{"id":19845,"date":"2022-05-09T10:10:00","date_gmt":"2022-05-09T17:10:00","guid":{"rendered":"http:\/\/www.roryc.ca\/blog\/?p=19845"},"modified":"2022-05-09T07:08:16","modified_gmt":"2022-05-09T14:08:16","slug":"moderating-growth-in-prices-sales-housing-starts-rentals-outmatched-by-demand-lack-of-inventory-construction-costs","status":"publish","type":"post","link":"https:\/\/www.roryc.ca\/blog\/2022\/05\/moderating-growth-in-prices-sales-housing-starts-rentals-outmatched-by-demand-lack-of-inventory-construction-costs\/","title":{"rendered":"Moderating Growth in Prices, Sales, Housing Starts &#038; Rentals Outmatched by Demand, Lack of Inventory &#038; Construction Costs"},"content":{"rendered":"<p style=\"text-align: justify;\">Canada\u2019s housing market will \u201cmoderate from historic 2021 levels\u201d in terms of price, sales, starts and rentals over the next year \u2013 but not to the point where owning or renting a home will be any more affordable than it is now.<\/p>\n<p style=\"text-align: justify;\">That is the forecast published by the Canada Mortgage and Housing Corporation, or CMHC, this morning in its latest Housing Market Outlook. The report noted that, despite the expected moderation in prices and the number of sales throughout Canada, costs growth will continue to outpace income growth in several major cities \u2013 placing \u201cgreater pressure on the affordability home ownership.\u201d<\/p>\n<p style=\"text-align: justify;\">\u201cImproving levels of employment and immigration are expected to be key factors, as the impact of pandemic restrictions continue to recede,\u201d said CMHC chief economist Bob Dugan in a statement about sales, prices and housing starts remaining elevated in 2022. \u201cIn 2023 and 2024, the growth in prices will trend closer to long-run averages, with sales and starts activity expected to remain above 5- and 10-year averages.\u201d<\/p>\n<p style=\"text-align: justify;\">The report paints the same picture for Metro Vancouver, Canada\u2019s most expensive real estate market. According to the CMHC outlook, price growth of homes should slow down this year from the blistering pace seen in 2020 and 2021 \u2013 but immigration-driven demand and rising debt servicing costs will lead to a worsening of affordability.<\/p>\n<p style=\"text-align: justify;\">CMHC projects the growth rate of home prices in the Greater Vancouver region will not continue on its double-digit rate beyond Q1 2022, and the rate of growth in prices will actually fall to below 5% year-over-year by 2023.<\/p>\n<p style=\"text-align: justify;\">Braden Batch, CMHC\u2019s senior analyst of market insights (and author of the outlook\u2019s chapter on Vancouver), noted there are variables in the projection of continued growth for the Lower Mainland\u2019s real estate market. Batch noted that \u201ctrouble in the national and global markets\u201d \u2013 ranging from interest rates to other economic pressures on B.C. home buyers \u2013 could slow market activity to a greater degree than what\u2019s projected if Metro Vancouver cannot remain insulated.<\/p>\n<p style=\"text-align: justify;\">Similarly, total housing starts will fall this year in Metro Vancouver and shift towards row and semi-detached units, but shortage in skilled trade labour and supply chain bottlenecks will continue to push costs of construction higher.<\/p>\n<p style=\"text-align: justify;\">\u201cVancouver will emerge from the pandemic with a strong economy,\u201d Batch said in the report. \u201cImmigration will be a major demand driver over the next few years, but a lack of supply at all levels and tightening credit has worsened affordability.\u201d<\/p>\n<p style=\"text-align: justify;\">The theme of continued unaffordability stretches to the rental market. The CMHC is projecting Vancouver\u2019s rental vacancy rate to remain around 1%, all while the economic and migration rebound will put new pressures of demand, leading to rent increases.<\/p>\n<p style=\"text-align: justify;\">\u201cLong development timelines and the current level of construction won\u2019t provide enough new units in the next three years to raise vacancy rates or to provide sufficient competition among property owners to lower rents,\u201d Batch said. \u201cUpward pressure on rents is inevitable for much of the market, particularly when rent controlled units turn over and reprice for the current market.\u201d<\/p>\n<p style=\"text-align: justify;\">Overall, the forecast projects the MLS average price for the Vancouver CMA to be in the range between a high of $1,459,000 and a low of $1,064,000 \u2013 showing no significant deviations from 2021\u2019s average of $1,150,357 and demonstrably higher than the pre-COVID level of $923,070 recorded in 2019.<\/p>\n<p style=\"text-align: justify;\">Home resale transactions this year will range between 44,000 and 60,000, again not venturing far from 2021 and 2020 figures (61,829 and 44,468, respectively). Again, those projections are significantly higher than levels recorded pre-pandemic in 2019 (35,715 sales transactions).<\/p>\n<p style=\"text-align: justify;\"><a href=\"https:\/\/biv.com\/article\/2022\/04\/cmhc-no-affordability-relief-sight-vancouver-housing-2022\" target=\"_blank\" rel=\"noopener\">CMHC : No Affordability Relief in Sight for Vancouver Housing in 2022<\/a> by Chuck Chiang | BIV<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Canada\u2019s housing market will \u201cmoderate from historic 2021 levels\u201d in terms of price, sales, starts and rentals over the next year \u2013 but not to the point where owning or &hellip; [<a href=\"https:\/\/www.roryc.ca\/blog\/2022\/05\/moderating-growth-in-prices-sales-housing-starts-rentals-outmatched-by-demand-lack-of-inventory-construction-costs\/\">read more<\/a>]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[8],"tags":[],"class_list":["post-19845","post","type-post","status-publish","format-standard","hentry","category-market-updates"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.7 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Moderating Growth in Prices, Sales, Housing Starts &amp; 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