Last January, WinnipegREALTORS® held an MLS® breakfast to forecast what they believed lay ahead for the Winnipeg real estate market in 2008.
During the breakfast, a presentation by Altus Clayton projected a clear trend for sellers’ market conditions to prevail in 2008 — a limited supply of inventory unable to meet the strong demand for existing housing.
An example differentiating Winnipeg from other major markets was its MLS® market’s conversion of residential-detached sales-to-listings. Winnipeg in 2007 had a conversion rate of 85 per cent while Calgary was 60 per cent and Edmonton closer to 50 per cent.
The strong fundamentals leading to Winnipeg’s high conversion rate were reflected in the Conference Board of Canada’s Metropolitan Outlook Winter 2008, which showed in 2007 that Winnipeg’s economy was performing extremely well with real GDP growth projected at 3.9 per cent, personable disposable income projected to increase by five per cent, housing starts up 21 per cent (a 19-year high), its CMA population growing by over 5,000 and an unemployment rate of only 4.7 per cent.
The Conference Board’s optimistic prediction for 2008 has been maintained, as Winnipeg now has a projected real GDP of over 3 per cent, ranking only behind Edmonton and Calgary.
At the forecast breakfast, the province of Manitoba’s chief statistician, Wilf Falk, confirmed Manitoba’s favourable net migration, indicating for the first time that more people returned to Manitoba from Alberta than vice vera. He added that Manitoba’s population should grow by close to 14,000 people — the highest population growth since 1972.
Stuart Duncan, the CEO of Destination Winnipeg, made it clear Winnipeg was enjoying positive growth despite events south of the border and elsewhere.
The message at the end of the forecast breakfast was there were many solid fundamentals in place, with momentum projected to carry over from 2007 and maintain a solid MLS® market in 2008.
However, WinnipegREALTORS® erred on the side of caution, saying that due to a limited inventory and record sales in the past few years, MLS® sales would be hard pressed to show any appreciable gain in 2008. This prediction was made knowing how the U.S. economy was then already slowing down along with indications of downward adjustments in other Canadian major markets after their remarkable housing gains.
House prices were still forecast to climb for the sixth consecutive year due to the tight housing supply entering into 2008, as well as positive economic indicators and immigration numbers that would sustain strong housing demand.
With the completion of nearly three quarters of real estate market activity in Winnipeg, the 2008 MLS® forecast is holding firm, despite a year filled with negative media headlines and rather dramatic global economic events such as the recent U.S. government plan to rescue Wall Street money markets. It should be pointed out, Canada’s banking system and housing sector are different and in better shape than the U. S. — both are supported by greater regulations and checks and balances.
MLS® sales are still in line with last year’s record pace and the dollar volume increase is in the low teens — consistently the case since 2003. Dollar volume for the year will likely reach $2 billion by the end of September, a level that did not occur until November last year, which was the first time WinnipegREALTORS® surpassed this milestone.
Yet, Winnipeg remains one of the most affordable markets in Canada even though prices have been on the rise since 2003.
The story is not significantly different for the Manitoba Home Builders’ Association. The article below indicates the new housing market is running even with last year’s best performance for housing starts in 20 years.
The fall MHBA Parade of Homes is enjoying plenty of foot traffic with potential buyers having the choice of well-built energy-efficient homes in some exciting new, as well as popular, existing developments throughout Winnipeg and the outlying rural municipalities.
Manitoba new home market still strong
There has been a series of recent articles forecasting the end of Canada’s housing boom. The rationale given has ranged from over-inflated prices in some provinces, a flat Canadian economy, poor weather or a ripple effect from the United States.
A number of economists have waded in on the subject, but offer no general consensus. However, the one consistent message from across the country is that Manitoba and the prairies will not be part of this decline.
On August 15, the Canadian Mortgage and Housing Corporation projected increases in single-family detached starts in 2008 and 2009 for Manitoba. Of particular note was the unusually high percentage (32 per cent) of recent housing starts in the rural municipalities surrounding Winnipeg.
Perhaps a response to this trend was the Manitoba minister of housing’s recent announcement regarding the release of 214 lots in the Waverley West subdivision to be followed by more lots soon becoming available.
Although a decrease in multi-family starts is projected for this year, one has to remember that 2007 was the all-time record for multi-family starts in Manitoba and 2008 is projected to be the third best year since 1987.
“Strong capital investments will sustain a solid pace of economic activity and continue to support housing starts (in Manitoba),” according to a recent projection by the Altus Clayton Economic Consulting Group.
The projected number of starts average over 5,000 units annually for the next two years, thereby placing 2007, 2008 and 2009 solidly as the top three years of housing starts in the history of the province.
Manitoba Economic Highlights, produced by the Economic and Fiscal Analysis Branch, recently reported that single-detached housing starts in Manitoba were up two per cent, whereas throughout Canada starts were down 18.8 per cent. This is a continuation of the pattern seen in 2007, when Manitoba enjoyed the third highest growth rate in Canada.
During the first six months of 2008, residential building permits increased by 7.8 per cent, thereby indicating projected continued growth. Investment in housing increased by 10.7 per cent.
We must remember that the trends and numbers in the new home construction industry for Canada are not necessarily applicable to Manitoba. All it takes to heavily sway the national numbers is for Ontario, B.C. or Alberta to have a downturn in their residential construction industry.
The Manitoba market remains steady and strong and is projected by the experts to remain so for an extended period of time.