Canada Mortgage and Housing Agency recently published an article entitled “CMHC warns of housing slowdown”. We’ve already received and published reports early this year that, ultimately, the boom in the housing sector will lose a bit of traction due to uncertain economic factors, such as the oil crises.. This report might just be the confirmation that Canada or Edmonton for that matter, would have a smooth landing after a very exciting flight of home prices.
On our end, Edmonton home prices still look very attractive. For a list of Homes For Sale in Edmonton, visit out Edmonton MLS Listings page.
Read full article here:
After years of tolerating sky-high house prices, Canadian buyers are set to start flocking to more affordable homes and many others will opt to keep renting instead, helping to take more steam out of the housing market, the federal housing agency predicts.
New-home construction will slow over the next two years as low oil prices continue to take their toll on the economy despite rock-bottom interest rates, Canada Mortgage and Housing Agency said in a new housing-market forecast. Prices of resale homes will rise 3.4 per cent this year before slowing to 1.5 per cent next year.
Oil-dependent provinces such as Alberta and Saskatchewan will bear the brunt of the slowdown in the market, CMHC said. Home prices will fall below the national average in Alberta as oil settles around $50 to $60 (U.S.) a barrel this year.
Outside of Western oil economies, much of the expected slowdown reflects the shifting preferences among buyers, who had been flocking to high-priced newly built detached homes in the past year, but who may start looking toward older entry-level resale homes and more affordable new builds, such as townhouses and condos, where ample supply has kept prices from rising too quickly.
That will be particularly true in expensive markets such as Toronto and Vancouver, where CMHC expects rising mortgage rates next year will put a damper on demand for detached homes. “As mortgage carrying costs continue to grow, particularly for single-family homes, demand will increasingly shift to more affordable housing,” said Ted Tsiakopoulos, CMHC’s regional economist for Ontario.
Both cities are likely to see rising demand for rental apartments among buyers priced out of the housing market. In Toronto, the affordability crunch is likely to lead to a surge of new construction in rental-apartment buildings and new condo projects being turned into rentals instead, according to a new report on Toronto-area residential development by real estate services company Colliers International.
In Vancouver, where land prices are still too high to justify building rental apartments, most new rentals are in the form of “mortgage helpers,” usually detached homes that have basement apartments or a small rental home built in the backyard, known as a laneway house. Roughly 80 per cent of all newly built single-family homes in Vancouver now have some sort of rental suite as part of the property, “effectively making the single-detached homes lower-density, multiple-family dwellings,” CMHC said.
Nationally, CMHC expects the average resale home price to range from $402,139 to $439,589 by the end of this year. Reflecting the level of uncertainty among economists about the future of interest rates and oil prices, CMHC says average home prices could fall to as low as $398,191 in 2016 or could rise to as high as $457,200.
The federal housing agency also says it expects that mortgage rates will rise slightly over the next two years, with five-year posted rates set to range from 4 to 5.5 per cent this year, rising to 4.2 to 6.2 per cent next year.
Provincial forecasts: Alberta
Rising unemployment and a fall in the number of temporary foreign workers will hit Alberta’s housing market. New home construction will slow as low oil prices push Alberta into a buyer’s market. Average resale prices will fall 3.7 per cent this year before rising 1.1 per cent next year.
This article originally appeared on The Globe and Mail.
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