What can we expect for the housing market in 2014? It may sound boring, but it should be more of the same. We are settling down into a pattern of steady sales and dollar volume growth based on continued immigration and population gains.
At the WinnipegREALTORS® annual forecast breakfast, Manitoba’s chief statistician Wilf Falk confirmed immigration, while it has fallen off somewhat from its peak in 2011 of over 15,000 people, still finished near 13,000 newcomers in 2013.
Studies have shown immigrants have a strong desire to own a home. With the large increase in numbers over the past few years, and the important distinction that immigrants represent a group with a younger average age than Manitoba’s overall average (28 versus 37.6), there is no question they will continue to drive housing market activity in 2014 and beyond. More people in the younger demographic means more demand for housing.
As a result of this immigration, Manitoba’s population is growing. Immigration is expected to finish 2013 at nearly 15,000 newcomers, which would be only second to 2012’s 16,000. You still have a tight rental market at the more affordable rental rates, so the default choice falls to what is affordable in the resale market. And this development really showed itself in 2013 with condominium sales actually gaining at the expense of single-family properties, which did not offer the same affordability opportunities for first-time buyers.
Looking at the year-end 2013 MLS® pie charts for single-family, or residential-detached, home sales and condominium sales, there is a marked difference in how many sales occurred in the more affordable price ranges. Sixty-five per cent of all condominium sales fell under $250,000 in 2013, whereas only 42 per cent residential-detached sales were below this figure. Breaking it down further, 42 per cent of condos sold for under $200,000 compared to 24 per cent of residential-detached sales.
However, when it comes to generating MLS® sales, there is a far greater supply of residential-detached listings than condominiums. As a result, you still need stronger conversions of the former property type to realize high overall numbers. Last year was a good example. Despite condominium sales being up 13 per cent and residential-detached sales only down two per cent, overall MLS® sales in 2013 fell short of matching 2012.
What will be some other factors driving real estate sales in 2014? Mortgage rates are still very favourable and will again motivate first-time and move-up buyers to take advantage of the low rates. Even if rates do start inching up in 2015, why would a potential buyer wait for another year when the rates may be slightly higher and bump up the cost of financing a home?
Another big plus for 2014 is a healthy supply of available listings. This has brought more balance to the market and made it easier for buyers to find a home. So far in February, there are 209 more residential-detached MLS® listings and 109 more condominium MLS® listings than at the same time last year.
Part of this increased supply is due to more MLS® listings and sales activity in areas such as Steinbach and Waverly West in Winnipeg. Both of these MLS® areas have over 100 active listings and more than 50 new ones were entered on MLS® this January.
The Manitoba economy is expected to do relatively well (still third lowest unemployment rate in country) and our export-driven manufacturing sector should be able to take advantage of the lower valued Canadian dollar to increase business with our southern neighbour.
One issue to watch in 2014 is housing affordability, although increased availability of listings is helping keep a lid on price increases. And, of course, we cannot ignore government imposed costs on buying and owning a home. This is especially true for first-time buyers, who do not have the benefit of equity in a home unlike existing homeowners.
The expectation is that 2014 sales will remain close, if not better, than 2013, with transactions near 13,000, while dollar volume should eclipse $3 billion for the fourth year in a row. House and condominium prices should climb by single-digit percentage increases, due more to higher-priced sales than sales in the lower price ranges. The average condominium price increase in 2013 of nearly nine per cent is a case in point. Last year, there were many newer condo projects represented on MLS®, with more higher sale prices than in the most active price range of $150,000 to $199,999.
No crystal ball is perfect, so expect updates as the year progresses.
On a final note, there are many different forces at play in any local market. You owe it to yourself to consult a REALTOR®, a market expert.