CMHC Predicts Housing Starts to Stabilize Through 2014 and 2015
By Lucas on Feb 07, 2014
By Penny Munoz
The latest report from the Canada Mortgage and Housing Corporation (CMHC) predicts that Canadian home builders will likely decrease the number of housing starts in the next couple years as demand from first-time buyers declines and interest rates continue to grow.
Though it sounds like a bad thing, the report emphasizes that this slowdown will help bring the housing market to a more sustainable level that will stabilize over 2014 and 2015.
"With a relatively high number of units under construction in some local markets, builders are expected to adjust the pace of new activity in order to manage their inventory levels,” says Mathieu Laberge, Deputy Chief Economist for the CMHC.
The prediction for housing starts in 2014 varies between 176,600 to 199,800 units with an average of 187,300, which is a miniscule decrease from 187,923 units in 2013. Looking forward to the predictions for 2015, the CMCH report predicts housing starts ranging between 163,200 to 206,600 units, with a point forecast of about 184,900 units.
Compared to record highs projected at the start of 2012, which estimated 214,827 starts, the 2014 and 2015 projections indicate a cooling market, but the CMCH says that the sale of existing houses will not suffer. Referencing the numbers projected by the Multiple Listing Service (MLS), the CMHC predicts that the average price of a resale home will increase by 2.1%, totalling $390,400 this year, and another 1.7% in 2015 for a total of $397,100. The CMHC expects sales to increase from 457,485 in 2013 to 466,500 in 2014, and then reach a potential 474,700 sales in 2015.
According to the report, seven out of 10 provinces will see the number of housing starts stabilize, with Alberta, British Columbia and Quebec expected to post gains in 2014. Projected figures suggest that by 2015 Manitoba and Quebec will experience a moderate rebound and British Columbia will stay the same.
