CMHC Says Vancouver is Safe

CMHC’s Outlook

CMHC’s Outlook Conference offered up their market research and analysis as well as some forecasts for 2012.

The Provincial Outlook

  • BC & Alberta’s economies are expected to continue leading the country
  • Population and global demand for western resources will keep the West growing
  • BC real estate prices are expected to dip 1% mainly due to easing of values on Vancouver Island and the Interior
  • Vancouver and Fraser Valley continue to be main economic engine for the province
  • Overall Sales activity is expected to increase slightly in 2012 to 81,900 sales from 77,200 forecast for 2011.
  • Interest Rates are expected to remain near record lows as economic volatility continues in Eurozone and US
  • Migration still an important driver to BC’s economy with 20,000 new households expected
  • Majority of migrants settle in GVRD
  • Housing starts are expected to maintain a balanced market with 28,500 new starts forecast in 2012.

Vancouver Outlook

  • Land Constraint and demand from migration to area (abroad and inter-provincially) will keep prices firm in Vancouver
  • 2012 MLS price is expected to increase 2% in Vancouver to average price of $805,000.
  • Single Family Home prices are expected to level off. The 26% average appreciation in SFD homes isn’t sustainable.
  • Supply & demand are considered balanced. Condo supply has decreased from 2600 units to 1300 units – now a 6 month supply
  • Multi-Family starts and completions should keep market balanced
  • Investor purchases and secondary suites continue to supply the majority of rental units with vacancy rates considered low
  • Breakdown of buyers according to a recent Landcor survey are as follows: – 9% of overall sales in GVRD are tracked to immigrant purchasers – 74% of high end luxury purchases are tracked to Asian Buyers – 3% of purchases are tracked to Investment purchasers.
  • Renovation spending is expected to remain healthy with 3.7 Billion forecast for 2012
  • Speculative activity remains low with only 4% of sales turning over within 12 months
  • Properties located near transit, less than 5 years old, allow pets, or rentals, and have an extra bathroom obtain highest sale prices.

Risks & Opportunities

With affordability stretched in single family markets, high land and development costs, we see strata properties as an opportunity for First Time Buyers and Investors. This being said, there are risks to CMHC’s forecast such as Global Financial issues in Europe and US, Government changes relating to taxes and borrowing, along with Migration trends.

Courtesy Rob Regan-Pollock AMP | Invis – Team Rob Regan-Pollock, Reprinted with permission.

CMHC Reports Here: Canada Highlights Canada Housing Market Outlook

Image Courtesy CMHC

About Larry Yatkowsky

Larry is a recognized real estate expert. A veteran professional, his experienced counsel leads Vancouverites in his west side community to place their trust in a man passionate about his work. Uncompromising ethics bring a balanced approach to realizing your real estate dreams.

When Life Moves You - contact Larry:

*Disclaimer: Statistics Courtesy REBGV. While believed to be accurate they are not guaranteed.
**Numbers provided may vary as they are dynamically posted by the REBGV.

Reader Comments:

Boombust Says:
November 18th, 2011 at 6:32 am

I think those guys should read Garth Turner.

BubbleBoy Says:
November 18th, 2011 at 7:54 am

What do we expect CMHC to say? They have 15 billion capital and insuring 500 billion in bunk loans.

November 18th, 2011 at 7:57 am

@Boombust

That man is a great read when suicide is being served.

specialfx3000 Says:
November 18th, 2011 at 8:01 am

I thought CMHC are the ones serving future suicides.

vanpro Says:
November 18th, 2011 at 8:31 am

CMHC’s forecast that Vancouver and BC are ok is based in large part on strong immigration & population growth. BUT that trend has actually reversed this year – we have the lowest immigration & population growth in in nearly 10 years and now net OUT-migration to other provinces.

