Saturday, May 19, 2007

CMHC Housing Market Outlook Q2 2007

CMHC released their 2nd Quarter Housing Market Outlook for Victoria CMA yesterday. Read it here.

Their 2008 at a glance:
  1. Victoria's housing markets buoyed by strong economy.
  2. Resale market sales to edge down, prices to inch up.
  3. New homebuilding to ease in 2007-08.
  4. Higher new home prices.
  5. Rental vacancies low.

I can appreciate their breakdown on page 3 of MLS House sales by market. For interest sake, I quickly calculated the price per square foot for each region. They are as follows:

  • Victoria City - $251 / ft2
  • Oak Bay - $270 / ft2
  • Esquimalt - $222 / ft2
  • Saanich East - $221 / ft2
  • Saanich West - $199 / ft2
  • Central Saanich - $208 / ft2
  • North Saanich - $238 / ft2
  • Sidney - $236 / ft2
  • West Shore - $197 / ft2

Not surprisingly, West Shore and Saanich West are the least expensive on a square footage basis. What does surprise me a little is that Esquimalt is more costly than Saanich East.

CMHC's forecasts include decreasing sales through 2007 and 2008. They also forecast a decrease in listings for 2008. I think they base this forecast on there being a decrease in construction activity and thus new listings in 2008.

They are forecasting a 15% decrease in new SFH building this year, with an increase in 2008. All other home types are forecasted with a decrease in new construction.

Prices are forecasted to rise, with 2008 having an increase in line with current inflation numbers.

Rental prices will continue to rise and vacancy will remain tight, loosening ever so slightly in 2008. I can't agree with that, as affordability for home purchasing is not getting any better, according to their home price increases. Unless home renters start moving away, rental vacancy will not loosen.

Finally, they see 5 year mortgage rates as increasing through 2008.

A lot of CMHC's forecasts appear to be quite conservative. They aren't stepping out on a limb with any bold predictions. They see the economy and housing continuing to hum along for the next 18 months. This may be, but with what's happening in the US, and the world in general, I'm expecting things to not go quite so smoothly.