Canada Mortgage and Housing Corp. has revised its forecast for the Greater Victoria homebuilding market and now expects the region to see nearly 2,000 new housing units started this year.
In a second-quarter housing market outlook released Monday, the federal agency now expects there will be 1,950 new homes started in 2015, a jump from the 1,825 forecast late last year.
“Demand for new homes in the Victoria area will be supported by modest employment and population growth combined with low mortgage interest rates,” said CMHC senior market analyst Eric Bond. “Lower inventories of completed and unabsorbed new multiple-unit homes will support starts of new apartment condominium projects, while higher migration to the region will encourage an expansion in rental apartment construction.”
The forecast suggests there will be 650 single-family homes started this year, up from an earlier forecast of 550, which homebuilders say is a sign new families are moving into the area and have confidence in the economy.
“We’re certainly very pleased with the numbers heading back toward 2,000 starts where we feel we have a healthy housing market,” said Casey Edge, executive director of the Victoria Residential Builders Association. “When the single-family home numbers start to increase, it’s an indication young people starting families have employment and are able to purchase.”
Edge noted the forecast of 650 single-family homes is a big indicator of confidence, given that in 2013 there were 514 homes started.
Edge said there has been some indication Victoria is also reaping the benefit of high prices in other cities across Canada. “Some municipalities are becoming significantly unaffordable, like Toronto and Vancouver, and some people are looking for more affordable communities,” he said.
That may help drive home sales, as the CMHC’s outlook is now forecasting there will be 6,850 sales in 2015. The outlook suggests that number should be tempered in 2016 by rising interest rates that should bring the total number of sales in line with the 15-year average of 6,400 resale homes changing hands.
As for price, the outlook suggests the average sale price will increase 2.3 per cent this year to reach $508,000, followed by a 1.4 per cent increase to $515,000 next year.
CMHC also noted while single-family homes will continue to enjoy a seller’s market, balanced market conditions are expected to prevail for other market segments through 2015 and 2016 as projected higher prices encourage new listings and increased competition from new homes.
Across Canada, CMHC expects homebuilding to remain stable, but noted there are factors that will affect markets in different provinces. On an annual basis, housing starts across Canada are expected to range between 166,540 and 188,580 units in 2015, while in 2016, housing starts are forecast to range from 162,840 to 190,830 units.
