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Demand for new homes will remain strong this year and next year
Feb 25, 2011
Housing starts in Manitoba this year and next will benefit from increases in employment and earnings, according to Canada Mortgage and Housing Corporation’s first quarter 2011 Housing Market Outlook, Prairie Highlights.
Housing starts rebounded in 2010 with a gain of about 41-per-cent year-over-year.
Since Manitoba’s economic recovery is expected to continue on 2011 and 2012, demand for new homes will remain strong. Single-family home starts are projected to rise to 3,650 units in 2011 and 3,700 units in 2012, according to the CMHC outlook.
The only dampening effect on new home construction this year will be price gains and additional listings in the competing resale market.
“Single-family builders have started 2011 at the same pace as last year,” said Dianne Himbeault, CMHC’s senior market analyst based in Winnipeg, “despite the colder temperatures and greater precipitation (snow) that typically inhibit production.”
There were 115 single-family starts in January, which was only one unit less than the same month last year.
“This pace is expected to continue through the year as demand for new homes remains steady,” she added.
Winnipeg will continue as the dominant centre for multiple-family construction in Manitoba, according to the outlook. Winnipeg finished 2010 with more than double the activity recorded in 2009 in this sector.
“While the majority of these starts were for the rental market,” according to the outlook, “condominium construction was about twice that of 2009 levels.
“Given rising supply levels, multiple-family production in Manitoba will moderate to 1,700 units in 2011 and 2012, yet remain elevated by historical standards.”
In January, there were only seven multiple-family units started, compared to 132 a year earlier.
“Multi-family starts tend to slow during the winter months due to the colder temperatures,” said Himbeault. “There is also a number of units currently under construction, which can have an impact on the initiation of new projects.”
The CMHC outlook reported resale home prices in Manitoba increased by approximately 10 per cent last year over 2009.
“Such price gains will provide additional incentive to move-up buyers to list their homes, adding much needed supply to the market where active listings have been low. As a result, upward pressure on prices will diminish through 2011 and 2012 as sellers’ market conditions give way to more balanced markets moving forward.”
According to the outlook, population gains will continue to fuel demand for resale homes.
“However, sales growth will be impacted by rising home prices and a continued relative scarcity of desirable listings, especially for entry level buyers.”
“Jobs, immigration and low interest rates continue to keep our local MLS® market active,” said WinnipegREALTORS® president Ralph Fyfe.
“Given the strength of our local market, it is not as cyclical as it used to be and there is less concern and less hesitation to put properties on the market early in the year,” he added.
Fyfe said proof a more balanced market arising was the ratio of total sales price dollar value to listings price value in January dropping under 100 per cent. A more heated market with plenty of multiple offers pushes the ratio above 100 per cent.