Photo by Jeff Werner
Housing starts will moderate in all areas of Canada except British Columbia and Alberta, according to the Canada Mortgage and Housing Corporation (CMHC). In Alberta, starts will remain steady in 2011 and increase in 2012.
The energy sector is providing a boost to the Alberta economy. According to the CMHC forecast, Alberta’s economy growth will continue, accelerated by investments in oil sands projects and higher oil prices. Oil and gas production companies like Vantage Engineering Inc. are getting stronger, supporting other sectors of the economy. “We have hired a number of additional people; quite a few,” said Vantage Engineering‘s president, Bob Ramsay, for the Calgary Herald. “We’ve seen a fair bit of growth in our business and as a result that’s exactly what we’ve done.“
Employment and migration
New labour market conditions will move the employment rate higher and attract migrants. CMHS expects that total net migration to Alberta will be 31,450 in 2011, and that it will rise to 34,100 in 2012. The migrant stream will support the housing market and mortgage rates since new citizens need new places to live.
Single-detached starts will improve in the coming months. The expected higher level of starts in the second half of 2011 will bring the annual total to a level similar to that achieved in 2010. The housing market is balancing throughout Canada. Better conditions will encourage new home buying and, in 2012, will provide a lift to new construction of about 8%. New multi-family units are also expected as the market gains strength, but they won’t exceed last year’s gain. “Despite the expected gain in 2012, condominium apartment construction will only be at about half the ten-year average,“ says the forecast.
Buyers’ market conditions slowed resales during the last months of 2010, and this slack will linger into the early part of this year. Resale transactions are projected to 50,400 units in 2011 and only modest growth is expected for the next year, as higher mortgage rates temper the impact of continued economic growth.
Prices and mortgages
Prices in the housing market won’t grow quickly, but the outlook for annual price growth will be stronger in 2012. Supply and demand will be more balanced, with price growth of over 2%, according to the report. Mortgage rates (particularly short term mortgage rates and variable mortgage rates) will remain at low levels. CMHC forecasted the one-year posted mortgage rate to be in the 3.0% to 3.7% range, while three- and five-year posted mortgage rates are expected to be in the 3.5% to 5.7% range in 2011. The rates will significantly grow in 2012.