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.