Genworth Canada released a report on the condo market in Canada today. They say rising prices of single family homes are pushing more first time buyers towards condos, and retirees are opting for the condo lifestyle as well. These factors along with population growth are expected to increase demand for condos in Canada for the next few years.
“This data corroborates our view that the demand for condos in Canada, particularly at the price-point we insure, is well supported by our economy and our population,” said Brian Hurley, Chairman and CEO of Genworth Canada. “For those seeking to own a home affordably in urban centres, condos remain a good option.”
Resale prices for condos are expected to rise next year, in seven of the eight metropolitan centres studied in the report with the highest jump in prices occurring in Edmonton. Edmonton will see prices rise 3.2% to an average of $215,290. The only city which is expected to have a drop in prices is Vancouver where condos will average $348,152, a cut of 2%.
Low interest rates and employment gains will ultimately fuel a stronger apartment condominium market in Edmonton, but another relatively weak year is expected in 2012, with sales, starts, and resale prices all falling. Next year looks significantly better, as sales, the median existing apartment price, and starts are all expected to rise.
Part of the reason for Edmonton leading the pack in their report is poor performance for the past year years. After a big drop in starts in 2009, completions were about 1/3 what they were in 2009. Even with slow sales in 2011, inventory dropped at the end of 2011 and has continued to fall in 2012. Completions are still low and they expect available inventory to continue to drop.
Genworth sees evidence of pent-up demand with the ratio of condo starts to population growth below the 20-year average for the past 4 years. They expect condo starts to hit a 5-year high in 2013.
The market for existing apartment condominiums is having difficulty gaining traction – sales rose in 2011 compared to a very weak 2010. Sales of exiting condos are expected to fall again in 2012 – a further 9.6% – but rebound in 2013. Sellers can take some encouragement from the slight but steady rise in the sales-to-active listings ratio, which averaged 17.5% last year, up from 14.5% in 2010. Drops in both sales and listings are expected to leave the ratio little changed this year, but the falling listings and rising sales forecast for 2013 will lift it to a roughly balanced-market reading near 25%.
Ongoing market weakness has lead to an 8.5% drop in median prices over the past four years, after spectacular increases leading up to the peak. Another 1.9% price drop is on tap for this year, but a firming market will finally produce a 3.2% rise in 2013.
If Genworth is right, and prices continue to drop for the rest of the year, then November and December will be a good time to buy a condo in Edmonton, with prices expect to increase in 2013.
The Genworth Canada report, produced with the Conference Board of Canada, reviewed a wide range of condominium statistics and offers an in-depth analysis of the trends in the condominium market for eight large Canadian metropolitan areas: Québec City, Montréal, Ottawa, Toronto, Calgary, Edmonton, Vancouver and Victoria.