Canada Mortgage and Housing Corporation is predicting that new home construction in Winnipeg and the surrounding municipalities will reach a 20-year high by the end of 2007.
According to CMHC’s Fall 2007 Winnipeg Housing Market Outlook, there will be 3,425 residential units — both single-family and multiple-family units — built in 2007, the highest total since 1988 and 23 per cent ahead of last year’s pace.
CMHC is also forecasting 1,575 multiple-family unit starts in 2007, which is another 20-year high.
In 2008, CMHC is predicting than
another 1,500 multiple-family units will be built.
“Given that about half of Winnipeg’s population is in the first-time buyer and move-up buyer stage of homeownership, demand for condominium units will remain strong for several years,” said Jeff Powell, CMHC’s senior market analyst.
In the past Winnipeg has not typically had high levels of multiple-family construction, but a shortage of residential home listings has builders poised to respond to the shift to meet the demand for multiple-family units, Powell added.
CMHC said the Winnipeg Census Metropolitan Area will be one of the few CMAs in the nation to experience increased residential and multiple-family construction in 2007 and 2008.
Powell said demand for new single-detached homes has been propelled by continued growth in the number of households — 4,000 new Winnipeggers in 2007 and another 3,500 in 2008 — and low levels of resale home supply, which has caused the New House Price Index to record gains of nine per cent in the last two years.
Also pushing the demand for new homes is a continuing low vacancy rate in rental properties.
CMHC said there will be a scarcity of vacant rental units through the remainder of 2007 and into 2008. The forecast is that the vacancy rate will be 1.4 per cent in 2007 and below 1.5 per cent in 2008.
The government agency said the Winnipeg CMA will experience its second lowest apartment vacancy rate on record at marginally higher than 1.1 per cent.
Powell said some relief is in sight for new home buyers this fall and throughout 2008 as price growth moderates due to the release of 2,000 new lots on the market this year and another 2,400 in 2008.
CMHC said builders across the Winnipeg CMA will surpass the 1,756 single-family homes started in 2006 and the 1,850 that will be started in 2007. The total of starts predicted for 2007 is only 32 homes short of the record established in 2004 and will represent the second highest level since 1990.
In 2008, CMHC is predicting 1,950 single-family starts, an increase of 5.4 per cent over 2007.
Manitoba is one of five provinces whose economic growth is expected to exceed the national average. This success has contributed to a five-year high in job creation, thus increasing net migration to levels not seen since 1982.
These factors will contribute to the high levels of new home construction expected between now and the end of 2008. Total housing starts will reach 5,750 units in 2007, the best performance in 20 years. Starts will edge lower to 5,600 units in 2008.
The average MLS® price in Manitoba will rise by 11.8 per cent and eight per cent in 2007 and 2008, respectively.
Across Canada, housing starts will reach 227,530 units in 2007, an increase of 0.1 per cent from the 227,395 units in 2006, according to CMHC. However, in 2008 residential construction will decline to about 214,000 units. Despite this drop, 2008 will mark the seventh consecutive year in which housing starts exceed 200,000 units.
“Continuing high employment levels, income gains and low mortgage rates have been a boon to Canada’s housing markets,” said Bob Dugan, chief economist at CMHC. “Despite this, however, housing starts are expected to decrease in 2008. The pull back in housing starts next year will be mainly due to the increases in house prices in recent years, which have pushed mortgage carrying costs higher.”
CMHC said existing home sales, as measured by the Multiple Listing Service®, are poised to experience their best year on record with just over 521,000 units in 2007, a 7.8 per-cent increase over 2006. The high level of MLS® sales will be led by activity in the Prairies.
Growth in the average MLS® price will remain high at 10.1 per cent in 2007, mainly because of continued strong price pressures in Canada’s Western provinces. As most resale markets move toward more balanced conditions, growth in average MLS® price is forecast to slow to 4.2 per cent in 2008.