2012 forecasts solid for Greater Vancouver; softer for Fraser Valley
All things considered, the Lower Mainland's housing market outlook for next year could be a lot worse.
Canada Mortgage and Housing Corporation (CMHC) is predicting an increase in both sales and average prices for Metro Vancouver and a slight decrease in sales and prices for Abbotsford, while BCREA is forecasting a mixture of both for the Fraser Valley — an increase in sales and decrease in prices for 2012. Here are those forecasts in more detail.
Again, given the global situation — the Euro zone economic crisis, the US recovery in slow motion, China's GDP shrinking, interest rates remaining at all-time lows and jittery markets — you could almost hear the sigh of relief in the room at CMHC's annual housing outlook conference, held November 1. Their lead economists projected a 9 per cent increase in home sales and 2 per cent increase in average home prices for Metro Vancouver next year.
Carol Frketich, CMHC's BC Regional Economist, explained why sales of existing homes in BC will rebound closer to 2009 levels and how that increase will outperform every other province in Canada. "What's driving housing demand here is the continuation of low interest rates, job growth in Vancouver and migration to the Greater Vancouver region."
Frketich explained that 16 per cent of international immigrants to Canada come to BC, staying mainly in the Lower Mainland and a significant portion of those new arrivals — 17 per cent — buy a home within their first six months. She added that the two key growth communities will continue to be Surrey and Vancouver attracting immigrants from India, Hong Kong, Taiwan and mainland China.
Regarding the influence of home buyers from mainland China and overseas in general, Robyn Adamache, Senior Market Analyst, shared new data the CMHC collected from the Real Estate Board of Greater Vancouver (REBGV) and Landcor Data Corporation illustrating the impact new immigrants have on the Lower Mainland housing market.
According to REBGV's monthly market poll (modeled after our monthly survey issued to members who complete sales within the first two weeks of every month), nine per cent of people who bought in Greater Vancouver during the first 10 months of this year were overseas buyers. And according to Landcor analysis, 74 per cent of all luxury home purchases in Vancouver's westside (detached $2 million +) and Richmond (condos $1 million +) are by mainland Chinese buyers — either new or landed immigrants.
In describing how luxury sales can impact the housing market regionally, Adamache used Fraser Valley as an example. "In the last year, the average home price in the Fraser Valley increased by 12 per cent, but if you exclude White Rock/South Surrey, that increase drops to 3 per cent."
She added that while overseas buyers have driven increases in sales and prices in niche markets in the last year, growth in those areas of West Vancouver, Vancouver westside, Richmond, Burnaby and White Rock/South Surrey is expected to moderate into balance in the coming year.
Regarding further east intos the Valley, CMHC is projecting negative growth. For 2012, it's forecasting a 3 per cent decrease in MLS® sales in the Abbotsford metropolitan region, along with a 1 per cent decrease in average price compared to 2011.
According to BCREA's November Housing Forecast, Abbotsford is struggling with elevated inventory levels. As well, first-time homebuyers who look to more affordable areas such as Abbotsford and Mission were impacted this year by the federal government introducing tighter mortgage restrictions in the spring.
Overall, BCREA is forecasting existing home sales in the Fraser Valley will increase by 5 per cent next year compared to 2011 and average prices will decrease year-over-year by 1.6 per cent: "A relatively high inventory of homes for sale, both this year and next, points to little upward pressure in the price of a typical home."
Information provided by the Fraser Valley Real Estate Board.