HOUSING FORECAST

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					                                                                                                B RITISH C OLUMBIA R EAL E STATE A SSOCIATION




                                                         H OUSING F ORECAST
                                                                                                                  E CONOMICS        F ALL 2010



    M ODERATE I NCREASE IN H OUSING D EMAND IN 2011                                                                                                      MLS®               09            10f    11f

    Residential unit sales on the Multiple                                                                     2011. However, BC is in a relative-
    Listing Service® (MLS®) in BC are                                                                          ly strong position, recouping nearly      Sales            85,028     74,950 79,700
    estimated to decline 12 per cent to                                                                        all the jobs lost during the reces-                        23.4%     (11.9%) 6.3%
    74,950 units this year. After begin-                                                                       sion.                                     Avg Price       465,725    498,500 495,600
    ning the year at a brisk pace, home                                                                                                                                    2.4%       7.0%   (0.6%)
                                                                                                               The silver lining for BC housing
    sales declined through July on a sea-                                                                                                                                39.6 Bil   37.4 Bil 39.5 Bil
                                                                                                               markets is that a more gradual pace       $ Volume
    sonally adjusted basis. The expected                                                                                                                                   26%       (5.6%)   5.6%
                                                                                                               of economic growth in both BC and
                                                                                                               Canada means continuing low infla-        Housing
                             BC MLS® Sales
                                                                                                               tion and interest rates. A rapid es-      Starts1
Thousands                                                                                              $ 000
                                                                                                               calation in borrowing costs, and
                                                                                                                                                         Total           16,077      24,940     25,540
                                                                                                               therefore a sharp erosion of afforda-
                                          Unit Sales          Avg Price

     120                                                                                        $600

     100                                                                                        $500                                                                     (53%)         55        2.4%
      80                                                                                        $400           bility, is not expected.
      60                                                                                        $300
                                                                                                                                                         Single           7,892      10,990     10,100
      40

      20
                                            In 2011, BC MLS® residential sales                  $200

                                                                                                $100                                                                     (28%)        39%        (8%)
       0
            2000   2001   2002   2003   2004are forecast to rise 6 per cent to
                                               2005    2006     2007      2008   2009   2010f
                                                                                                $0



                                                                                                                                                         Multiple         8,185      13,950     15,440
                                            79,700 units. However, the pace of
  Sources: CREA, BCREA Forecast
                                                                                                                                                                          (65%)       70%        11%
                                            home sales will fall below ten-year
    lull in consumer demand after a         average of 85,500 units. Consumer
    strong finish to 2009 was exacerbat- demand in 2011 is expected to
                                                                                                                                                            Inside
    ed by tighter credit conditions for     more closely match overall eco-                                                                                      2 …. Economic Outlook
    low equity homebuyers and inves-        nomic conditions and population
                                                                                                                                                                 4 …. Van. Is./ Sun. Coast
    tors introduced in April. In addition, growth.
    a temporary uptick in mortgage in-      The average annual BC MLS® resi-                                                                                     7 …. Mortgage Forecast
    terest rates in the spring had the      dential price is forecast to increase                                                                                8 …. Lower Mainland
    combined effect of reducing the pur- 7 per cent to $498,500 this year,
    chasing power of consumers.                                                                                                                               12 …. Kamloops
                                            before edged back 0.6 per cent to
    While the BC economy is expected        495,600 in 2011. Total active list-                                                                               13 …. Okanagan
    to expand by a robust 3.4 per cent      ings in the market peaked in the                                                                                  15 …. Kootenay
                this year, most of the      summer and are trending lower,
                growth will have oc-        while new listings added to the                                                                                   16…. Northern BC
                curred in the first half of market are down significantly. Mar-                                                                               18…. Forecast Summary
                the year, with more tepid ket conditions are expected to
                economic growth forecast achieve relative balance in 2011.                                                                             1. Sources: CMHC, BCREA Forecast
                through 2011. Real GDP The positive impact of improving
                growth is forecast to in-   economic conditions will be offset
                crease 2.6 per cent in      by weak upward pressure on inter-
                                            est rates.
   P AGE 2                                                                                                    H OUSING F ORECAST



