Market Forecast Update

Overview

1.       Housing starts are forecast to total 27,100 units in 2013 and 28,600 units in 2014.

2.       Existing MLS®2 home sales in 2013 are expected to reach 70,100 units, up from 67,637 sales in 2012.

3.       In 2014, resale transactions will increase further to 77,000 sales, remaining below the ten-year average.

4.       Existing home prices are forecast to edge higher, increasing to $518,300 in 2013 from $514,836 last year and $523,200 in 2014.

Economic Outlook

British Columbia’s economy is forecast to expand 1.9 per cent in 2013 and 2.5 per cent in 2014, slightly ahead of the national average. Modest growth in consumer spending and business investment are expected to contribute to economic growth. Population and employment growth are forecast to help increase consumer spending, while a weaker Canadian dollar and increasing demand from the U.S. is expected to boost provincial exports. Growth in exports will support business investment.

British Columbia’s labour market conditions are forecast to improve in 2014 with employment growth increasing to 1.5 per cent next year from 0.4 per cent in 2013. This year’s shift to higher levels of full-time employment will carry over into 2014. An increase in full-time employment will support wage growth and homeownership demand.

Demographic trends support a rising level of housing demand in the province. Migration from other countries, partly offset by people moving to other provinces, is expected to add 38,000 people this year and 41,300 people next year. As well, population projections by age group indicate a larger number of people in the 25 to 44 year age range, which has traditionally contributed to first-time homebuyer demand.  Population growth in this age range is projected to increase from 1.1 per cent in 2012 to 1.8 per cent by 2017, up from less than one per cent per annum during the previous five year period. The resulting growth in population, combined with stronger employment growth, will push housing sales and starts higher next year.

Housing Market Outlook

Single-detached starts are projected to rise to 9,000 units in 2013 and 9,900 units in 2014. Growth in demand for new single detached homes will shift from urban to rural BC in 2014, reflecting both lower land costs and rising resource sector employment.

British Columbia’s multiple-family starts will ease slightly to 18,100 units in 2013, due to rising inventories and increased competition from a well-supplied resale market for condominium apartments. Multiple family starts are forecast to edge higher, increasing to 18,700 units in 2014 as demand strengthens and inventories of new completed and unoccupied units are drawn lower. Multiple-family construction in the province has been supported by low vacancy rates in the rental sector and demand from buyers seeking less costly and lower maintenance alternatives to single-detached housing. Expect smaller phased projects to continue to get underway in housing markets outside of Vancouver, with an increase in larger multiple-family projects starting construction in Vancouver, including several intended for the rental market.

MLS® sales are forecast to increase to 70,100 in 2013 and 77,000 in 2014. Demand will be broad-based, fueled by rising employment, coupled with low interest rates, ample supply and stable prices.

Expect rising new listings in line with stronger existing home sales to keep price growth in check this year and next. The average residential MLS® price in British Columbia is forecast to edge higher, with projected increases below the pace of consumer price inflation. The average price is forecast at $518,300 in 2013 and $523,200 in 2014.

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