June 25, 2013

CMHC Housing Market Outlook Spring 2013

The spring 2013 market outlook from CMHC has been released. It can be found in its entirety here.  Below are snippets from the report.


Following a 38 per cent increase in 2012, total housing starts in the Calgary Census Metropolitan Area (CMA) are forecast to decline 8.9 per cent in 2013 before increasing slightly next year. While new single detached construction will see a modest increase over the next two years, the elevated pace of multi-family construction witnessed in 2012 is not expected to continue this year. Heightened supply levels and the threat of rising inventories will warrant a reduction in multi-family starts in 2013. A moderation in the pace of job creation and net migration will also warrant a lower level of starts this year.



Multi-family construction this year is not expected to be as strong as 2012 when starts reached its second highest level since 1981. The increase in the number of units under construction and the prospect of rising inventories will keep starts from returning to last year’s elevated levels. In 2013, multi-family starts are forecast to total 5,500 units, a 20 per cent decline from 2012. Despite
the reduction, multi-family units will continue to be an option for a variety of buyers, such as renters looking for their first home, individuals planning to downsize, or investors seeking an income-producing property. Provided supply levels move lower and inventory levels do not escalate, multi-family starts in 2014 are forecast to increase 5.5 per cent to 5,800 units.


Residential MLS® sales in Calgary are forecast to total 27,000 transactions in 2013, up 1.4 per cent from 26,634 in 2012. The gain in sales will not be as pronounced as in 2012 when sales increased 19 per cent, as some of the primary drivers of housing demand such as employment and migration will experience a lower rate of growth this year. In 2014, MLS® sales are forecast to reach 27,700 units, a 2.6 per cent increase from 2013. The economy in Calgary will continue to create jobs while relatively low mortgage rates and rising incomes will help buyers purchase a home.

Home prices in Calgary have not posted strong gains in the last couple of years, following the declines in average price in 2008 and 2009. As such, a number of homeowners are waiting for prices to increase further before listing their homes. With prices rising moving forward, more homeowners will look to capitalize on equity gains and list their homes. New listings in 2013 are forecast to finish the year slightly above 2012 levels at 42,500 units. For 2014, new listings are forecast to reach 43,000 units, up 1.2 per cent from a year earlier.

With higher sales and moderating listings, the sales-to-active listings ratio increased to an average of 35 per cent in the first three months of 2013, up from 28 per cent one year earlier. Under these conditions, the average MLS® residential price in Calgary is expected to rise this year and next. While the increase in demand has reduced active listings, it has also shortened the time to sell. In addition, an increase in the proportion of sales in the luxury home market will continue to contribute to the rise in the average price. Collectively, these factors will boost the average price 4.0 per cent in 2013 to $429,000, surpassing the record reached in 2007. As the market is expected to remain in balanced territory, the average price is forecast to reach $439,000 in 2014, an increase of 2.3 per cent.


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