E CONOMIC O UTLOOK

The BC economy started strong out of the gate this year,
aided by monetary and fiscal policy response to the 2009
recession and the serendipitous fortune of hosting the                                                2009         2010f         2011f
2010 Winter Games. The BC housing sector was particu-           Real GDP Growth                      (1.8%)         3.4%          2.6%
larly strong, with housing starts and home sales rebound-
                                                                Employment                            2.26          2.31          2.35
ing strongly out of the recession. However, the BC econo-
                                                                (millions)                           (2.4%)         2.1%          1.9%
my began to slow in the second half of the year as growth
among major trading partners sputtered and the housing          Unemployment                          185.9        184.6         185.6
sector slowed following the introduction of tighter mort-       (000s)                                7.6%          7.5%          7.3%
gage credit as well as the Harmonized Sales Tax (HST).          Personal Disposable                   125.1        130.4         138.6
Employment in BC has rebounded, with most of the jobs           Income ($billions)                    0.0%          4.2%          6.1%
lost in the recession recovered within twenty-four              Average Weekly                        $801          $825          $848
months. After declining 2.4 per cent in 2009, employ-           Wage                                  2.6%          3.0%          2.8%
ment is estimated to increase 2.1 per cent this year and a
further 1.9 per cent in 2011. Despite the relatively robust     Retail Sales ($ bil-                  $55.2        $58.1         $60.5
                                                                lions)
employment recovery, the BC unemployment rate is ex-                                                 (4.4%)         5.2%          4.1%
pected to remain elevated as natural growth in the labour       Net International Mi-                51,072       47,500         47,600
force and the return of previously discouraged workers          gration                               (7%)        (6.8%)          0.2%
expands the supply of available labour. The unemployment
                                                                Net Interprovincial                   7,499        7,000         8,100
rate is estimated to average 7.5 per cent this year and 7.3
                                                                Migration                            (10.5%)      (6.7%)         15.7%
per cent in 2011.
                                                                Total Net Migration                  58,571       54,500         58,700
The dollar volume of BC exports has increased 12 per cent
                                                                                                     (7.5%)       (7.0%)          7.7%
January through August. However, this follows a 24 per
cent decline in 2009. Sluggish growth on the trade front
has led to weak employment growth in the goods produc-                                      Sources: Statistics Canada, BC Stats, BCREA Forecast
ing sector, which accounts for over 20 per cent of overall
employment. Job growth in the goods producing sector
increased just 0.2 per cent year-to-date in October. In
contrast, service sector employment climbed 2.5 per cent
over the same period.                                                    BC Employment Recovery
While the BC economy is expected to expand at a healthy        102      Peak Employment = 100
3.4% pace this year, led by resurgent consumer spending        100
and residential investment, further growth will be tem-         98
pered by BC’s trade exposure to countries undergoing            96

slow or uncertain recoveries, like the United States and        94                                                         1982 Recession

Japan. In addition, retail sales growth has slowed, signal-     92                                                         2009 Recession

ling some retrenchment and deleveraging by consumers.           90                                                         2001 Slowdown

As a result, economic growth in BC is forecast to slow to       88

2.6% in 2011.                                                   86
                                                                     -12 -8 -4 0 4 8 12 16 20 24 28 32 36 40 44 48 52 56
                                                                                                 Months
Strong population growth has aided economic recovery
                                                              Source: Stats Can, BCREA calculation
and underpinned the housing sector. Net migration is not
only an important component
                                … Continued on Page 3


                                   B RITISH C OLUMBIA R EAL E STATE A SSOCIATION
   P AGE 3                                                                                                                                                               H OUSING F ORECAST

  to the economy, but vital to new construction activity,                                            Inter-provincial migration is largely influenced by the
  the resale and rental markets. Net international migration                                         relative strength of provincial economies. BC’s stronger
  is expected to decline by 7 per cent to 47,500 individuals                                         economic position continues to attract households from
  this year and remain flat in 2011. Immigrants comprise                                             other provinces. Net inter-provincial migration is fore-
  70 per cent of the growth in provincial population. In                                             cast to decline 7 per cent to 7,000 individuals this year,
  addition, BC garners 55 per cent of all investor immi-                                             before rising 16 per cent to 8,100 individuals in 2011.
  grants that arrive in Canada.



