The average MLS® resale house price in Winnipeg is expected to increase by 7.1 per cent this year to $222,000, according to a new revised forecast by Canada Mortgage and Housing Corporation.
Earlier in the year, the corporation had predicted a five per cent increase in the average resale price.
Next year, CMHC predicts the average price of an existing home will increase by another 3.6 per cent, bringing the average MLS® price to $230,000.
Lai Sing Louie, CMHC’s regional economist for the Prairie province and the territories, said the pace of existing home sales has been elevated since the fall of 2009, as home buyers sought to get into the market before mortgage rates pushed upward.
“Our forecast calls for existing home sales to rise 4.3 per cent in 2010, reaching 12,000 units,” said Louie.
“A modest increase to 12,250 sales will occur in 2011,” he added.
The forecast will represent the strongest existing home sales since 2007, which peaked at 12,319 units.
CMHC forecasts that the heightened pace of MLS® home sales will moderate through the later half of 2010, as higher mortgage rates and house prices begin to hamper affordability. However, the strong sales pace at the beginning of the year will push 2010 activity above last year’s level.
WinnipegREALTORS® reported that year-to-date MLS® residential home sales were up 12 per cent over 2009 to 3,626 units by the end of April.
“Helping things along are the spring market, when activity always heats up,” said WinnipegREALTORS® president Claude Davis. “And there is added motivation this year with higher mortgage rates on the horizon, if not already creating a stir with incremental rate increases.”
In recent days, however, the charter banks have announced slight decreases in mortgage rates, although rates remain higher than was the case at the start of the year, but the rates are still at historically low levels.
Davis also warned that the average price increase forecasted by CMHC will not apply equally to all parts of the city.
“It is really important to understand and appreciate the differences and subtleties that occur within a large real estate market such as greater Winnipeg,” he added.
Davis said home prices can vary dramatically by neighbourhood in Winnipeg.
The Canadian Real Estate Association also warned that average price information can be useful in establishing trends over time, but does not indicate actual prices in centres comprised of widely-divergent neighbourhoods, such as is the case in Winnipeg.
CMHC is also forecasting a 13 per cent increase in single-family detached home construction this year for the Winnipeg Census Metropolitan Area (CMA), which is comprised of the city and surrounding municipalities.
The forecast is for 1,700 single-detached homes to be built this year and 1,750 the following year.
“Stronger economic conditions, low mortgage rates, and historically high migration will support single-family construction over the next two years,” said Louie.
“This year will see the largest increase as production expands in response to lower inventory levels and fewer active listings in the resale market. Next year will see a more modest gain in (new home) starts as higher mortgage rates and additional selection in the resale market slow the increase in demand.”
Following two successive years of reductions, CMHC is predicting that multiple-family construction — semi-detached, row and apartment — will rebound to 900 units this year with a similar repeat in 2011.
“These represent significant increases from the 528 multiple-family starts in 2009, but are lower than the 1,000-plus units annually from 2006 to 1008,” said Louie.
He said a low supply of condominiums relative to demand will form the basis for the upswing in multiple starts, as will persistently low rental vacancy rates.