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Canadian Mortgage and Housing Corporation’s outlook on the housing market

CMHC has released its latest Housing Market Outlook which is released annually at the beginning of the fourth quarter and looks ahead over the next two years.

In general CMHC sees a stable, but slowing housing market.

Housing starts are expected to decline over the next two years as the economy strengthens and the Bank of Canada withdraws stimulus – that is, interest rates continue to rise.

CMHC is forecasting posted, 5-year mortgage rates of 4.9% to 5.7% next year and 5.2% to 6.2% in 2019.  That is an increase of as much as 160 bps over the time horizon of the outlook.

Existing home sales are forecast to drop.  This should be no surprise given the record setting pace of sales through 2016 and early 2017.  As well, the pace of price increases is expected to slow down.

CMHC predicts the national average price for a home should fall somewhere between $494,000 and $511,000 this year.  In 2019 the range is expected to be between $499,000 and $524,500.

CMHC is also forecasting ongoing growth for GDP, employment and immigration.  But the agency expects consumer spending to decline as interest rates increase.

To download the report, click here

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October 2017 Real Estate Market Update

Home buyer demand continues to differ based on housing type

Click on the above to read the News Release from the Real Estate Board of Greater Vancouver. Summary below:

  • August 2017 home sales were 20% higher than the 10-year August sales average.
  • September 2017 home sales were 13% above the 10-year September sales average.
  • Sales-to-active listings ratio for August 2017 was 35% for all property types
  • Sales-to-active listings ratio for September 2017 was 30% for all property types
  • Sales-to-active listings ratio for September 2017:
    • 14.6% detached homes (balanced market – slowed upward pressure on price)
    • 42.3% for townhomes (seller’s market – upward pressure on price)
    • 60.4% for apartments (seller’s market – upward pressure on price)

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Buyer demand continues for Townhomes and Apartment condos. We find the demand for single family home is still there, especially for homes that were well priced.

Since it’s rapid increase this January, we are seeing the Sales-to-Active ratios (for all property types) started to decrease after reaching its peak so far this year in May 2017 (see graph below).

The HPI benchmark price for all property types in Greater Vancouver continued to rise, although at a slower rate, since the ratio remained in the seller’s market.

According to First National Financial LP “Market watchers appear to be taking the same “wait-and-see” approach to interest rate hikes as the Bank of Canada” Read full article here. Summary below:

  • Economic data that support further interest rate increase:
    • Employment numbers show 10th straight month for gains
    • Wage growth popped up by 2.2% in September after months of sluggish growth. Hourly average wage reaching $26.36.
  • The two key factors that support “wait-and-see” approach:
    • July GDP was flat which forecast a slowing for 2nd half of the year
    • Household debt remained a concern and a determining factor in future rate increase.

The August GDP numbers will come out at the end of this month and they will help determine if there is a trend.