Minimal recovery as Edmonton housing market remains turbulent By Laura Severs For The Mortgage Loans Association of Alberta EDMONTON – It will be a bumpy road for Greater Edmonton‟s housing market in 2009 but there is light at the end of the tunnel. The region‟s single-family housing sector should begin to rebound later this year and for those looking to buy, now may be the time to get back into the market. On the other hand, the dramatic slowdown in multi-family dwellings is expected to continue while prices for condos will remain soft. That‟s the message Canadian Mortgage Housing Corp. (CMHC) senior market analyst Richard Goatcher, Prairie & Territories Market Analysis Centre, delivered earlier this month to the Mortgage Loans Association of Alberta February luncheon session at Edmonton‟s Royal Glenora Club. “It‟s definitely going to be a slower year because of the overall state of the economy in North America,” said Goatcher, adding that there will be some growth, though it will be slow growth. “For new singlefamily construction, the table is set for some modest gains in the second half of the year largely because they‟re going to run out of inventory. So that should give them some optimism to start a few more units but we‟re not talking a big recovery here. The overall numbers of starts, they‟re still going to be at recessionary levels.” For single-family dwellings, expect to see housing prices drop for the next couple of months, said Goatcher. But as the market becomes more balanced, there should be fewer listings relative to sales and that should help to provide some support for prices. For those looking to buy a single-family home, however, now may well be the time to buy, the audience was told. “Affordability has certainly improved in 2009 relative to 2006 and 2007,” said Goatcher. “Prices have dropped and mortgage rates, we expect those to be lower this year. When you combine those together, from a carrying cost perspective, it‟s going to be cheaper.” While Goatcher said it‟s not CMHC‟s place to tell buyers when they should enter the housing market, he said for those waiting on the sidelines it could be the time to move forward. “For those that are sitting on the fence and waiting to see continued declines in prices and continued improvements in affordability, I would argue that this year is as good as it‟s going to get – particularly for single-family housing – because the inventory levels are going to drop and mortgage rates in 2010 are going to move upward,” said Goatcher. “So if you were thinking that the situation is going to be better affordability wise in 2010, I would argue that it probably isn‟t.” On the condo side, though, softness remains. It‟s going to take time for the industry to digest the large number of units currently under construction, said Goatcher. From a bargain perspective, buyers may be able to get better deals for a longer period than those interested in single-family homes. Multi-family starts, meanwhile, are expected to remain on the decline. “This is definitely going to be the low point in the cycle for multi-family starts,” said Goatcher. “We‟ll see some projects getting going next year but this year for multi-family starts it‟s going to be very, very slow again.” Next year looks better because Goatcher believes the market will have digested a good portion of the new units coming into play. “In 2010, I can see an improvement because we‟ll be getting to the point where we are now in singles, where inventories will have peaked and start to move down,” said Goatcher. “Developers will be looking forward and say „if I‟m building a 150-unit tower, and it takes me two years to build it, I better get it in the ground now so by 2011 I‟ve got some units to sell.‟ ” Yet despite a not that optimistic forecast, Edmonton is holding up well compared to other markets. “There‟s a really strong correction going on right now in Calgary, Edmonton and Vancouver,” said Goatcher, in reference to the extremely high levels of activity in the past couple of years. “But when I look at our overall economy and the overall outlook, I think this is still probably the best place to be in North America, in terms of the economy, and at some point we‟re going to see things start to come back. I would think we‟ll start to see it express itself next year.”
Even so, don‟t expect to see numbers like 2006 when the housing market was moving out of first gear and into overdrive. “It will take awhile for us to get back to those levels. I think for new home construction – single-detached starts – it may be a long time before you see that activity level again,” said Goatcher. “It just goes to the volumes of migration we had coming in here in 2006. We may never see those kinds of volumes again but I‟m hesitant to say never.” Goatcher at a Glance A quick snapshot of Canadian Mortgage Housing Corp. (CMHC) senior Edmonton analyst Richard Goatcher‟s speech on the Edmonton Metropolitan Census Area housing market: Mortgage rates are expected to hit the low point in their cycle this year. Job growth of just under 1% this year. Migration levels to remain strong. Market balance still favours buyers. For single-family starts, basically no change in 2009 after a two-thirds decline in 2008. Single family starts remain at their lowest level since 1995. Multi-family starts fell 45 per cent in 2008. This year, expect another 38 per cent decline due to overbuilding in 2007. 2009 volumes for multi-family starts are expected to drop to their lowest levels since 2000.