Housing Market Outlook - 2nd quarter 2008

Overview

Existing home sales will decline slightly as mortgage carrying costs rise in response to higher home rices and mortgage rates. Income and population growth stemming from tight labour markets will put upward pressure in existing home sales, lessening the decline.

Fewer housing starts are expected as economic conditions cool this year. Single-detached homes will continue to trend lower, while multiple-unit home starts will be lower than last year's peak.

Housing Forecasts

BC will outperform most other provinces in economic and job growth during the next two years. This relative strength will translate into a high level of existing home sales, housing starts and house prices.

Move-up buyers and people downsizing will keep the number of resale transactions above the ten-year average. Existing home sales will decline during the next two years in response to high home prices, a rise in mortgage rates in 2009 and slower job growth. 

High home prices will result in more homes being listed for sale. This increase in supply will slow growth in the provincial average MLS price from the double-digit pace of the last four years. Centres where the local economy is more diversified and homeownership demand remains strong will record double-digit price gains again in 2008. 

Fewer home will be started as tight resale market conditions ease and potential homebuyers are more able to satisfy their housing needs in established neighbourhoods. Single-detached home starts will trend lower, as builders balance the high cost of land building materials with what price conscious homebuyers will pay. Multiple-unit starts will account for the lion's share of new construction. With demand shifting to denser housing forms, more than sixty % of starts will be in the multiple-unit housing developments. 

Source: CMHC Housing Market Outlook- release date second quarter 2008

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