                                 BC Net Migration                                                                                        Retail Sales Growth
                                                                                                           Year-over-year per cent change
    Individuals                                                                                             16
      80,000                                                                                80,000
                                                                                                            12
                         Inter-Provincial     International
                                                                     Total (RHS)            70,000
      60,000                                                                                                   8
                                                                                            60,000
                                                                                                               4
      40,000                                                                                50,000
                                                                                                               0
                                                                                            40,000
      20,000                                                                                30,000             -4

                                                                                            20,000             -8
           0
                  1995      1997       1999   2001     2003   2005     2007    2009   2010F 10,000         -12
                                                                                                                 1992         1994        1996       1998      2000   2002   2004   2006   2008   2010
     -20,000                                                                                0
                                                                                                               Sources: Statistics Canada, BCREA
        Sources: Statistics Canada, BCREA                                                                      Seasonally Adjusted




H OUSING S TARTS
                                                                                                        Units (000s)
                                                                                                                                                    Housing Starts
Housing starts in the province are estimated to climb 55                                                  45
per cent to 24,940 units this year, after falling 53 per cent                                             40                Singles                Multiples
                                                                                                          35
in 2009. Low interest rates, stronger consumer demand                                                     30
and improving economic conditions are key drivers. How-                                                   25

ever, tighter mortgage credit conditions for investors and                                                20
                                                                                                          15
low equity homebuyers introduced in April along with the                                                  10

introduction of the HST will slow expansion of the hous-                                                   5
                                                                                                           0
ing stock in 2011.
While housing starts have rebounded from their recession-
ary low, the level of new construction activity this year                                                      Source: CMHC, BCREA forecast



and next is forecast to be well below the pace of new
home construction observed in the mid-2000s when hous-
ing starts ranged from 33,000 to 39000 units. However,                                               Total housing starts in 2011 are forecast to increase 2.4 per
expected population growth and household formation                                                   cent to 25,540 units. Construction of single-family units
trends in BC favour a relatively robust pace of new con-                                             are forecast to edge back 8 per cent to 10,100 units, while
struction activity ahead, with particular strength in con-                                           multiple housing starts are expected to advance a further 11
struction of multi-family units in urban areas.                                                      per cent to 15,440 units on the strength of a moderating
                                                                                                     inventory of complete and unoccupied units.



                                                                B RITISH C OLUMBIA R EAL E STATE A SSOCIATION
   P AGE 4                                                                                                                                        H OUSING F ORECAST



V ICTORIA R EAL E STATE B OARD

           Home sales in Victoria have moderated since last fall’s fre-
           netic pace. Seasonally adjusted MLS® residential sales de-                                                                    MLS® Prices
                                                                                                        Per cent                                                          Forecast

           clined 42 per cent January to September. Advanced purchas-                                    20                                                                          $600,000


           es late last year and tighter credit qualifications for low equi-                             15                                                                          $500,000


           ty home buyers introduced in the spring have impacted con-                                    10                    Average
                                                                                                                                Price
                                                                                                                                                                                     $400,000


           sumer demand. In addition, weakness in the US economy                                          5                                                                          $300,000



           combined with a strong Canadian dollar has negatively im-                                      0

                                                                                                                                                Per cent Change
                                                                                                                                                                                     $200,000

                                                                                                          -5                                                                         $100,000
           pacted the accommodation and food services sector.
                                                                                                         -10                                                                         $0
                                                                                                               1995     1997      1999   2001    2003   2005    2007   2009
           Housing demand is expected to post a moderate uptick
           through the balance of the year and through 2011. Recent
                                                                                                         Sources: CREA, BCREA Forecast




           downward pressure on mortgage interest rates has helped
           boost consumer purchasing power and with higher rates ex-                                    MLS®                                09                 10f             11f
                                                   pected in the second                                 Sales:
                                                   half of 2011, prospec-                                                Total1 7,660                          6,200           6,500
                   Housing Starts                  tive home buyers may
  Units                                                                                                                                   24%              (19%)               4.8%
  3,000
                      Victoria CMA
                                                   decide to buy sooner
  2,500
                                                   than later. MLS® res-                                         Detached 4,482                                3,600           3,800
  2,000
                                                   idential sales are fore-                                                               23%              (20%)               5.6%
                                                   cast to decline 19 per                                         Attached                 870                 675             710
  1,500


  1,000


    500
                                                   cent to 6,200 units                                                                    34%              (22%)               5.2%
       0                                           this year before ad-                                        Apartment 2,162                                 1,775           1,850
           1995    1997        1999   2001   2003   2005   2007   2009    2011f


