The 10th annual WinnipegREALTORS® forecast breakfast, attended by around 300 people, heard how the MLS® forecast turned out from the year before and where we are headed in 2016. The forecast numbers for 2016 are muted or very modest, although expectations are for another solid year of activity and there are a lot of listings to keep prices on an even keel.
The feature speaker this year was Alexander Fritsche, a senior economist with the Bank of Canada, who spoke about the uncertainty in Canada’s economy due to much lower oil prices and the precipitous fall of the Canadian dollar against the U.S. dollar.
As was explained by Fritsche, there are many variables involved going forward as a result of the major complex adjustments to Canada’s resource economy. As it turned out, the Bank of Canada decided to hold the bank rate at 0.5 per cent in January with the hope there will be more stability going forward in oil prices and the Canadian dollar.
WinnipegREALTORS® has been tracking and monitoring its MLS® sales and dollar volume numbers for years. Especially of late, the local market has been very consistent in delivering steady sales and enough extra dollar volume each year to eke out a new benchmark level. Last year, there were over 12,900 MLS® sales and dollar volume eclipsed $3.5 billion for the first time.
What is it about Manitoba and Winnipeg and its surrounding rural municipalities, which the WinnipegREALTORS® market region captures, that delivers such solid results year in and year out? It may not be as big a surprise to some who follow the diversity of our economic fundamentals and how well they have been performing. Here are just a few indicators of strength of the market.
Manitoba is expected to be second in economic growth in 2015 and third best in 2016. The Conference Board of Canada in Autumn 2015 Metropolitan Outlook forecast that Winnipeg would achieve real GDP growth of 2.6 per cent in 2015, reaching a seven-year high. The forecast equals Toronto for second best GDP growth and is a full percentage point above the national average. It will be the third year since 2012 in which Winnipeg’s output growth exceeds the national average.
This additional growth translates into giving Manitoba higher average weekly earnings and thus making it more competitive with other provinces.
Key sectors performing well are manufacturing, transportation and warehousing, and the wholesale and retail trade. This year looks very promising given that Manitoba is a major exporter to the U.S. and stands to gain greatly by a much lower Canadian dollar and growth in the U.S. economy.
Winnipeg saw its labour market grow in the first half of 2015 by 2.8 per cent when compared to the same period in 2014. Its employment growth ranked second best among Canada’s large cities and the unemployment rate was ninth lowest at 6.2 per cent. In comparison, Canada’s total employment grew by only 0.6 per cent.
Fritsche presented a slide indicating that private forecasters are expecting Manitoba to become a leader in economic growth in 2016 and 2017. Backing up this assessment, just a day later at the Western Business Outlook conference held in Winnipeg, was the Conference Board of Canada’s Marie-Christine Bernard who predicts that Manitoba will see 2.1 per cent GDP growth in 2016 and 3.1 per cent in 2017.
At this same conference, there was also mention of Manitoba benefiting significantly from accelerated public and private investment, which, in turn, will fuel strong construction activity. A big factor is Manitoba Hydro’s Keeyask Generation Station and the Bipole 3 project.
The Manitoba government’s five-year $5.5-billion infrastructure investment, coupled with the new federal governments plans to invest heavily in infrastructure starting this year, can only add to creating more person-years of employment in Manitoba and, therefore, keep unemployment at one of the lowest levels in the country. The Conference Board predicts an unemployment rate of 5.7 per cent in 2016 and 5.4 per cent in 2017.
As of October 1, 2015, Manitoba had the second highest population increase in Canada at over one per cent. Manitoba’s successful provincial nominee program continues to bring in new immigrants to this province. There were over 16,000 immigrants in 2014, with many of them seeking homeownership.
One more example of the strength of the housing market has to be the rather favourable state of Manitoba household balance sheets. Manitobans have the lowest personal debt per capita in Canada. It includes personal loans, credit cards and mortgages held at commercial banks. Manitoba’s personal debt per capita is estimated at $23,390 on average in 2015 compared to $44,396 for Canada.
It should be stressed that all of this good news supporting sustained housing activity in WinnipegREALTORS® market region is happening in an era of historically low interest rates. And there is no expectation rates will change much in 2016 and in the foreseeable future. When rates do start to increase, the ascent will be gradual at best.
And as far as prices goes, home buyers are in a local market with the lowest average sale price of all major cities in this country. In an infographic WinnipegREALTORS® created this year, it showed Winnipeg has the lowest average home sale price at around $294,000, which is slightly lower than Halifax.
Contrast our local house prices with those of Vancouver’s where an international survey just depicted the city as highly unaffordable with the third highest prices in the world. The only cities with steeper prices are Sydney and Hong Kong.
So, regardless of all the national headlines about housing bubbles and overvalued properties, you need to focus your attention on where you live — all housing markets are local and Winnipeg’s is no exception to that rule.