UDI Capital Region: Growth & Change

Transcription

1 UDI Capital Region: Growth & REAL ESTATE thoughtful Andrew Ramlo, VP, Market Intelligence Rennie Group

2 Today's Roadmap: - Current Market Stats - The Drivers To - To 2021 & Beyond

3 Current Market stats ALL PROPERTY SALES 1,200 1,000-17% 1, Sales Victoria Metro Region yr August Average = % 0 Aug '07 Aug '08 Aug '09 Aug '10 Aug '11 Aug '12 Aug '13 Aug '14 Aug '15 Aug '16 Aug '17

4 Current Market stats ALL PROPERTY LISTINGS 4,500 4,000 3,500-57% 3,000 2,500 10yr August Average = 2, Listings Victoria Metro Region 2,000 1,500 1, % 0 Aug '07 Aug '08 Aug '09 Aug '10 Aug '11 Aug '12 Aug '13 Aug '14 Aug '15 Aug '16 Aug '17 1,645 1,561

5 Current Market stats DETACHED LISTINGS 2,500 2,000-34% 1,500 10yr August Average = 1, Listings Victoria Metro Region 1, Aug '07 Aug '08 Aug '09 Aug '10 Aug '11 Aug '12 Aug '13 Aug '14 Aug '15 Aug '16 Aug '17 sales vs August average 10%

6 Current Market stats CONDO LISTINGS 1,400 1,200-49% 1,000 10yr August Average = Listings Victoria Metro Region % 0 Aug '07 Aug '08 Aug '09 Aug '10 Aug '11 Aug '12 Aug '13 Aug '14 Aug '15 Aug '16 Aug ' sales vs August average

7 Current Market stats TOWNHOUSE LISTINGS % yr July Average = Listings Victoria Metro Region % Aug '07 Aug '08 Aug '09 Aug '10 Aug '11 Aug '12 Aug '13 Aug '14 Aug '15 Aug '16 Aug '17 sales vs August average

8 Current Market stats SALES TO LISTINGS RATIO 70% 60% 65% 50% 40% 49% 39% 2017 Signs of a TIGHT regional market 30% Sellers 20% Balanced 10% Buyers Market 0% Aug '07 Aug '08 Aug '09 Aug '10 Aug '11 Aug '12 Aug '13 Aug '14 Aug '15 Aug '16 Aug '17 20% 12%

9 Current Market stats BENCHMARK PRICES $700,000 $600,000 Benchmark August +17% +16% +13% Detached $694,500 All Types $620,700 Townhouse $554, Signs of a TIGHT regional market $500,000 $400,000 $300,000 $200,000 $100,000 $0 Aug '07 Aug '08 Aug '09 Aug '10 Aug '11 Aug '12 Aug '13 Aug '14 Aug '15 Aug '16 Aug '17 Condo $435, %

10 Current Market stats LISTINGS & BENCHMARK PRICES 4,500 4,000 3,500 benchmark $620,700 3, Signs of a TIGHT regional market 12 month average 2,500 2,000 1,500 1,561 1, Aug '07 Aug '08 Aug '09 Aug '10 Aug '11 Aug '12 Aug '13 Aug '14 Aug '15 Aug '16 Aug '17 1,645

11 Today's Roadmap: - Current Market Stats - The Drivers To

12 The Drivers To 3,000 2,500 Housing Supply & Occupancy Demand, Victoria Metro Region 1996/97 to 2015/16 actual, 2017 Estimated CMHC Starts Completions 2,933 3,105 2, Housing STARTS & Completions 2,000 1,500 1, , ,233 1,236 2,370 1,533 1,602 1,662 1,993 1,618 1,045 1,561 1,983 1, ,913 1,904 2,404 2,303 2,732 1,787 2,694 demand increment