Source: CMHC, BCREA Forecast
                                                   vancing 5 per cent to                                                                  27%              (18%)                6%
                                                   6,500 units in 2011.
                                                                                                        Avg Price:
                                                   While home sales are
           forecast to increase next year, the consumer demand will be                                           Total 476,137                            501,000             495,000
           below the ten-year average of 7,100 units.                                                                                    (1.8%)            5.2%               (1.2%)
                                                                                                                 Detached 575,505                         615,000             610,000
           After declining 2 per cent last year, the annual average
                                                                                                                                         (1.8%)                6.9%           (0.8%)
           MLS® residential price is estimated to increase 5 per cent to
           $501,000 this year, before edging down 1 per cent to                                                    Attached 427,515                       439,000             431,000
           $495,000 in 2011. Total active listings in the market have                                                                     0.1%                 2.7%           (1.8%)
           trended lower since June and while inventory is high from                                           Apartment 310,911                          322,000             318,000
           an historical perspective, a continuing downward trend will                                                                   (2.9%)                3.6%           (1.2%)
           lead to greater stability in home prices. The current buyer’s
           market is expected to erode into a balanced market in the                                                                       Housing Starts2
           coming months, with little change in price levels forecast                                                                           Victoria CMA
           through next year.                                                                                              Total 1,034                         2,070           1,650
           Housing starts in the Victoria CMA are estimated to double                                                                     (46%)                100%           (20%)
           in 2010 from the recessionary level in 2009. Most of the                                                      Single            647                 916             750
           increase is in the multiple unit construction where the pace                                                                  (3.9%)                42%            (18%)
           of activity is expected to triple from 387 units in 2009 to                                                Multiple             387                 1,155           900
           1,155 units this year. However, slower than expected con-                                                                      (69%)                198%           (22%)
           sumer demand will likely bolster vacant inventory and curb                                   1. Sum of product types may not match as total may include
           housing starts by 20 per cent in 2011.                                                       other property types; i.e., mobile, house and acreage
                                                                                                        2. Sources: CMHC, BCREA Forecast


                                                                         B RITISH C OLUMBIA R EAL E STATE A SSOCIATION
P AGE 5                                                                                                                                               H OUSING F ORECAST


                                                           V ANCOUVER I SLAND R EAL E STATE B OARD

                                          MLS® Sales                                     Residential sales activity through the Vancouver Island Real
      Units                                                                              Estate Board (VIREB) region is forecast to decline 8 per cent
      12,000
                                                                                         to 6,700 units this year after increasing 7 per cent in 2009. A
      10,000

       8,000
                                                                                         high Canadian dollar combined with weak US demand will
       6,000
                                                                                         constrain local lumber production and manufacturing though
       4,000                                                                             next year. However, approximately 40 per cent of home
       2,000                                                                             sales in the region are to retirees. This market segment is
            0
                1995     1997       1999    2001   2003    2005   2007   2009    2011f   less susceptible to macro-economic conditions and operates
          Sources: CREA, BCREA Forecast                                                  to smooth the impact of volatility in the resource sector. A
                                                                                         moderate increase in consumer demand is expected next
   MLS®                                    09              10f                  11f      year, in line with overall improvement in the global econo-
                                                                                         my. MLS® residential sales are forecast to increase 3 per
   Sales:
                                                                                         cent to 6,900 units in 2011.
                  Total1                  7,280            6,700            6,900
                                          6.8%            (8.0%)            3.0%         A significant pro-
                                                                                         portion of home                           MLS® Prices
          Detached                        4,949            4,450            4,595
                                                                                         buyers in the Van-     Per cent
                                                                                                                                                             Forecast

                                          12%             (10%)             3.3%         couver Island hous-          25                                                $350,000

                                                                                                                      20                                                $300,000
            Attached                       691             670                  685      ing market origi-            15           Average                              $250,000
                                                                                                                                    Price
                                          (11%)           (3.0%)            2.2%         nate from outside            10                                                $200,000



       Apartment                           615             580                  600      the region. Typical-          5                                                $150,000

                                                                                                                       0                                                $100,000
                                                                                         ly less than 40 per
                                          (11%)           (5.7%)            3.4%                                       -5                                               $50,000

                                                                                         cent of buyers are           -10
                                                                                                                                                 Per cent Change
                                                                                                                                                                        $0

