Housing Forecast Seminar: Live Blog
Today we’re attended the always informative Housing Forecast Seminar put on by the REALTORS® Association of Edmonton. We always get tons of insight on the market and what to expect at the seminar that I’ll be sharing here.
James Mabey; Chair, REALTORS® Association of Edmonton
Single-family home sales were down 5.4% in 2016 compared to 2015, and condos were down 14%. A further decline of 1.7% in single family home sales in 2017 is predicted. Mortgage rates are expected to have minimal impact in 2017. Condo sales are expected to remain stable in 2017. Total residential sales are expected to decrease about 1% in 2017. Single family home sales hot spots were Summerside, Windermere and The Hamptons in Edmonton in 2016 and Westpark in Fort Saskatchewan.
Despite predicting a drop in average prices last year, the average single-family home price dipped only 0.6% in 2016 and prices dropped 0.7% and are expected to drop 2.2% in 2017.
10 sales over $2million in 2016 helped keep the average prices high – this is the same number of sales over $2million in 2015. Average prices are expected to drop in 2017: single-family homes by 2.2% and condos by 3.8%.
Over the past few years, the number apartment style condos sold has dropped from 10% of overall sales to 6%, and rowhouse/duplexes increased from 6% to 10%.
Inventory spiked last year, coming close to the levels we saw at the end of 2008.
Hot spots in Edmonton in 2016: Ottewell, Cumberland, Grandin and Foxboro all saw average days on market below 40 days in 2016. Condo hotspots included Centennial Village in Sherwood Park, Garneau, South Terwillegar and Casselman with the average days on market at 48 or less.
Risks to these predictions include: mortgage rates and rules, oil prices, employment, migration and consumer confidence.
Christina Butchart; Senior Market Analyst, CMHC
Jobs – After showing monthly job gains, Edmonton lost jobs for 5 consecutive months in Q2 and Q3 in 2016. Employment is expected to continue to pull back a bit in 2017, with the economy strengthening in the second half of the year. Our labour force grew in the first half of 2016 put it has been pulling back since about June, and some people have left for other markets, bringing the unemployment rate down below 7% by the end of the year. Population growth is expected to slow over the next few years, but it will remain positive.
Mortgage rates – expected to save relatively low over the next 5 years.
Rental market – new construction of rental properties has really increased over the past few years and as a result the number of properties available for rent has increased and the vacancy rate (7.1%) is at the highest rate we’ve seen since 1996. The number of people who rented in 2016 actually increased, but supply increased faster. The expect the rate to remain around 7% in 2017 and drop below 6% in 2018. Rental rates declined for the first time in 2016 since the mid-90’s (average rents dropped about 3%). About 1 in 3 condos in Edmonton are in the rental market.
New homes – new starts pulled back quite quickly in 2015 & 2016, there has been a slight uptick in construction in Q4 of 2016. Inventory of new homes peaked in mid-2016 at around 900 homes and is dropping (it sits at about 600 homes now). Starts should get back up to about the 2015 level in 2018.
New condos – multi-family starts hit a record high 2015 and the market pulled back in 2016, but levels are still relatively high. As a result, inventory has grown and continues to grow. Starts are expected to remain lower for the next few years.
Overall CMHC says our market is moderately overvalued, which essentially means they’re keeping an eye on it. This could be corrected by declining prices, or stronger economic fundamentals.
Catherine Rothrock; Chief Economist, Government of Alberta
Real GDP Growth expected to improve slightly in Canada in 2017 to about 2% from about 1% in ’15 and ’16. Canadian $ is expected to stay between 75-78 cents (US) for the next few years. Commodity prices are expected to remain subdued. Oil prices are expected to remain relatively low through 2018 and so investment in oil in Alberta is not expected to grow. Production has actually increased in the Province and is expected to continue to increase. There are signs of stabilization for the Alberta economy – business output has been improving, as have exports. Government spending has partially offset declines in private spending. Big projects are wrapping up and construction is declining. Employment rate is expected to remain high in Alberta for a couple of years. Expecting a net inter-provincial loss of 11,000 people in the province in 2017, but international migration is expected to offset that loss. Average weekly earnings have been on the decline since mid-2015, which has caused a pull back in spending in the province.
Part of the reason housing market hasn’t seen as large of a correction as some might expect, is because we didn’t have a large increase in prices between ’09-’14, when supply mostly met demand.
Improvements are expected in manufacturing and exports in 2017, but they’re not expecting strong GDP growth (about 1% mostly due to construction in Fort McMurray). Any recovery is going to take “awhile.” Alberta’s annual nominal GDP per capita is still the highest in Canada, and there are some positive signs expected to support growth in the next five years – costs have come down, and we have positives demographics (our population is about 10 years younger than the Canadian average).
There is a lot of volatility in the oil market, people are uncertain about OPEC and other producers – there may be some improvements in prices, but then production should increase putting a lid on any price increases in 2017.
You can also follow #RAEforecast on twitter.
About Sara MacLennan
Sara MacLennan is the Director of Marketing at Liv Real Estate and a licensed Real Estate Associate. The bulk of Sara’s experience and wealth of expertise lies in on-line technology and marketing both for agents and consumers. Sara is the former National Director for Interactive Marketing for Coldwell Banker Canada where she was responsible for an extensive training program traveling to offices across the country training agents and brokers on marketing and technology. Find Sara on Twitter @edmontonblogger.