Housing Market Update

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Kerrie Glenn
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1 Housing Market Update Keith Stewart, Senior Market Analyst September 2017

2 Agenda Economic Fundamentals The Rental Market The Ownership Market 2

3 New Households drive housing demand 5,000 4,000 3,000 2, % 4.6% 5-year Average Annual change Vancouver CMA: 9.1% 8.7% 8.3% 9.8% 10.7% 9.7% 5.4% 5-year avg annual chg 16k 5-year total % chg - 7.5% 1, % 2.8% Source: BC Stats PEOPLE

4 Immigration is the main contributor to household growth 50,000 Net Vancouver CMA Migration 40,000 30,000 20,000 10, , International Interprovincial Intraprovincial Source: Statistics Canada 4

5 Job creation has been strong and job quality is good 100 Year-over-year job creation (000s), Vancouver CMA Full-time Part-time Source: Statistics Canada 5

6 Income growth continues, but has moderated 8% Vancouver CMA - Annual Nominal Per Capita Income Growth 6% 4% 2% 0% -2% -4% Source: Conference Board of Canada 6

7 Falling bond yields have drawn down mortgage rates Year Government of Canada Bond Yield and Average 5-Year Discounted Mortgage Rate (%) 5-Year Average Discounted Mortgage Year Government of Canada Bond Yield Source: Bank of Canada 7

8 Mortgage funding is cheap and has defied expectations 7 Consensus Forecasts for 10-Year Government of Canada Bond Yield (%) Actual Sources: Department of Finance, Bank of Canada 8

9 BC households have taken advantage of lower rates % Change Number of Refinances Average Refinanced Mortgage Balance % Chg Canada 4% $230,484 $249,892 8% Toronto 4% $329,333 $363,163 10% Abbotsford-Mission 44% $282,758 $337,605 19% Vancouver 26% $379,156 $440,196 16% Victoria 32% $315,436 $349,785 11% Source: Equifax, CMHC calculations 9

10 Rental Market

11 Rent increases were the highest in 25 years in 2016 Same-Sample Rent Changes by Area (%) New Westminster 5.1 Burnaby 6.8 Surrey 7.4 City of Vancouver 7 Vancouver CMA 6.4 Source: CMHC

12 Rising rents and incentives have attracted new investment Starts and Completions Rental Construction Activity Under Construction 10,000 8,000 6,000 4,000 2, Under Construction - City of Vancouver Under Construction - Non-City of Vancouver Starts (Smoothed) Completions (Smoothed) Source: CMHC 12

13 Multiple factors have drawn down rental vacancy Rising interprovincial migration New households to a region tend to rent for a period of time High cost of purchase Longer duration of renting for future buyers More households looking to rent long-term Increased short-term rentals drawing units out of the secondary rental market (condos, suites, etc.) Increased pressure on the primary rental market (purpose-built rental buildings) 13

14 Ownership Market

15 New ownership stock to begin hitting market in 2018 Starts and Completions 2,000 1,500 1, Source: CMHC Under Construction - City of Vancouver Starts (Smoothed) Ownership Construction Activity Under Construction 35,000 30,000 25,000 20,000 15,000 10,000 5,000 0 Under Construction - Non-City of Vancouver Completions (Smoothed) 15

16 Completions and household formations align in the long run Household Formations versus Housing Completions - Vancouver CMA 25,000 20,000 15,000 10,000 5,000 0 Source: BC Stats, CMHC Projected Household Gain Completions 16

17 Sale of singles remain low, apartment and attached high Seasonally Adjusted Sales - Vancouver CMA 2,000 1,800 1,600 1,400 1,200 1, Single Attached Apartment Source: CREA, CMHC Calculations 17

18 The share of sales of high-end homes surged over Index (Jan 2014=1) 4 Seasonally Adjusted Sales by Price Segment, Vancouver CMA Jan 2014 Jul 2014 Jan 2015 Jul 2015 Jan 2016 Jul 2016 Jan 2017 <500k k 750k-1 mill 1mill-2 mill 2mill-4 mill 4mill+ Source: CREA, CMHC Calculations 18

19 Inventories of re-sale homes remain low 20 Months of Supply, All Types Total Months of Supply GVREB Total Months of Supply FVREB Source: REBGV and FVREB 19

20 Active listings have been drawn down due to a surge in sales Sales and New Listings 6,000 5,000 4,000 3,000 2,000 Total Resale Market Conditions, REBGV - SA Active Listings 16,000 14,000 12,000 10,000 8,000 1, Total Active Listings SA (Smoothed) Total Sales SA (Smoothed) Total New Listings SA (Smoothed) Source: REBGV, CMHC Calculations 6,000 20

21 Overall market is near balanced 100% Sales to New Listings Ratio, All Types 80% 60% 40% 20% 0% Total Sales to New Ratio SA - REBGV Total Sales to New Ratio SA - FVREB Source: REBGV and FVREB 21

22 but two-speed market remains Jan 2015= HPI - REBGV $1.6 mill $616k 1.2 BC HOME 1.1 Foreign Buyers Tax Program 1 Jan 2015 Jul 2015 Jan 2016 Jul 2016 Jan 2017 Jul 2017 Source: CREA Single Detached Apartment 22

23 Top and bottom five annualized price changes, to July Year 10 Year North Delta Apartment 54.4% Vancouver West Detached 9.2% Surrey (Combined) Apartment 36.8% Vancouver East Detached 9.1% Langley Apartment 34.0% Richmond Detached 8.8% Abbotsford Apartment 32.5% Burnaby South Detached 8.8% Mission Apartment 31.0% Burnaby North Detached 8.0% Burnaby North Detached -1.2% Abbotsford Apartment 3.5% Ladner Apartment -1.2% Ladner Apartment 3.4% Richmond Detached -2.1% Tsawwassen Apartment 3.0% Ladner Detached -2.3% Abbotsford Attached 2.8% West Vancouver Detached -5.7% Maple Ridge Apartment 1.5% Source: REBGV, FVREB 23

24 Vancouver housing market summary Supply of re-sale homes are at an all-time low Strong in-migration and local economic fundamentals means demand remains elevated Market remains in two speed mode Starts are strong, but there are constraints in construction capacity 24

25 Looking ahead Headwinds Mortgage policy changes Uninsured stress test for federal lenders Increasing mortgage rates Provincial policy changes/uncertainty Affordability Tailwinds Strong local economic fundamentals 25

26 Housing Observer Online Look for CMHC s: Housing Market Outlook (HMO) Housing Market Assessment (HMA) Out week of October 23 26

27 Housing Market Information Portal Snapshots of Local, Regional, and National data. Compare statistics for multiple locations. Comprehensive tables, map and charts. Current and archived CMHC publications. cmhc.ca/hmiportal 27

Thank You Canada Mortgage and Housing Corporation www.cmhc.

28 Thank You Canada Mortgage and Housing Corporation Keith Stewart Senior Market Analyst 28

RED DEER HOUSING MARKET OUTLOOK

RED DEER - JUNE 3, 2009 RED DEER HOUSING MARKET OUTLOOK Regine durand Market Analyst - CMHC Prairie and Territories 50,000 48,000 46,000 44,000 42,000 40,000 38,000 36,000 34,000 32,000 30,000 28,000 Red