   Avg Price:                                                                            from local markets.         1995 1997 1999 2001 2003 2005 2007 2009


            Total 316,118                                 328,000         326,000        About 15 per cent             Source: CREA, BCREA Forecast




                                      (4.4%)               3.8%            (0.6%)        originate from Van-
          Detached 340,953                                357,000         352,000        couver and Victoria, while approximately one-third of Van-
                                                                                         couver Island homebuyers come from the rest of BC, Canada
                      (6%)                                 4.7%           (1.4%)
                                                                                         and international sources.
            Attached 241,716                              253,000         250,000
                                      (0.5%)               4.7%            (1.2%)
                                                                                         Total active listings have trended lower in recent months as a
                                                                                         result of a sharp decline in new listings added to the market.
       Apartment 198,383                                  221,000         220,000
                                                                                         The combination of a moderate increase in consumer de-
                                      (7.6%)               11%             (0.5%)        mand with fewer additions to inventory is expected to pro-
                                                                                         vide greater stability to home prices in 2011.The annual av-
                                          Housing Starts2                                erage MLS® residential price is estimated to increase 4 per
                                             Nanaimo CA                                  cent to $328,000 this year and stay relatively flat in 2011,
                    Total                  798             780                  750      declining slightly by 0.6 per cent to $326,000.
                                          (13%)           (2.3%)           (3.8%)        New home construction activity in the Nanaimo CA is ex-
                  Single                   264             383                  300      pected to edge down 2 per cent to 780 units this year. Few-
                                          (32%)            45%              (22%)        er multiple starts are the result of an accumulation of unab-
            Multiple                       534             397                  450      sorbed inventory following a significant increase in construc-
                                          0.4%            (26%)                 13%      tion activity in 2008 and 2009. Multiple starts are forecast to
                                                                                         decline 26 per cent this year to just under 400 units in 2010
    1. Sum of product types may not match as total may include
    other property types; i.e., mobile, house and acreage                                before bumping up in 2011. Total starts are forecast to de-
    2. Sources: CMHC, BCREA Forecast                                                     cline 3.8% next year.
                                                          B RITISH C OLUMBIA R EAL E STATE A SSOCIATION
  P AGE 6                                                                                                                       H OUSING F ORECAST



P OWELL R IVER S UNSHINE C OAST R EAL E STATE B OARD

       MLS® residential sales in the Powell River area are estimat-
       ed to increase 7 per cent to 280 units this year, after a 25 per
       cent increase in 2009. More tepid recovery in the global                                                        MLS® Sales
       economy will mean sluggish growth in the region’s exports                            Units

       both this year an next. Housing demand, while relatively                             600

       strong, is unlikely to return to 2003-2005 levels over the                           500


       forecast horizon.                                                                    400

                                                                                            300
       The housing stock consists primarily of detached units, with                         200

       roughly 80 per cent of home sales in this category. Improved                         100

       purchasing power led by low mortgage interest rates is a key                           0

       driver this fall. In 2011, the benefit of improved economic                                1995   1997   1999    2001    2003    2005   2007   2009    2011f



       conditions is expected to be offset by a normalization trend                         Sources: CREA, BCREA Forecast


       in interest rates.

                           MLS® Prices             The annual average
                                                   MLS® residential
Per cent                                  Forecast                                          MLS®                        09               10f            11f
 30                                                price is expected to
                                                                      $300,000
 25
                Average                            increase 1 per cent$250,000              Sales:
 20
              Price (RHS)
 15
                                                   to $240,000 this   $200,000                           Total1         263              280            280
 10
  5                                                year, after declining
                                                                      $150,000
                                                                                                                        25%             6.5%           0.0%
  0                                                                   $100,000
 -5                                                7 per cent in 2009.$50,000
                                                                                                    Detached            205              220            215
-10
-15
                          Per cent Change
                               (LHS)
                                                   A sizable increase in
                                                                      $0                                                29%             7.3%          (2.3%)
      1995   1997   1999   2001   2003   2005
                                                   the average price of
                                                2007   2009   2011f

