Richard Goatcher from Canada Mortgage and Housing Coporation (CMHC) was given 25 minutes to forecast the housing market in Edmonton for 2010. Here is the short of it…
Employment growth will return in 2010, they predict job growth of slightly more than 5000. The predict a gradual improvement in unemployment, but the 12 year average will only be slightly lower than 2009. Net migration is expected to be strong by historical standards. Monthly carrying costs for a home are expected to increase slightly after a sharp drop in 2009.
Resale housing activity was close to record levels in Q4 '09 but how much more growth can we really expect? Inventory is currently pretty good, new home inventory of single family homes is currently very low (almost none). The fact that housing is currently more expensive than it was at the same time last year has affect buyer psychology as they not longer feel they will get a better deal if they wait. They expect to see improved sales in 2010 but similar to last year (without the really slow Q1). Expect an annual average price increase of about 4% in 2010 which puts us back up to the 2008 average annual price – they expect this will be mostly due to lower inventory.
New home construction – activity has ramped up significantly in Q4 and the trend is upwards. They still consider the supply to be fairly low – less than 100 spec homes were available at the end of the year, this is a historic low. They went from record high in August '08 to near record low now. They single detached starts to increase to over 5000 units (from 3900 in '09).
Multi-family starts are increasing slowly because of the high existing inventory of apartment style condos downtown and in the South West. It is difficult to get funding for new apartment style condos because of the large number of standing unsold units. They are expecting a 24% improvement in multi-family starts in 2010 mostly because financing will become easier and pre-sales will be easier to get. There are a number of projects planned and ready to go that are just waiting for pre-sales and financing. In addition the cost of construction has come down but it is still relatively high compared to earlier in the decade.
They expect the apartment vacancy rate to drop below 4% assuming the population grows and supply doesn't increase significantly. Average rents declined by 2% in 2009 but they are hopeful that rates will rebound or at least stay the same.
As for changes in lending policies such as changes to down payment requirements there is no prediction as this comes from the finance department.
