January 4, 2013
Numerous variables will determine the shape of the housing market in Metro Vancouver in 2013, some originating from far beyond the region. Urban Development Institute president and CEO Anne McMullin offers some insight into the UDI’s projections for the year ahead, noting that the overall market fundamentals will be strong.
The couple of days before the end of one year and the beginning of the next never fail to provide for a last-minute scramble to formulate that New Year’s resolution. More travel, more exercise, less stress, learning a new skill, or undertaking a significant investment are some of the more common new year’s resolutions. When the clock strikes midnight on Dec. 31, the moment will have even more significance for those who have decided that 2013 will be the year when they will enter the housing market for the first time, and for existing owners who are planning to buy a new home or investment property.
With so many great expectations, what is actually in store for the Vancouver housing market in 2013? Will it be hot or not? If you’re an owner-occupier, are your reasons for purchasing different to those of an investor? Let’s start with some pertinent statistics, then I will frame the Urban Development Institute’s conclusions and projections for the year ahead.
The year ahead, like any other year, will throw forth many uncertainties, and many opportunities lie in those uncertainties if prospective buyers and investors do their research.
According to the latest CMHC housing forecast, the average annual MLS price is forecast to end the year 6.4 per cent down on 2011 with a further forecast drop of 0.3 per cent in 2013. The same forecast suggests that the number of sales in Metro Vancouver will end 2012 at a rate 18 per cent lower than the previous year with a forecast rebound and increase of 11 per cent in 2013.
At the same time, new housing supply – homes built by UDI members – is poised to remain steady but strong in 2013, with a projected 19,100 new housing starts. The above figures are a useful snapshot and indicator of what can be reasonably expected in the Metro Vancouver market. However, like all statistics, they can be meaningless without context, so here it is. This New Year’s Eve also marks the date that the United States must avert what commentators call the “fiscal cliff”, in which that country’s Congressional Budget Office projects would reduce the country’s GDP growth in 2013 by about four per cent unless a budget agreement is reached.
What will be the impact on Canada, or on Vancouver? (Editor’s note: By deadline, no agreement had been reached.) Then there is the European debt crisis; need we say more? The point is that there are many external influences on the Vancouver economy – and by extension, the housing market – that forecast statistics do not account for, some negative, but many positive.
The positive influences on the local housing market include net migration increases with 30,000 new residents expected to call Metro Vancouver home in 2013, historically low interest rates as set by the Bank of Canada in Ottawa, and an upcoming provincial election that may provide for policy platforms that encourage greater home ownership.
The year ahead, like any other year, will throw forth many uncertainties, and many opportunities lie in those uncertainties if prospective buyers and investors do their research. UDI has done its research, and all other factors being equal, has projections that suggest the rising sub-markets in Metro Vancouver will include Richmond and Vancouver’s west side. Steady markets include Vancouver’s downtown, Langley and Cloverdale. Affordable markets include the Tri-Cities of Port Coquitlam, Coquitlam and Port Moody.
In our view, the Tri-City market indicates improved affordability for those seeking entry into home ownership or a good bargain for first-time investors. The rising markets in 2013 will be ideal for families seeking single-family and townhomes close to the downtown, young professionals and couples willing to outlay a little more on a condo close to transit, or more experienced investors with a little more available capital at their disposal or seeking a safe haven in a world of rickety share markets.
Regardless of world events, there are always reasons to buy, sell or invest. Seeking opportunities in the housing market in 2013 will pay dividends to those resolute enough to pursue them – but more than that, a home to call your own at a good price. The overall housing market fundamentals in Vancouver remain strong and, like you, UDI has great expectations for the year ahead. The Urban Development Institute represents over 600 B.C. residential, commercial, industrial and institutional developers.
Special to The Sun