Thursday, November 17, 2011

CMHC 17th Annual Housing Outlook Review


The health of the BC real estate market is of vital importance to buyers and sellers and, a barometer, of sorts, on the economic health of the province.  The Central Mortgage and Housing Corporation (CMHC) every year presents hard numbers, graphs and charts galore in an endeavour to make sense of both what has transpired and what is about to unfold. Yesterday, I had the pleasure of attending CMHC's 17th Annual Housing Outlook in downtown Vancouver, BC.

© Stephen Mullock
The morning, before the coffee break, has two major presenters Carol Frketich, Regional Economist CMHC and Robyn Adamache, Senior Market Analyst CMHC.  Carol's job is to present the Provincial Outlook and Robyn is left with boiling down the market to look specifically at the Metro Vancouver area.

There is a problem of course, with this approach, the Provincial Outlook is so heavily weighted by Vancouver real estate sales it winds up looking like not much more than a watered down Vancouver outlook of not much assistance.

Perhaps, it would be better to have a Beyond Vancouver (+90 kilometres) Outlook to get better sense of what is happening in that 95% of BC existing beyond the bright lights and bike lanes of Vancouver.

The Vancouver Housing Market 2011 - 2012

It is very clear that the Vancouver market, fuelled by a world class reputation and an onslaught of Asian investors, is moving in isolation from the remainder of the province.  Did you know that there are more Chinese millionaires than there are Canadians?  The good news is these Asian investors are long term holders of real estate and so are quite unlike the speculators of the run-up of Vancouver values prior to the financial meltdown in 2008.   They are looking for properties of good design close to universities, quality schools and transit corridors.  Stories, or urban legends, abound about Mainland Chinese investors arriving by airplane and over the weekend purchasing a half dozen properties valued in excess of 6 million dollars each.  It is reported that 74% of luxury housing is being purchased by Chinese buyers driving values in this niche market upward.

The average housing price in Greater Vancouver is expected to be worth 17% more in value by the end of this year!  This Greater Vancouver housing price average have been driven largely by sale prices of single family homes, up  26% ,from a previous peak in 2008 prior to the meltdown, townhouses by 12% and apartments only 1%.  The crazy part is that no one there seemed worried about sustainability for local families.

Bidding wars are common occurrences in the Vancouver market and CMHC has developed a new index that is comprised of sales in excess of listing price - one figure I heard yesterday was as high as 36% in the west side of Vancouver.  Wow.  Are these properties grossly under-priced or is this a marketing strategy?

Many Bright Spots for 2012
  • 2012 - A Balanced market will result in provincial average prices growing by 2%
  • 2012 - A 9% increase in provincial home sales
  • 2012 - New housing unit sales will grow moderately from 16,000 in 2011 to 17,000
  • Interest rates are expected to remain stable, one year posted rates in the 3.4 - 3.8% range and 5 year posted rates to be 5.2 - 5.7%
  • Employment gains mainly centred in Vancouver in 2011 will spread throughout the province
  • More full time jobs will be created

What does this mean?

My take away from the Vancouver Housing Outlook is that 2012 will be slightly better than 2011 with more employment being created in the province.  It is worth noting that the unemployment rate fell from 8.2% at this time in 2010 to 7.3% currently.  I will not try to paint the Beyond Vancouver Market in 2012 as anything but a market that continue to require a lot of work, time and expertise to achieve a sale. In contrast, areas from Langley to Vancouver will continue to see happy days although maybe not as sunny as in 2011.

It also means that it is a great time to cash out of Vancouver and head into the Fraser Valley.  According to BCREA the average housing price, year end, in Greater Vancouver is expected to be $782,000 while the Chilliwack average is only $297,000!  Move out into the nearby, beautiful Fraser Valley and put some money in the bank.

Imagine living here...

Forecasting Resources : a must read -  BCREA Housing Forecast November 2011
                                                        - CMHC depth and analysis

For any specific BC real estate property questions you might have it is recommended that you consult with a professional member of the Real Estate Institute of British Columbia or a Realtor®. 


  
Are you a Langley/Surrey Investor or Developer?

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Stephen Mullock RI is an award winning full-time real estate agent with 30 years of experience and hundreds of sales. Thinking of buying or selling real estate in the Fraser Cheam communities of Chilliwack, Agassiz or Harrison Hot Springs? Contact Steve (click here) of Royal LePage Wheeler Cheam Realty, telephone 604-792-0077, for experience, local knowledge and friendly service you’ll be happy you did.

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