| Unit Sales |
| Average MLS® Prices ($) |
|
| 2006 |
| 2007F |
| 2008F |
| 2006 |
| 2007F |
| 2008F |
|
| Gr. Van. | 36,479 | -14% | 35,100 | -4% | 33,000 | -6% | 509,876 | 20% | 545,000 | 7% | 582,000 | 7% |
| Victoria | 7,480 | -6% | 7,600 | 2% | 7,350 | -3% | 426,722 | 11% | 458,000 | 7% | 485,000 | 6% |
| Van. Isl. | 8,860 | -7% | 8,530 | -4% | 8,275 | -3% | 281,874 | 20% | 295,000 | 5% | 312,000 | 6% |
| Powell R. | 293 | -30% | 310 | 6% | 325 | 5% | 204,786 | 22% | 230,000 | 12% | 245,000 | 7% |
| Fraser V. | 18,093 | -10% | 17,100 | -6% | 16,250 | -5% | 393,047 | 20% | 428,000 | 9% | 455,000 | 6% |
Chilliwack
| 3,211 | 7% | 3,325 | 4% | 3,375 | 2% | 269,327 | 7% | 305,000 | 13% | 325,000 | 7% |
Kamloops
| 3,302 | 5% | 3,250 | -2% | 3,140 | -3% | 221,359 | 25% | 255,000 | 15% | 275,000 | 8% |
| Okanagan | 7,780 | -7% | 7,550 | -3% | 7,400 | -2% | 324,963 | 20% | 365,000 | 12% | 390,000 | 7% |
| S. Ok. | 2,199 | -7% | 2,080 | -5% | 2,010 | -3% | 272,521 | 19% | 295,000 | 8% | 315,000 | 7% |
| Kootenay | 2,847 | -17% | 2,900 | 2% | 2,850 | -2% | 209,895 | 21% | 235,000 | 12% | 248,00 | 6% |
| N. Lights | 502 | -17% | 440 | -12% | 425 | -3% | 148,694 | 24% | 172,000 | 16% | 185,000 | 8% |
| BC N. | 5,605 | 9% | 5,400 | -4% | 5,290 | -2% | 165,380 | 20% | 189,000 | 14% | 197,000 | 4% |
| BC Total | 96,671 | -9% | 93,600 | -3% | 89,700 | -4% | 390,963 | 18% | 422,000 | 8% | 450,000 | 7% |
Home sales to decline, home prices to keep risingBCREA press release – The British Columbia Real Estate Association (BCREA) released its first semi-annual
Housing Forecast report today. The report contains forecasts and analysis of the British Columbia economy and housing markets, including detailed forecasts by home type of the province’s twelve real estate board areas.
"Market forces have realigned," said Cameron Muir, BCREA Chief Economist. "Some potential home buyers are now finding themselves at the wrong end of a price-led affordability squeeze, and home sales are forecast to edge down as a result." MLS® residential sales are forecasted to dip 3% to 93,600 units in the province in 2007, and a further 4% to 89,500 units in 2008. The ten-year average is 77,811 units.
"A more balanced market is emerging in the aftermath of less frenetic buying activity and an increase in residential listings," added Muir. The supply of active listings in the province increased 27% to 32,879 units in March compared to the same month last year.
"More balance between supply and demand will mean less upward pressure on home prices," said Muir. The average MLS® residential price in the province climbed 18% to $390,963 in 2006. This year, the average MLS® residential price is forecast increase a more modest 8% to $422,000, and a further 7% to $450,000 in 2008.
"Strong economic fundamentals will underpin housing demand through 2008," noted Muir. "Robust labour demand is forecasted to keep job growth high and unemployment low. In addition, wages and salaries, and personal disposable income are forecast to rise well above the inflation rate."
BC housing starts are forecasted to decline 7% to 33,900 units in this year and a further 6% to 32,000 units in 2008. While new home inventories remain at low levels, capacity constraints are inhibiting the ability of many BC home builders to increase production.
Full report here.
GREATER VANCOUVERMLS® sales dipped 14% in 2006, after a record 42,222 sales in 2005. While local economic conditions remained strong, the asking prices of many sellers were no longer being immediately realized. For the first time in four years, homebuyers began to show some resistance to rapidly escalating home prices. A price-led affordability squeeze began to impact sales during the last half of 2006, resulting in less upward pressure on home prices.
More balance between homebuyers and sellers is forecast over the next two years. The market has shifted away from strong sellers’ conditions and is expected to operate in a band between a strong balanced and weak sellers’ market over the forecast horizon. These conditions will produce an increase in the average home price of 7% this year and 7% in 2008.