See latest plunging immigration stats for BC and Vancouver from Stats Can as detailed by Central 1 Economics and RBC Economics. Vancouver’s pop. growth is down to just 1.7% per annum (a lowly 6th out of all CDN cities behind Toronto, Calgary and others) due to: (1) international immigration is plunging to 10 yr. lows and (2) net out-migration to other provinces in search of better jobs, economic opportunities and lower housing costs:

http://www.central1.com/publications/economics/pdf/briefing/1739%20BC.pdf

http://www.rbc.com/economics/market/pdf/citytrend.pdf

canadien Says:
November 18th, 2011 at 10:51 am

Garth is a fear mongering idiot. His advice has been consistently wrong in everything he said over the years.
If you consider the bear rationale for RE , prices have been too high since 2001.
Ten years later prices are higher than ever. There is no stronger case than this to prove that bears have been utterly WRONG.
Being wrong for 10 years is a very long time in the lifespan of a family. Very long time indeed.

Reasonfirst Says:
November 18th, 2011 at 11:28 am

“If you consider the bear rationale for RE , prices have been too high since 2001”

nice exaggeration…

ssssss Says:
November 18th, 2011 at 11:42 am

Thanks for the break down. Much appreciated!

BubbleBoy Says:
November 18th, 2011 at 11:49 am

I would believe Garth Turner over the words from the government. Look what Gordon Campbell did to us with hst. Lies lies lies.

BubbleBoy Says:
November 18th, 2011 at 1:14 pm

Garth can say whatever. But as Larry says “stats don’t lie”

http://worldhousingbubble.blogspot.com/p/canadian-housing-bubble-house-price.html?m=1

Boombust Says:
November 18th, 2011 at 3:40 pm

Hey! Don’t shooy!

I agree with Turner about the Boomer demographics and a lot of other things…can’t argue with what he says in many cases.

But, to think that OUR piddly economy can support these ridiculous prices without a significant correction is ludicrous.

Why should we escape the wrath that has ravaged other markets?

San Diego anyone?

Boombust Says:
November 18th, 2011 at 3:41 pm

“shooy!”

…or, shoot, either!

Makaya Says:
November 18th, 2011 at 9:03 pm

If CMHC says so, it must be true then…

I hope these guys will be held accountable when the bubble burst.

BubbleBoy Says:
November 19th, 2011 at 6:52 am

Article from 2005. Very interesting!!

http://www.cato.org/pub_display.php?pub_id=4243

November 19th, 2011 at 7:44 am

@Bubbleboy

The summation should start some fires, but then that was 2005 –

“In short, we are asked to worry about something that has never happened for reasons still to be coherently explained. “Housing bubble” worrywarts have long been hopelessly confused. It would have been financially foolhardy to listen to them in 2002. It still is.”

Lloyd Christmas Says:
November 19th, 2011 at 2:02 pm

Larry,

Look around the world and even other parts of Canada. Many homes are bought with little down or with HELOC’s. I’ve been very bullish with RE in recent years. Now that we are where we are, it’s extremely risky for first time buyers or people buying with HELOC for investment. All capital gains are created with debt. Debt is a scary thing that people don’t realize. As gains slow, so will sales. Prices drop, fear kicks in and things will turn in a hurry. We saw in 2008. If the intersect rates weren’t ducked with, where will we be? There are no more tweaks left to keep the party rolling. I’m happy for the people that made big $ in the industry for the last 10 years. For those that got sucked in at the wrong time, well, you’re screwed.

November 19th, 2011 at 3:03 pm

“lloyd
strikes me as the brutality of harmony and balance – some win some lose and losing never feels good.

BubbleBoy Says:
November 19th, 2011 at 4:45 pm

Losing does suck. We learned that on June 15 2011

AG Says:
November 25th, 2011 at 9:26 am

“Speculative activity” should be labeled “Purely speculative activity” Buyer-occupiers are willing to stretch financially because they expect gains upon selling. Even if they hold more than a year, that doesn’t mean there isn’t a speculative component to the purchase.

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