13 The Drivers To 2017 Housing STARTS & Completions 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Housing Starts & Completions, Victoria Metro Region 1996/97 to 2015/16 actual, 2017 estimated (July) CMHC ,119 1,266 1,304 1,179 1,272 1, , ,201 1, , ,467 1, , ,126 1,732 1, Ground Oriented Apartment

14 The Drivers To 2017 Foreign BUYERS FOREIGN BUYERS in the CAPITAL REGION 8% 6% 4% 2% 0% 4.1% % 3.6% 3.6% 7.2% 6.8% % 5.3% average: 4.8% 5.0% 4.5% 4.0% 5.0% June July August September October November December January February March April May

15 The Drivers To 2017 BC Home PARTNERSHIP BC HOME Partnership assists BC residents who are first-time homebuyers by providing interest-free down payment assistance loans. The 25-year loans are interest free for 5 years, are capped at $37,500, to a maximum purchase price $750,000, and are registered on the title of the home.

16 The Drivers To 2017 BC Home PARTNERSHIP 2,623applications 1,135 funded $16.5m in loans ($14,537/ea.vs.$37,500) Q1: 88 funded in CRD with 1,844 total sales, BCHP represented 5% of sales through Q1 of 2017

17 The Drivers To HISTORICAL GDP CHANGE, BC Ontario Manitoba 2.1% 2.5% 3.2% Quebec 1.4% NB 1.3% PEI 1.2% Strong Recent GDP Growth Canada NS 1.1% 1.1% Sask -0.9% Nfld -1.3% Alberta -3.1%

18 The Drivers To EMPLOYMENT CHANGE, % 3.0% 4.7% 3.5% Strong JOB GROWTH in BCs Metro regions 2.0% 1.0% 0.0% -1.0% -2.0% 1.2% 0.01% 0.00% -1.5% Toronto Calgary Edmonton Abbotsford Vancouver Victoria

19 The Drivers To Strong JOB GROWTH in BCs Metro regions EMPLOYMENT CHANGE Greater British Vancouver Columbia +7% +156,500 jobs +13% +158,700 Greater Victoria +3% +3,300 Rest of BC -0.7% -5,500

20 The Drivers To UNEMPLOYMENT RATE 10.0% 9.0% 8.0% 7.0% 6.0% Victoria Vancouver Toronto Edmonton Calgary Canada 9.5% 7.9% 6.9% 6.8% Continuation of LOW & DECLINING unemployment rate 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% 5.1% 4.3% 12 month moving average

21 The Drivers To PROJECTED GDP CHANGE, AVG Big Bank Consensus Real GDP Growth (%) Alberta 2.8% BC 2.6% Ontario 2.5% Canada 2.4% Manitoba 2.1% Quebec 2.0% Consensus OUTLOOK of the Big 5 Banks Sask PEI NS NB 1.2% 1.0% 1.4% 2.0% Nfld -0.8%

22 The Drivers To HISTORICALLY LOW MORTGAGE RATES 20% 15% 10% The Interest Rate 5% 4.84% 3.39% environment 3.14% 0% year 3 year 1 year

23 The Drivers To The Interest Rate environment

24 The Drivers To +0.25% in the target 3.10% $725,295 $708,363 Let s assume: $100K HH Inc. $100K DP 25 year am. 35% GDS -2% in purchasing power A 0.25% increase in the interest rate costs an additional ~$13/month per $100,000 borrowed

25 The Drivers To Interest Rate Environment Consensus OUTLOOK of the Big 5 Banks DECEMBER 2018 OVERNIGHT TARGET RATE > BMO Capital Markets: 1.50% > TD Economics: 1.25% > CIBC World Markets: 1.50% > Scotiabank: 1.25% > RBC: 1.50%

26 The Drivers To The NeW Osfi Proposal Let s assume: $100K HH Inc. $100K DP 25 year am. 35% GDS 3.10% $725,295 $708,363-2% 4.85% $606,468-16% in purchasing power

