Winnipeg housing market experiences correction

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This article was published 30/01/2018 (2912 days ago), so information in it may no longer be current.

A moderate level of overbuilding in the Winnipeg home market has been corrected thanks to a surge in condominium purchases.

Condo sales shot up 52.5 per cent in the third quarter of 2017 from the same period a year earlier, according to the Canada Mortgage and Housing Corporation’s quarterly housing market assessment.

“This could partially be attributed to some of the population growth we’re seeing in Winnipeg,” said Heather Bowyer, CMHC senior market analyst for the Manitoba market.

“We’re seeing growth in our first-time homebuyer population, those individuals in the ages 25 to 34, and condominiums tend to be a popular choice for this age group due to more affordability, as well as more flexibility in ownership.”

Condo sales rose to 188 in the third quarter of 2017, versus fewer than 130 for the same period in 2016. The majority of the 2017 sales were for units in the $200,000-$249,999 price range.

Winnipeg was experiencing a hangover from overbuilding condo units two years ago that caused CMHC to red flag the situation in previous reports.

Overbuilding is defined as when available housing units significantly exceed demand. That market buildup has now moved back into a more balanced position in Winnipeg, the report says.

Seniors are cosying up to condos, too, said Manitoba Home Builders Association president Lanny McInnes.

“We’re seeing condos as an attractive option not just for millennials, but for seniors looking at downsizing. Both markets are really eyeing condos as an attractive choice,” he said.

Winnipeg also scored low on all the other warning signs CMHC tracks: overheating, price acceleration and overvaluation.

The same can’t be said around the country. Canada-wide, the housing market shows signs of overheating for the sixth straight quarter, the report stated.

A combination of price acceleration and overvaluation threaten market stability in parts of the country. That market vulnerability is greatest in Vancouver and Toronto. Hamilton and Victoria are also markets of concern to the CMHC.

The report said the cities could experience future market instability if markets aren’t brought more into balance.

In Winnipeg, the apartment-rental vacancy rate remains stable as increasing supply was offset by growing demand. Balanced resale market conditions and strengthening employment has kept the market in good shape, the report said.

On the price side, the seasonally adjusted Multiple Listing Service (MLS) average home price in the city through 11 months in 2017 was $295,025, an increase of 3.6 per cent over the same period last year.

Other strong buying fundamentals in the Winnipeg market include population growth, more full-time employment and an increase in wages.

“Overall, the Winnipeg resale market is experiencing balanced market conditions that are supporting price growth currently above the inflation rate,” the report said.

“We felt all along we were stable. That’s kind of been our calling card,” said Peter Squire, Winnipeg Realtors Association vice-president of market intelligence.

bill.redekop@freepress.mb.ca