CMCH 2nd Quarter Housing Outlook - Vancouver

(June 22, 2012 , posted in Forecasts and Economic Update)

The CMCH have just published their Housing Market Outlook for Canada and some of the large metropolitan areas.

Vancouver Highlights

(1) sales and prices are forecast to remain flat in 2012 and 2013. MLS® sales are projected to decline three per cent in 2012 and increase eight per cent in 2013. The average MLS® price is forecast to dip two per cent in 2012 before rising five per cent in 2013. Market conditions are expected to remain in balanced territory.

(2) starts are projected to grow four per cent both in 2012 and 2013. Much of the growth is expected to occur in the multiple-family housing segment. Expect strong housing demand fundamentals to support sales of completed new homes keeping inventories moderate.

(3) steady conditions suggest the rental market will likely continue to see low vacancy rates and increases in rents that are in line with the provincially mandated allowable rate of rent increase.

(4) stable economic conditions underscore a rising trend in full-time employment and a downward trend in the unemployment rate. While these trends are projected to continue in 2012 and 2013, uncertainties in the global economy suggest downside risk to the outlook.

Greater Vancouver's MLS® resale market steady

MLS® resale market conditions are forecast to be in balanced territory in most areas of the Greater Vancouver region in 2012 and 2013. During the past year, market conditions moderated from sellers market conditions for many municipalities in the first quarter of 2011 to balanced market conditions for most in the first quarter of 2012. While a few municipalities such as the Tri-Cities and North Vancouver have remained in sellers market conditions, others such as Burnaby, Vancouver City and West Vancouver have moved to balanced market conditions in the first quarter of this year. Richmond moved from sellers market conditions in the first quarter of 2011 to buyers market conditions in first quarter of 2012.

Expectations are for a much smaller increase in the number of MLS® sales and a steady level of new listings, which will contribute to a flatter trend for average MLS® prices in the Greater Vancouver region during the remainder of 2012 and 2013. In terms of MLS® sales, there has been a 22 per cent decline in the first quarter of 2012 compared to a year ago. The decrease in MLS® sales was recorded in all market segments - single- detached homes, row homes, and condominium apartments. Changes in market share suggests that homebuyer activity for single-detached homes has shifted from Vancouver West, Richmond, and West Vancouver to other areas including Vancouver East, North Vancouver, Burnaby and Coquitlam.The geographical distribution of condominium apartment sales, however, has shown little change in the first quarter of 2012 compared to the same period a year ago. As well, little geographical change was observed for townhouse sales.

In terms of price, there was a one per cent decrease in average MLS® price in first quarter of 2012 compared to the same period last year. Price trends for both single-detached homes and condominium apartments have been fairly flat during this period. Single-detached homes in Greater Vancouver recorded slightly stronger growth in average MLS® prices than median MLS® prices, which was largely a result of more very high-end, luxury home sales (i.e. homes that sold for at least $5 million) in the first quarter of 2012 compared to the same period a year ago. These sales took place mainly in Vancouver West and West Vancouver. For condominium apartments, both average and median MLS® prices follow a similar path - a year-over-year decline of one per cent in the first quarter of 2012. Areas such as Vancouver West and Richmond experienced year-over-year declines in average and median MLS® prices for condominium apartments.

Stable home prices during the forecast period are expected to encourage some home purchases as potential homebuyers could see it as an opportunity to either trade up from a current residence or enter homeownership as a first time home buyer. This will keep the number of MLS® sales on par with last year, with a 2.8 per cent dip expected in 2012 and a 7.8 per cent increase projected for 2013. Still, the potential for mortgage rate increases in 2013 may prompt some homebuyer caution and keep overall market conditions in balanced territory over the forecast period in spite of a strong local job market and population growth. Average MLS® prices in the Greater Vancouver region are projected to decline 1.5 per cent in 2012 and then to increase 4.6 per cent in 2013.

As a Vancouver real estate consultant, my business grows by building strong client focussed relationships. I would welcome the opportunity to answer any questions about the Vancouver (and neighbouring cities) real estate market.

If you would like to find out how much your home is worth in today's market, to discuss listing your home or buying a new home, please contact me on (604) 781-5692 or via email - tim@timwray.ca

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