We all know there’s a softening going on right now in most Canadian housing markets. Homebuyers know it, home sellers know it, and now, CMHC knows it, too. While the Crown corporation has undoubtedly seen the softening going on for several months, now they’ve come out with a new forecast for the remainder of this year. And it’s not as optimistic as their last forecast was.
As you can see from the chart above, the numbers in most housing categories have gone down, albeit very slightly, from the previous forecast. Given the fact that most of these categories have to do with prices, it may or may not spell good news for the housing market, depending on your outlook.
- The number of existing homes to be sold this year, according to CMHC, will be about 465,600 – a drop of about 20,000 units from the organization’s forecast this past summer. While home sales being down doesn’t typically spell good news, this will bring demand down, which will also have an affect on prices (which is great!)
- Resale prices will drop by about $3,000 when sales for pre-existing homes fall to an average of $365,100.
- Average mortgages on new homes will also fall to about $370,500, about $6,800 lower than what was estimated. This could be very good news, as prices are simply too high right now and keeping too many out of the market.
- In 2013, CMHC predicts that up to 489,700 units will be sold; that’s up by about 2,100 from their earlier forecast.
- Housing starts for this year will be somewhere in the range of 210,800 to 216,600. That’s slightly higher than the previously forecasted range of 196,800 to 217,000. Next year that range is going to drop from 2012’s number though, as it’s expected to be only 177,300 to 209,900 starts.
Think this bodes bad news? It really all depends on your perspective. If you saw our housing market this past year as being a healthy one, yes, the results are probably a bit disappointing. But truthfully, the drop in numbers is going to help us all. As prices go down, more options are opened up and more people can get back out on the market (such as all those that have been patiently waiting for prices to drop.) It also means that there will be more competition on the market, but this time it could be among sellers trying to get buyers to their properties – which is great for anyone looking to buy!
And there’s also the fact that the housing market isn’t the be-all-end-all of Canada’s economy. Yes it does make up a large portion of it, but we do have other supporting factors we can rely on. Mathieu Laberge, deputy chief economist at CMHC, says, “A weaker outlook for global economic conditions and the waning of the effect of pre-sales from late 2010 and early 2011, which contributed to support multi-family starts this year, will bring moderation in housing starts next year.
He also says, “Nevertheless, employment growth and net migration will help support housing starts activity going forward.”
