This is the 15th year for Canada Mortgage and Housing’s annual look at the state of the housing market in B.C., with a focus on the Lower Mainland. Needless to say, it pulls in all the heavy-hitters eager to feast on an early-morning menu of PowerPoint presentations, with more facts than they can digest.
So here in no particular order or importance are some of the items that struck me as worth jotting down:
B.C.’s economic outlook looks good* – so much so that even some of the media were wondering if they hadn’t been over-emphasizing doom-and-gloom. (Of course they have; it’s their job.)
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For the next year, we’re forecast to have:
- low interest and mortgage rates;
- low inflation;
- a healthy rate of growth (2.7 percent, maybe up to 3 percent);
- the dollar at par;
- employment gains (particuarly in full-time jobs);
- a turnaround in interprovincial migration (they’ll even be comin’ in from Alberta!);
- preferred international migration;
- a balance in buyers and sellers for housing;
- and stable prices in both sales and rents.
* Assuming the U.S., Europe and China don’t blow up or collapse. Otherwise, what could go wrong?
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The gap in MLS home prices between B.C. and Alberta/Ontario dropped something like 35 percent. That means we’re still more expensive – just not as obscenely so.
This is the single most interesting fact I heard, made almost as aside: Eight percent of households in the City of Vancouver have a person living there who is not a member of the census family. We used to call them boarders. Now they’re the people who occupy the secondary suites, I assume, or occupy extra bedrooms. It’s how people on low income can afford to live in neighbourhoods and houses they could never afford.
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The chart that showed average house prices in Prince George was the only one without a precipitous drop in 2008. All the others were mountain peaks of some kind or another: a rising slope up to the year of the global financial crisis, and then a downward slope of various degrees. Prince George was a prairie.
Fifty-seven percent of seniors expect that health and activity limitations will only really hit when they get to their 70s – which also happens to be the age when they most want to stay in their homes and finish aging in place. No one wants to say what a bad idea that is if we want a more efficient allocation of the existing housing stock. The housing crisis, some argue, could be solved tomorrow if we could free up all the empty bedrooms in existing and now oversized housing. But that ain’t going to happen.
Instead, we should be designing new houses to assist aging in place at a much reduced cost. Nonethess, there will be a huge renovation market for the 1.5 million Canadians who will be between 70 to 74 by 2036.
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Another curious chart showed Kelowna to be an outlier when it came to employment: they were the only part of B.C. to experience negative employment. Why? Apparently, major public-sector investments in hospitals and universities had come to an end – showing how significant those expenditures can be.
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CMHC analyst Robyn Lake was there with predictions:
It will be a buyer’s market for at least another half year, with flat prices and a large supply of inventory – but still below the peak of mid 90s.
The new housing will be targeted to demographics:
In the Vancouver CMA (census metro area), there are 16,805 new households expected. But the majority of them will be one-person (28 percent) or two-person (31 percent). Three-person households comprise a mere 16 percent of the total.
Does that explain why so many small condos are constructed? Yes, it does.
Prices will edge up modestly. The average price of a unit in the Vancouver CMA: $728,000.
The fastest growing community was Port Moody at 20 percent. But it had a small base. Surrey is the gorilla at 19 percent. West Vancouver is the slowest growing, with 231 new households but only 75 more units.
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The City of Vancouver has 1,601 more housing starts than households formed – but that number did not adjust for demolitions or investor units rented out. In fact, there are 25,000 investor condos, of which 23,000 are rented out – making up 27 percent of rental market. Downtown Vancouver has 43 percent investor units rented out – but overall there is a higher percent of rented condos in Langley (34 percent) than in city of Vancouver (at 32 percent).
The number of condos flipped in year, despite public perception, is about 12 percent. But it has been as high as 26 percent.
She had numbers for the ‘Barnacle Cohort’ – children still living at home with parents rather late into their lifespan. Twenty-four percent of those between 25 to 29 are still getting their laundry done at home; it’s half that at 12 per cent for those between 30 and 34.
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Average price for a condo: $428,000 – a price that has been stable since 2009.
Word of warning: I was busy taking notes as the slides were going by – so some of these numbers (or their context) might be off. I’ll update them if I get corrections. In the meantime, why not go to the source itself? CMHC’s web site still provides a lot of this data for free. Even better, it publishes in various formats the CMHC Observer – an interpretation of data that makes the stuff actually accessible and interesting.
UPDATE: Presentations here –
has the CMHC read this….?
http://www.greaterfool.ca/2012/11/12/getting-ugly/
“B.C.’s economic outlook looks good*
* Assuming the U.S., Europe and China don’t blow up or collapse. Otherwise, what could go wrong?”
The housing market tanking, obviously, but getting that message from CMHC seems unlikely, equally obviously. Did they offer any reason why the current [lack of] buyer’s market was expected to end? Could they explain why it started? Did they offer any validation or assessment of the accuracy of their previous predictions to give you confidence that they had any merit?
(See “Future Babble” by Dan Gardner for an explanation of how most ‘expert’ predictions are meaningless and don’t fare any better than flipping a coin.)
Also, I’m puzzled by the prediction of provincial in-migration – most of the people I know who’ve left did so at least in part because of high housing prices (and vice-versa, the people who might come but don’t also stay away because of high housing prices – maintaining a qualified workforce in Vancouver is becoming near-impossible), which CMHC doesn’t seem to be predicting will change, so what is the basis for the turnaround?