Canadian Home Sales Will Fall Over Next 2 Years, CMHC Forecasts

Canada Mortgage and Housing Corp. projects housing starts and sales are both expected to decline in 2019 and 2020

Canada Mortgage and Housing Corp. projects housing starts and sales are both expected to decline in 2019 and 2020

Canada Mortgage and Housing Corporation's (CMHC) 2018 housing market outlook predicts the real estate market will moderate over the next two years, including in Victoria. Alberta's housing markets are expected to transition to more balanced conditions over the forecast period. The trend suggests more modest pricing is on the horizon.

"In terms of new construction, the story is going to be more and more condos, and that seems to be where the push is both in terms of policy shift in government and higher house prices dictating demand towards high-rise construction because low-rise is out of reach for first-time buyers, and when the average price is over $1 million, it's not an easy entry point for any buyer".

The report said existing home sales will experience a fourth-straight yearly decline in 2018, with stabilization and some growth in 2019.

Resales will also dip through the end of 2020, added Senagama, due to rising mortgage rates.

"In Alberta's new home market, single-detached inventories have been trending higher in 2018 prompting builders to slow production".

For the resale market, the agency is forecasting MLS sales this year of between 51,600 to 56,000 compared with 57,211 in 2017.

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The average MLS sale price in Alberta was $398,228. Sales are then expect to slide further in 2019 to between 6,200 and 6,600, and then recover slightly in 2020 to the 6,300-6,700 range. Sales are then expect to increase somewhat in 2019 to between 79,100 and 87,900 units, and then in 2020 to range between 81,500 and 92,500 sales. As older units turn over, their rents will be increased to reflect the new price level.

The report said the vacancy rate in Alberta expected to gradually decline over the forecast period, with the exception of oil-sands-driven economies such as Wood Buffalo and Cold Lake, where vacancy rates are expected to remain elevated. It said, "Rental market conditions across B.C. are anticipated to loosen as a result of slower growth in demand and a significant amount of new rental units set to enter the market".

"However, the average MLS price will continue facing downwards pressure, but is expected to stabilize in 2019 and modestly rise in 2020".

"Net interprovincial migration is turning positive and these new households will help lower the vacancy rate in Alberta".

The October vacancy rate hit 10.3 per cent in 2016.

However, this market is expected to remain tight across Metro Vancouver, as rents continue increasing faster than inflation, on average.

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