Fuelled by both population and employment growth, CMHC is painting a fairly rosy outlook for BC’s residential housing market moving into 2015 and 2016.
Hundreds of industry delegates from across the Lower Mainland came to hear a number of industry leaders provide a snapshot of the economic and housing market outlook at the CMHC’s 20th Annual Vancouver Housing Outlook Conference held November 4.
“Housing demand is on the rise due mostly to a majority of new immigrants settling in the Vancouver region,” says Carol Frketich, CMHC’s BC regional economist. “We are also seeing improved growth in income and jobs.”
Although population growth is a key indicator of economic health, Frketich says other factors boosting the province’s positive economic position include: continued low interest rates, our close proximity to the Asia-Pacific gateway – increasing global trade – as well as growth in exports both in the energy and pulp and paper sectors.
While industry analysts often used words such as “moderate” and “stable” in their presentations to indicate the housing market’s direction, they all seemed to point to reasons for cautious optimism.
“In late 2015, housing demand will be tempered by rising mortgage interest rates,” adds Frketich.
Housing Starts and Sales
“Although housing starts are expected to dip slightly in 2015, overall the Vancouver housing market is quite stable,” says Robyn Adamache, CMHC senior market analyst. “Total housing starts will edge higher as resale market conditions remain stable.”
The industry analyst went on to say that driving multiple-housing starts over the next two years will be the need for increased condo apartments and rental housing (both purpose-build rentals), as well as mortgage helpers.
“What affects Vancouver vacancy rates are the average new households, migration and aging young adults entering the rental pool,” she adds. “There are roughly between four to 5,000 new renter households per year.”
CMHC forecasts that housing sales in the area will drop somewhat to 32,350 units in 2015, down from 32,800 this year, and average overall home price will rise 1.2 per cent to $821,000.
Moving forward, Adamache told the crowd that CMHC identified six key findings affecting our long-term housing picture – migration, dramatic increase in baby boomers, the Echo Generation (22 to 42) as a driving force in both rental and home ownership, the increase in senior-led housing, flexible housing arrangements and a rise in one-person households (from 26 per cent today to a projected 34 per cent by 2026).
For much more on the CMHC 20th Annual Housing Outlook Conference, visit www.cmhc.ca.
Conference Highlights By The Numbers
- Housing starts for single-detached homes rising slightly at 9,500 and 9,600 in 2015 and 2016 respectively, from this year’s projection of 9,200.
- MLS® prices expected to drop by 1.4 per cent in 2015 and 1.6 per cent in 2016
- MLS® sales are expected to increase moderately in 2015 and remain somewhat unchanged in 2016 following the 11.6 projected increase this year
- Roughly seven per cent of all MLS® sales are to new immigrants
- One quarter of the condo supply is owned by investors; three-quarters of those luxury condos in Richmond and Vancouver’s West Side are owned by Mainland Chinese
Key Factors Affecting the 2015-16 Housing Outlook
- Mortgage rates to remain low, with a slight increase in late 2015
- Sources of economic growth to broaden
- Employment expected to pick up slightly in 2015 and 2016
- As economic conditions improve overall, incomes are forecasted to increase modestly
- Population growth expected to add 30,000 households annually
- Inter-provincial migration remains strong – especially from Toronto
- Immigration expected to continue at a steady pace