The Lower Mainland economy is in the midst of a robust growth phase. More than $47 billion worth of major projects are either under construction or proposed for the region. A tight labour market is producing strong upward pressure on wages and pushing the unemployment rate down to an unprecedented level. While housing affordability is a serious challenge in Greater Vancouver, the robust economy is expected to continue underpinning demand.
Housing starts in the Vancouver CMA are forecast to edge down 2% this year and a further 2% in 2008. Production increased from 8,203 units in 2000 to 19,430 units in 2004, a 137% increase. Despite strong demand and low inventories, home builders have been unable to increase production since 2004.
Supply-side constraints in the residential construction sector have limited growth in the housing stock, contributing to escalating home prices. Strong upward pressure on new home prices will continue until the demand for new homes more evenly matches the available supply. This adjustment is now underway and, by 2008, the increase in new home prices should more closely reflect those in the resale market.
PROVINCE-WIDE
HOUSING STARTS EDGE DOWN
Home builders are facing capacity constraints in the large urban areas of the province. The combination of a diminishing land supply, high land costs, more complicated mixed use developments and near full employment of skilled trades workers is inhibiting their ability to increase production. As a result, BC housing starts will fall short of last year’s performance. Total housing starts in the province are forecast to dip 7% to 33,900 units this year, and a further 5.5% to 32,00 units in 2008.
After increasing 13% last year, single detached housing starts are forecast to decline 16% to 12,900 units in 2007. The inventory of new units that are complete and unoccupied have begun to moderately increase, totaling 1,113 at the beginning of March. In addition, affordability constraints are starting to impact consumer demand for these higher priced units. However, a drawing down of inventory this year will set the stage for single detached housing starts to rebound in 2008, climbing 5% to 13,500 units.
Housing starts of multiple units are forecast to continue at the pace of 21,000 units per year in 2007. Driven by affordability, land use planning imperatives and consumer acceptance of the condominium lifestyle, multiple units now comprise 60% of all BC housing starts. Housing starts of multiple units are forecast to edge down 7% to 19,500 units in 2008. Capacity constraints in the home building industry will limit production next year, keeping new condominium inventories from markedly rising.
ECONOMIC OUTLOOK
The provincial economy is forecast to continue expanding through 2008. Real GDP growth is forecast to outpace the Canadian average, rising 3.2% in 2007 and 3.0% in 2008. The robust economy will continue to entice migrants, adding to population growth and the overall number of households. More than 750 major projects totaling over $110 billion are either proposed or already under construction in BC.
The demand for labour is expected to pull up the labour participation rate in BC. However, employment growth will exceed the overall increase in the labour force and push the unemployment rate down to 4.3% this year and 4.2% in 2008. Tight labour markets limit employment growth as firms find it increasingly difficult to hire workers with the requisite skills. As a result, BC employment growth is forecast to fall below last year’s pace of 3%, increasing 2.6% this year and 2.4% in 2008.
One benefit to BC households that stems from strong labour demand is rising incomes. Wages and salaries per employee climbed 5% last year to just over $36,000, and is forecast to grow a further 4% this year and in 2008. Personal disposable income in the province increased 7% in 2006 and is forecast to rise close to 6% annually through 2008.
Total net migration, backed by BC’s economic performance, reached 44,047 individuals in 2006, an increase of 1%. A total of 47,400 net migrants are forecast this year, and 51,400 in 2008, an increase of 7.6 and 8.4% respectively.
Typically, inter-provincial migration ebbs and flows according to the relative strength of the provincial economy.
Despite BC’s robust economy, net migration from other provinces is being tempered by Alberta’s position as Canada’s fastest growing economy. With four out of every five net migrants to BC originating from outside of Canada, international migration will continue to have a greater economic impact than any other component of population growth.
Almost 75% of provincial economic activity flows from the service sector, with nearly 50% stemming from finance, insurance and real estate and community, business and personal services. Continued strong activity in these sectors is expected, as they are closely tied to the province’s current economic expansion, and the number of transactions that are accrued. Retail and wholesale trade has been riding a wave of consumer confidence over the last two years. Rising wages, strong job growth and low unemployment is expected to continue driving growth in this sector by 5-7% annually through 2008.
The goods sector has some bright and not-so-bright areas. While construction, non-forestry related manufacturing, and mine exploration are expected to grow at faster rates than the aggregate economy, oil and gas has flattened and the forest sector is suffering from less US demand and falling prices. Lumber production has the potential to increase marginally due to the pine beetle infestation and the associated increase in the annual allowable cut. However, profits are being negatively impacted by lower prices and the invocation of the surge limit based export tax. These factors operate to limit production as the least profitable mills cut back production or temporarily shut down.
More CIV real estate articles here.
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