detached home starts are forecast to rise. Total housing starts are expected to total 28,500 units in 2012 and 30,100 units in 2013. 

Expect single-detached home starts of 8,900 in 2012 and 9,900 in 2013. In the first half of 2012, well-supplied resale markets offered choice to homebuyers, drawing some demand away from new single-detached homes. This trend should continue during the second half of 2012. Next year, fewer listings, higher existing home sales and firmer resale prices are expected to shift some demand from resale housing back to new homes.

The forecast level of multiple-family housing starts, including apartments, semi-detached and row homes is revised higher in this quarterly forecast due to an increase in larger projects, including some rental. Moving forward, however, starts are forecast to stabilize at levels consistent with underlying demand over the forecast period. Demand from first-time homebuyers, empty-nesters and others choosing condominium living is expected to result in 19,600 multiple family starts in 2012 and 20,200 starts in 2013.

On a quarterly basis, the number of resale transactions is forecast to gradually improve in the rest of 2012, in line with strengthening employment and population growth. Provincial resale market conditions are forecast to remain in balance during the rest of this year and next, although local market conditions will vary. Existing home prices, as measured by the average MLS® price, moved lower during the second quarter of 2012 after modest growth in the first quarter. The average annual price for 2012 is forecast to be $522,200 while 2013 will see a slight increase to $535,700 as resale activity picks up.

Copyright CMHC

BCREA Housing Market Update (August 2012)

Published by
BC Real Estate Association (BCREA) Chief Economist Cameron Muir discusses the July 2012 statistics.

Copyright BCREA - Reprinted with permission

Canadian home sales hold steady in July

According to statistics released today by The Canadian Real Estate Association (CREA), national resale housing activity remained stable from June to July 2012. Prices are off their recent peaks in Greater Vancouver and Greater Toronto, but remain above year-ago levels in most markets.
  • Home sales activity little changed (-0.01%) from June to July.
  • Actual (not seasonally adjusted) sales up 3.3% over levels in July 2011.
  • The number of newly listed homes fell 3.3% from June to July.
  • Stable sales combined with fewer new listings firmed the national housing market, keeping it in balanced market territory.
  • The national average home price declined 2.0% on a year-over-year basis in July.
  • The Composite Aggregate Benchmark home price was up 4.5% in July, its smallest gain in over a year.
Sales over MLS® Systems of Canadian real estate Boards and Associations held steady in July 2012 from the previous month, edging back by less than one-tenth of a percentage point.
The number of local housing markets was roughly evenly split between those that saw month-over-month gains and those that posted monthly declines. Activity was up from the previous month in Kingston, Chilliwack, and Calgary, offset by fewer sales in Toronto, Newfoundland & Labrador, and Edmonton.
Actual (not seasonally adjusted) activity was up 3.3 per cent year-over-year in July 2012, with gains in Calgary and slower sales in Vancouver.
“Recent changes to mortgage regulations were widely expected to temper sales and prices in Greater Toronto and Greater Vancouver, and the data released today confirms that,” said Wayne Moen, CREA President. “Even so, sales and price trends can be very different from one market to the next, and run counter to national trends. Buyers and sellers should talk to their REALTOR® to understand how the housing market is shaping up in their area.”
“Some first-time home buyers may have difficulty qualifying for mortgage financing due to shortened amortization periods included in recent changes to mortgage regulations,” said Gregory Klump, CREA’s Chief Economist “As the lynchpin of the housing market, lower first-time buying activity will have knock-on effects over the rest of the market. It will likely take more time for move-up buyers to sell their current home.”
The number of newly listed homes fell 3.3 per cent in July compared to June, with declines in more than half of all local markets including Montreal, Toronto, Vancouver, the Fraser Valley, Calgary, and Edmonton.
The national housing market remains firmly entrenched in balanced market territory, supported by stable sales activity and fewer new listings. The national sales-to-new listings ratio, a measure of market balance, stood at 53.4 per cent in July 2012, up from 51.6 per cent in June. Based on a sales-to-new listings ratio of between 40 to 60 per cent, two thirds of all local housing markets were in balanced market territory in July.
The national number of months of inventory is another measure of market balance. It represents the number of months it would take to sell current inventories at the current rate of sales activity. It stood at 6.1 months at the end of July, unchanged from the June reading. The months of inventory measure has been hovering around six months since the end of 2010.
Average sale prices in July were up from levels one year ago in about seven of every 10 local markets, but declining sales activity in Greater Vancouver continues to impact the national average price. The actual (not seasonally adjusted) national average price for homes sold in July 2012 was $353,147, down two per cent from the same month last year. Excluding Greater Vancouver from the national average price calculation yields a year-over-year increase of 1.1 per cent.
Unlike average price, the MLS® Home Price Index (MLS® HPI) is not affected by changes in the mix of sales, so it provides a better gauge of Canadian home price trends. The index tracks home price trends in five of Canada’s most active housing markets, including Greater Vancouver, the Fraser Valley, Calgary, Greater Toronto, and Montreal. These five markets comprise approximately 45 per cent of all home sales activity in Canada.
The MLS® HPI rose 4.5 per cent year-over-year in July 2012. This was the third time in as many months that the year-over-year gain shrank, and marks the slowest rate of increase in over a year.
Year-over-year gains moderated in all Benchmark housing categories tracked by the index. One and two-storey single family homes posted the strongest year-over-year growth in July, with two-storey single family home prices up 5.8 per cent and one-storey single family prices up 5.6 per cent.
Prices for townhouse and apartment units continue to see more modest gains, rising 2.5 per cent and 2.2 per cent respectively on a year-over-year basis in July 2012.
The MLS® HPI posted the largest year-over-year increase in Greater Toronto (7.1%), followed by Calgary (6.0%), the Fraser Valley (2.5%), Montreal (2.1%), and Greater Vancouver (0.6%). Price gains in July were smaller than they were the previous month in all of these markets except Calgary.

Copyright CREA reprinted with permission

Home Sales Decline in Vancouver, but Surge in Rest of BC

The British Columbia Real Estate Association (BCREA) reports that the dollar volume of homes sold through the Multiple Listing Service® (MLS®) in BC declined 12.9 per cent to $3.1 billion in July compared to the same month last year. A total of 6,482 MLS® residential unit sales were recorded over the same period, down 0.8 per cent from July 2011. The average MLS® residential price was $474,954, 12.2 per cent lower than a year ago.

"While some potential homebuyers in Vancouver are taking a breather over the summer months, stronger consumer demand continues across the rest of the province,” said Cameron Muir, BCREA Chief Economist. MLS® residential unit sales outside of Vancouver were up 11 per cent in July over a year ago. In contrast, home sales through the Real Estate Board of Greater Vancouver were down 18 per cent over the same period.

Year-to-date, BC residential sales dollar volume declined 16.5 per cent to $23.5 billion, compared to the same period last year. Residential unit sales dipped 7.9 per cent to 44,794 units, while the average MLS® residential price was 9.4 per cent lower at $525,183.

Copyright BCREA reprinted with permission