For those expecting the housing market to produce a compelling storyline in 2012, the latest forecast from CMHC is sure to disappoint.
Expect more of the same, according to the crown corporation’s fourth quarter Housing Market Outlook, which forecasts housing starts and prices will stabilize into 2012.
“Despite continued uncertainty in the global economy, Canada’s economic fundamentals remain positive, particularly with respect to interest rates, employment and immigration. These factors will continue to support Canada’s housing sector in 2012,” said Mathieu Laberge, Deputy Chief Economist for CMHC.
Housing starts will be in the range of 170,900 to 199,900 units in 2011, with a point forecast of 191,000 units. In 2012, housing starts will be in the range of 161,650 to 206,350 units, with a point forecast of 186,750 units.
Existing home sales will be in the range of 423,600 to 470,100 units in 2011, with a point forecast of 450,100 units. In 2012, MLS sales are expected to move up modestly in the range of 406,100 to 509,000 units, with a point forecast of 458,500 units.
CMHC’s forecast for the average house price is expected to move up to $363,900 in 2011, while 2012 will see a more moderate increase to $368,200.
“Ontario, Saskatchewan and Nova Scotia’s growth will be the strongest, while Prince Edward Island and British Columbia are forecast to see modest growth,” CMHC said. “The other provinces, on the other hand, are expected to see decreases. In 2012, housing starts are forecast to increase in British Columbia, Alberta and Manitoba.”
The agency said the economic outlook for the country was uncertain, making it difficult to forecast growth in the housing market.
“Sustained financial market uncertainty has heightened risks but, there are both upside and downside risks to the outlook,” the agency stated.
The positive: “Some upsides include the potential that the U.S. could recover stronger than is forecast, thus increasing U.S. employment and economic growth. This could, in turn, boost employment growth in Canada and lead to stronger than anticipated housing demand.”
The negative: “Some downsides include a slower than expected recovery for the U.S., reduced economic growth in emerging economies and a downturn in parts of Europe. Such events could result in slower employment growth in Canada, which could lead to lower demand for housing.”
Other highlights from the report:
· Posted mortgage rates will remain relatively flat until late 2012. For 2012, the one-year posted mortgage rate is expected to be in the 3.4 to 3.8 per cent range, while the five-year posted mortgage rate is forecast to be within 5.2 to 5.7 per cent.
· Single starts have rebounded coming out of the recession. After an increase in the third quarter of this year, they are expected to moderate before rising later in 2012.
· Since the beginning of 2011, new listings steadily outpaced existing home sales. As a consequence, the resale market has moved from sellers’ to balanced market conditions.