27 The Drivers To NDP/Green POLICY s Increase in the Foreign Buyer Tax Speculation & Vacancy Tax Principal Residence Capital Gains Tax HOG Adjustment More Progressive Property Tax

28 The Drivers To growing HOUSING equity HOUSING EQUITY 40,000 30,000 20,000 10,000 0 Victoria Metro Region's Mortgage Free Housing 27,100 25,688 Number of Homes by Age 15,901 10,997 7,168 1, ,508 1,990 34,361 29,981 26,274 28,070 22,668 21,897 20,833 Number of Owned Homes 17,600 15,589 13,343 14, % 75% 50% 25% Number of Mortgage Free Homes 5,802 Under 25 years years years years years years 75 years and over 0%

29 The Drivers To HOUSING EQUITY 40,000 30,000 29,981 69% EST. number of mortgage 27,100 free households: 25,688 54,012 26,274 28,070 22,668 20,000 51% Est. value of owned Number MFree of Homes dwellings: by Age 21,897 20,833 $868,000 Number of Owned Homes 17,600 Est. growing total mortgage-free equity: 15,901 $46 BILLION 15,589 29% 28% 13,343 14,186 10,000 HOUSING 10,997 EST. number of mortgage free s: 29,700 Number of Mortgage Free Homes 7,168 14% 13% EST. equity total s 5,802 1,445 mortgage-free equity: $27B 421 1,508 1,990 0 Victoria Metro Region's Mortgage Free Housing 34,361 % Mortgage Free Under 25 years years years years years years 75 years and over Their Kids entering the housing market 29,700 81% 100% 75% 50% 25% 0%

30 The Drivers To growing HOUSING equity & the impact on prices $75,706 Couple family households 4.64% Interest Rate 30% Gross Debt Service 25 Yr. Amortization $331,976 Maximum Loan $17,472 5% down $349,499 purchase price $93,186 Bank of M&D (mom & dad) $110,659 25% down $238,790 reduce mortgage & pmts or $442,635 purchase price

31 The Drivers To growing HOUSING equity & the impact on prices $75,706 Couple family households 4.64% Interest Rate 30% Gross Debt Service 25 Yr. Amortization $331,976 Maximum Loan $17,472 5% down $349,499 purchase price $93,186 Bank of M&D (mom & dad) $110,659 25% down $238,790 reduce mortgage & pmts or $442,635 purchase price 30% more than they could afford

32 Today's Roadmap: - Current Market Stats - The Drivers To - To 2021 & Beyond

33 To 2021 & Beyond 2.1% Total Population, Capital Region, % 386, ,739 The People: Growth & 236, % 1.4% 0.8% 1.1% 1.3%

34 To 2021 & Beyond The People: Growth & 117,036-27,733 Immigration as a share of population Components of, Canada, 1971 to , ,890 actual 320,932-45, , , % 0.83% Immigration Net Immigration Natural Increase Emigration projected 330, %

35 To 2021 & Beyond The People: Growth &

36 To 2021 & Beyond Components of, Capital Region 3,566 2,746 Net Inter-provincial 3,196 The People: Growth & 880 1, ,046 Net Immigration Net Intra-prov. Natural Increase (decrease) ,

37 To 2021 & Beyond 2.1% Total Population, Capital Region, % 386, , , ,858 The People: Growth & 236, % 1.4% 0.8% 1.1% 1.3% 0.5% 75,000 more residents (19%) [55,000 over the past 20 (17%) 35% more!]

