Manitoba resale-homes market about to hit the gas: CMHC

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This article was published 15/11/2010 (3198 days ago), so information in it may no longer be current.

IT will be full speed ahead for Manitoba's resale-homes market next year while the new-homes side takes a breather after this year's big comeback, according to the latest forecast from Canada Mortgage and Housing Corp.

In its fourth-quarter 2010 Housing Market Outlook issued Monday, the federal housing agency predicts Manitoba's resale-homes market will end a three-year string of declining sales with a 2.4 per cent increase in 2011 — 12,900 units versus a projected 12,600 for 2010.

It also predicts the province's new-homes market will follow up this year's 32 per cent increase in starts with a 10 per cent decline in 2011.

The outlook said while the demand for new homes remains strong, homebuilders won't be able to sustain the pace of growth they've enjoyed in 2010.

The report said the industry banged out more than twice as many multi-family home starts this year than in recession-plagued 2009 as builders responded to historically low vacancy rates by erecting hundreds of new rental units.

Dianne Himbeault, CMHC's senior market analyst for Manitoba, said nearly two-thirds of the roughly 1,300 new multi-family units that will be built this year in the Winnipeg Census Metropolitan Area (CMA) are rental units.

And even though CMHC is forecasting only 1,200 new multi-family units for the Winnipeg CMA for next year, Himbeault said that would be well above the five-year annual average of 1,000 units.

Because demand for single-family homes remains strong, CMHC is predicting only a modest decline in single-family home starts for Manitoba. And that will only be because rising prices and higher mortgage rates will force some buyers to postpone their purchases.

For existing homes, the agency said the negative impact that rising home ownership costs has on sales will be offset by further increases in population.

"Population gains will continue to be a dominant source of demand next year," it said. "In 2011... sales numbers will start to make the slow climb back towards the level set in 2008."

That year, 13,525 homes sold through the local Multiple Listing Service.

Selling prices are also expected to continue to climb in 2011, although at a slower pace than this year. In the Winnipeg CMA, for example, the average MLS selling price this year is expected to be nine per cent higher than in 2009 — $226,000 versus $207,341, CMHC said.

Next year's price hike is expected to be a more modest 2.7 per cent, as an increase in new listings gives buyers more properties to choose from and relieves some of the upward pressure on prices, the CMHC outlook said.

Although it had one of the lowest apartment vacancy rates in Canada last year at 1.1 per cent, CMHC said Winnipeg will see little improvement this year or next. It predicts its annual October survey will show the overall rate has inched up to only 1.2 per cent this fall, and that it will climb by just a few more notches to 1.4 per cent by next October.

Nationally, CMHC said new-home construction is expected to continue easing in the final quarter of this year before stabilizing in 2011.

— With files from Postmedia News

murray.mcneill@freepress.mb.ca

Starts, sales and prices

Housing starts

2009 2010* 2011*

Manitoba 4,174 5,500 5,000

Winnipeg CMA 2,033 3,300 3,250

MLS sales

2009 2010* 2011*

Manitoba 13,086 12,600 12,900

Winnipeg CMA 11,509 11,100 11,400

Average MLS price

2009 2010* 2011*

Manitoba $201,343 $219,300 $223,300

Winnipeg CMA $207,342 $226,000 $232,000

*Forecast

— Source: Canada Mortgage and Housing Corp.