The B.C. housing market is forecast to stabilize next year, resulting in housing starts close to their ten-year average. Growth in employment and incomes, as well as low mortgage interest rates, will continue to bolster the resale market next year. Following a more stable resale market, starts will be in the range of 21,600 to 29,800 homes next year. The forecast range reflects the potential variability in the economic outlook next year.
Stronger-than-expected economic growth or lower-than-expected mortgage rates would result in housing starts in the upper end of the range. The point forecast of 25,900 starts in 2011 is slightly higher than the projected 25,500 starts expected this year.
Full-time employment growth this year will fuel demand for homeownership next year. Average weekly wages in the province are increasing at a pace faster than the national average. The strong job market compared to other provinces is a key contributing factor to a rising trend in interprovincial migration.
New home construction will increase to meet demand generated by growth in the number of households. CMHC estimates that between 28,000 and 30,000 households will be added in British Columbia on an annual basis this year and next, a level above the number of housing starts. Builders are expected to increase housing starts to meet this demand as resale market conditions improve next year.
Resale market conditions have been volatile during the last two years, but are expected to stabilize as the economy experiences positive economic factors. The number of resale transactions has been trending lower and will stabilize during the remainder of 2010. Average home prices are forecast to move lower during the second half of 2010 reflecting buyers' market conditions.
Modest growth in home prices is expected during 2011. In 2011, the annual average MLS® price in B.C. will be similar to 2010, reflecting an ample supply of homes for sale early in the year. Relatively stable mortgage interest rates and lower home prices early in 2011 are forecast to contribute to increased resales next year.
Single Starts: The annual level of single-detached hom starts will be on par with the ten-year average this year and next. Competition from well-supplied resale market will dampen the level of single-detached home starts during the next six months.
Multiple Starts: Apartment condominiums, row and townhouse starts are trending higher and are forecast to reach 14,700 units next year. The focus remains on smaller more phased projects.
Resales: The number of existing homes sales recorded on MLS® is expected to increase next year. The forecast is that resales will remain in line with job and population growth, approaching 80,000 resales in 2011. This following a dip to the 75,000 resales level this year.
Prices: The average MLS® resale price in B.C. will reach $486,000 by the fourth quarter of 2010, down from $492,619 at the end of 2009. Resale market conditions are forecast to move towards balanced demand and supply in 2011 as new listings are absorbed and resale demand is rejuvenated by growth in employment and real income. Resale prices are expected to increase modestly during 2011, but the annual average will be close to his year's average price.
Compliments of the CMHC Housing Market Outlook, Fourth Quarter 2010.