38 To 2021 & Beyond The People: Growth & age ,000 3,000 2,000 1, ,000 2,000 3,000 4,000

39 To 2021 & Beyond The People: Growth & age = +23% = +81% = +12% 4,000 3,000 2,000 1, ,000 2,000 3,000 4,000

40 To 2021 & Beyond The People: Growth & age ,000 3,000 2,000 1, ,000 2,000 3,000 4,000

41 To 2021 & Beyond The People: Growth & for every senior today there age & better +52% 42,000 more seniors % 24,000 more workers % 8,600 more kids ,000 3,000 2,000 1, ,000 2,000 3,000 4,000 would be 1.5 by 2036

42 To 2021 & Beyond The Lifecycle of Housing Occupancy: Age Specific Household Maintainer Rates, Capital Region, % 51% 52% 55% 57% 58% 60% 60% 61% 61% 68% 63% 56% Housing Growth & 3% 27% age

43 To 2021 & Beyond Housing Growth & 2% 1% 17% 10% 19% The Lifecycle of Housing Occupancy: Age Specific Household Maintainer Rates, Capital Region, % 31% 20% 37% 15% 42% 43% 44% 46% 45% 45% 45% ground oriented 13% 14% 14% 14% 15% 16% 16% apartment 48% 20% 40% 33% 24% 23% age

44 To 2021 & Beyond 19% Growth in Residents & Residences Capital Region, % 21% 25% Housing Growth & Future Occupancy Demand Population 75,000 3,700/yr Dwelling Units 40,000 2,000/yr Colwood, Esquimalt, View Royal & Langford (80,000) Ground Oriented 25,000 Apartment 14,000

45 To 2021 & Beyond Cohort Future Occupancy Demand Age in 2016 Population by Cohort Number of People Age in 2036 Number of People <15 48,330 <15 57,250 = , ,938 = , ,465 = , ,380 = , ,234 = , ,585 = , ,592 = , ,843 = ,069 = 95+ 1,502 = Total 386,110 Total 460,858 = Cohort +19,104 +7,755-9,184

46 To 2021 & Beyond Cohort Future Occupancy Demand Age in 2016 Housing by Cohort Number of Dwellings Age in 2036 Number of Dwellings Cohort <15 - <15 - = , ,654 = 6, , ,776 = 24, , ,578 = 26, , ,288 = 12, , ,490 = 7, , ,623 = 2, , ,606 = -2, ,523 = -17, ,611 = -20,286 Total 174,265 Total 214,149 = 39, ,471-40, ,884

47 To 2021 & Beyond 3,000 Housing Supply & Occupancy Demand, Victoria Metro Region 1996/97 to 2015/16 actual, Projected to 2021 (fiscal year) Starts 2,933 3,105 2,902 Modeled Completions 2,673 2,500 Completions 2,000 1,787 Future housing Demand & supply 1,500 1, , , , , , , , , , , , , , , , , , , , , , , ,441 Occupancy Demand Increment 2021

48 1,720 3,240 3,050 1,890 To 2021 & Beyond Projects u/c, proposed & comtemplated Future housing Demand & supply Total supply 10,500 units Total demand 12,900 units

49 To Recap: - Current Market Stats Since the end of 2014 the Capital region has been characterized by record low inventories and above average sales. This has put upward pressure on prices as a growing number of people compete for a smaller number of listings.

50 To Recap: - Current Market Stats - The Drivers To The drivers to change are wide and varied, from a relatively well growing economy and positive net migration to a limited supply of new product coming to the market to fulfill demand

51 To Recap: - Current Market Stats - The Drivers To and on the price side we have factors such as growing wages, salaries & household incomes, non-local incomes and other sources of capital that have, and will continue to, push prices higher.

52 To Recap: - Current Market Stats - The Drivers To - To 2021 & Beyond In the short-term (to 2021), the region is expected to accommodate about 4,700 new residents each year and an associated 2,600 net new dwellings, levels not seen since the 1980 s & 90 s

53 To Recap: - Current Market Stats - The Drivers To - To 2021 & Beyond Beyond 2021 the region s rate of population growth will slow, largely due to the growing (negative) contribution of natural increase.

54 UDI Capital Region: Growth & REAL ESTATE thoughtful Andrew Ramlo, VP, Market Intelligence Rennie Group Thank you!!!