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Robust forecast for 2013

Housing prices to rise faster than elsewhere in country

By: Murray McNeill

Posted: 11/6/2012 1:00 AM | Comments: 0

New homes are going up in Bridgwater Lakes south of Winnipeg. The latest forecast from Canada Mortgage and Housing Corp. predicts the average selling price of an existing home in Manitoba will rise faster than anywhere else in 2013, at 3.9 per cent. (KEN GIGLIOTTI / WINNIPEG FREE PRESS) Photo Store

Manitoba will have one of the strongest housing markets in the country in 2013, the latest forecast from Canada Mortgage and Housing Corp. shows.

In its fourth-quarter 2012 forecast released on Monday, the corporation predicts the average selling price of an existing home in Manitoba will rise faster than anywhere else in 2013, at 3.9 per cent.

It also predicts Manitoba will be one of only four provinces to see an increase in Multiple Listing Service (MLS) sales, albeit a modest one (0.7 per cent). And it predicts it will post the third- smallest decline in new-home-construction activity, at 6.7 per cent -- 7,000 units versus a projected 7,500 for this year.

"It's probably just another case of Manitoba being a fairly steady market," Dianne Himbeault, CMHC's senior market analyst for Manitoba, said. "We don't see a lot of the wide fluctuations in the conditions underlying the housing market that some provinces see."

Himbeault said Manitoba is also probably the only location in the country where a seller's market still prevails -- especially in Winnipeg.

She said although MLS unit sales in Winnipeg have levelled off -- CMHC is forecasting fluctuations of less than one per cent for this year and next -- the persistently low number of active listings keep it a seller's market.

She noted that while Winnipeg's resale market enjoyed a strong first half in 2012, sales activity has slowed in the second half. That may be due to changes to federal mortgage insurance rules, which reduced the maximum amortization period to 25 years from 30 years. That raises monthly mortgage payments, and has forced some first-time buyers to delay their purchases.

While CMHC predicts Manitoba will have one of the best performing markets in 2013, it's calling for a middle-of-the-pack finish for this year. It predicts that while it will have the third- biggest increase in housing starts -- a robust 23.3 per cent to 7,500 units -- it will finish with one of the smallest increases in MLS sales, at 0.4 per cent. It's also expected to finish near the middle in terms of increases in the average MLS selling price at 4.2 per cent -- $244,500 versus $234,604 in 2011.

Next year's projected 3.9 per cent increase would bump the average price up to $254,000, while a 0.7 per cent increase in unit sales will boost that figure to 14,100.

Peter Squire, residential market analyst for the Winnipeg Realtors Association, said new MLS sales numbers due out today will show Winnipeg's resale-homes market bounced back in October. He hasn't given up hope on topping 2011's sales total of 12,297 units.

"We're just razor-thin ahead (of last year's pace) with two months to go," he said.

Manitoba Home Builders' Association president Mike Moore agreed it's been a banner year for new-home construction.

"In my wildest dreams I was never as high as 7,500 (starts). That's absolutely tremendous."

Even though CMHC is forecasting only 7,000 starts for next year, "that's still an amazing number (for Manitoba)," he added.

Nationally, CMHC says the market for existing homes will be softer this year than previously forecast -- 465,000 units -- but the midpoint price will continue to rise from where it was in 2011, climbing to $365,100.

The revised 2013 midpoint price estimate is $370,500 -- about $6,800 lower than the previous forecast but $5,400 higher than the revised estimate for 2012. And it's forecasting 489,700 MLS sales for next year and 177,300 to 209,900 housing starts, versus 210,800 to 216,600 this year.

murray.mcneill@freepress.mb.ca

NUMBERS GAME

Here is CMHC's latest housing market forecast for the Winnipeg Census Metropolitan Area and for Manitoba, with the percentage increase from the previous year in brackets:

WINNIPEG20122013

MLS sales12,200 (-0.8)12,300 (0.8)Average MLS price$255,000 (5.6)265,000 (3.9)

Housing starts4,050 (21.6)4,250 (4.9)

Avg. new-home price$400,000 (1.3)$415,000 (3.8)

MANITOBA

MLS sales14,000 (0.4)14,100 (0.7)

Average MLS price$244,500 (4.2)$254,000 (3.9)

Housing starts7,500 (23.3)7,000 (-6.7)

Avg. new-home priceN/AN/A

Republished from the Winnipeg Free Press print edition November 6, 2012 B3

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