Historically low interest rates, stable employment and population growth will boost B.C.’s housing market this year and next, according to the Canada Mortgage and Housing Corporation (CMHC).
In its latest housing market outlook report published Monday, CMHC said housing starts in B.C. are expected to total 26,400 this year, increasing to 29,000 in 2012, reaching a 10-year average.
CMHC B.C. regional economist Carol Frketich said low mortgage rates will support both resale and new home markets in the foreseeable future.
Still, an increase in the cost of homes in Vancouver, Richmond and West Vancouver caused CMHC to revise its forecast for average home resale prices.
“Greater Vancouver accounts for almost half of [multiple listing service] sales in the province and a rising share of single detached home sales, which tend to have higher prices, as well as an increasing proportion of sales in higher prices areas of Greater Vancouver,” Frketich said. “These factors contributed to an increase in the B.C. average resale price.”
CMHC believes resale activity will total 83,900 units this year and 87,500 in 2012, which is slightly above a 10-year average.
The national housing agency’s outlook is decidedly more positive than a recent RBC Economics report that said Vancouver’s high housing prices are becoming increasingly disconnected with local demand conditions.
At the time, RBC senior economist Robert Hogue feared the situation could result in a “painful market disruption.” (See “Vancouver’s housing market reaches height of unaffordability” – BIV Business Today, May 20.)
Check out this week’s edition of Business in Vancouver to find out how Vancouver’s real estate prices are creating recruitment challenges for local firms.
Joel McKay
Twitter: @jmckaybiv