Housing Market Outlook by CMHC: 2012 Q1

This week CMHC issued its latest Housing Market Outlook and we are presenting a summary for you.

Over the course of 2011, new listings outpaced existing home sales. As a consequence, the resale market remained in balanced conditions. Moving forward, balanced market conditions expected to prevail and the average MLS® price to remain relatively stable at a rate roughly in line with inflation to the end of 2013. The average MLS® price is forecast to be between $330,000 and $410,000 in 2012 and between $335,000 and $430,000 in 2013. CMHC’s point forecast for the average MLS® price is $368,900 in 2012, while 2013 will see an increase to $379,000. 


The average prices in this report are higher than were expected a year ago.

Toronto rental market conditions will remain supportive of low vacancy rates in 2012, holding the average for the GTA to 1.3%. Demographic trends will continue to support strong growth in the population aged 25 to 34, while potential first time buyers could feel restrained by increased economic uncertainty, slow income growth and persistent challenges associated with ownership affordability. The supply of condo rentals will continue to expand quickly as approximately 18,000 new units are completed over the next year. Overall tight rental market conditions will support stronger increases in apartment rents. The average two-bedroom apartment rent will grow in excess of the rent review guideline amount of 3.1% in 2012 to $1,187.

Mortgage rates

Short-term mortgage rates and variable mortgage rates are expected to remain near historically low levels. The outlook also assumes that mortgage rates will remain flat through most of 2012 and start increasing moderately in late 2012 or early 2013. This will continue to support housing demand. 

Employment and income

In the 12 months to December 2011, employment grew by 1.2% while the unemployment rate stood at 7.5%. Over the December-to-December period, full-time employment rose by 1.5% (+207,700), while part-time work declined 0.3% (-8,600). Employment is forecast to grow by 1.3% in 2012 and 2.0% in 2013. These positive employment results will continue to support Canada’s housing sector

Migration

Relative to other countries, Canada’s economy is expected to be a better performer. Canada is thus expected to attract more immigrants (net international migration), which will push net migration up. This will have a positive impact on housing demand in the medium to long term.

Vacancy rates

Moving forward, it is expected that there will continue to be modest purposebuilt rental construction and strong rental demand due to high immigration. This, however, will be partly offset by an expanding rented condo market. As a result, vacancy rates across Canada’s metropolitan centres will remain relatively stable this year and next.

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