                                                                                                         Condo          37                38             43
Sources: CREA, BCREA Forecast
                                                   a condominium this
                                                                                                                       8.8%             2.7%            13%
                                                   year reflects newer
      additions to the housing stock rather than demand driven                              Avg Price:
      appreciation. Housing markets depend on the financial con-                                    Total 237,125                      240,000        238,000
      dition and confidence of households. With a provincial econ-                                                     (6.7%)           1.2%          (0.8%)
      omy that will post only modest gains in output next year,                                     Detached 267,804                   268,000        268,000
      another run up in property values is not expected. In short,
                                                                                                               (8.1%)                   0.1%           0.0%
      Powell River home prices are expected to exhibit stability
      next year.                                                                                         Condo 162,672                 205,000        207,000
                                                                                                                       (8.0%)           26%            1.0%
       New home construction in the Powell River CA can vary
       significantly. A relatively small population base means that a                                                    Housing Starts2
       single condominium project, for example, could instantly                                                             Powell River CA
       double the previous year’s annual total. Housing starts de-                                        Total         38                40             38
       clined 12 per cent to 38 units last year. BCREA expects 38                                                      (12%)            5.3%          (5.0%)
       to 40 housing starts per annum this year and next, with sin-
       gle detached starts accounting for approximately three-
       quarters of new construction activity. However, because of                           1. Sum of product types may not match as total may include
       the extreme volatility in Powell River new construction ac-                          other property types; i.e., mobile, house and acreage
                                                                                            2. Sources: CMHC, BCREA Forecast
       tivity, readers should be cautious in extrapolating the hous-
       ing start forecast.



                                                              B RITISH C OLUMBIA R EAL E STATE A SSOCIATION
   P AGE 7                                                                                                                 H OUSING F ORECAST


                                         M ORTGAGE R ATE F ORECAST

                                                              Mortgage Rate Forecast
                                                            2010                                            2011
                                  Term         Q1     Q2        Q3      Q4F            Q1F           Q2F           Q3F         Q4F

                                  1-Year      3.60   3.61       3.40    3.20           3.30          3.65          3.75        4.10

                                  5-Year      5.43   6.02       5.55    5.30           5.40          5.60          5.70        5.90




Following a blistering start to the year, the Canadian econo-          The silver-lining in the lacklustre economic outlook is that
my is now showing clear signs of slowing. Economic weak-               the normalization of both short-term and long-term interest
ness in the United States, a tiring Canadian consumer, and a           rates will be deferred. In addition to very low short-term
high Canadian dollar have created a drag on growth in the              rates going forward, the highly uncertain economic envi-
second half of 2010. We expect these trends to hamper                  ronment in the United States and the announcement of
growth into for the remainder of 2010 and into 2011.                   quantitative easing by the Federal Reserve have exerted
Overall, we are forecasting that the Canadian economy will             enormous downward pressure on key benchmark bond
grow 3.1% this year and 2.2% in 2011.                                  yields in the US and Canada.
                                                                       This low-rate environment has benefited BC households
 Per Cent real GDP Growth (QoQ SAAR)                                   with variable rate mortgages who are now facing lower
 8.0                                                 Forecast
 6.0
                                                                       payments than originally expected at the beginning of the
 4.0                                                                   year. Moreover, the dramatic decline in medium and long-
 2.0                                                                   term interest rates means that new homebuyers or home-
 0.0
                                                                       owners set to renew their mortgages will be offered a se-
 -2.0
 -4.0            Canada
                                                                       cond chance at securing rates at levels last seen at the
 -6.0          United States                                           depths of the financial crisis.
 -8.0
        2006    2007       2008        2009   2010   2011              The BCREA mortgage rate forecast is for a continuation of
                                                                       the current low-rate environment into mid-2011. The 1-
                                                                       year fixed mortgage rate is forecasted to finish 2010 at an
                                                                       average of 3.20% and to reach 4.10% by the end of 2011.
In the face of slowing growth and muted inflation, the Bank            The 5-year fixed mortgage rate is forecasted to average
of Canada raised rates for what we expect to be the final              5.30% for the remainder of the year and to reach 5.90% by
time in 2010 at its September 8th meeting. Although the                the end of 2011.
Bank’s medium-run objective of returning rates to normal
long-run levels is still intact, the Bank will take a very cau-                        1-Year Fixed Mortgage              5-Year Fixed Mortgage Rate
                                                                         Per cent
tious approach to tightening monetary policy over the next               8.00
6 to 12 months and further rate tightening will be highly                                                                                    Forecast
                                                                         7.00
dependent on how solid the ground is underneath both the
Canadian and US economies. Given that inflation is project-              6.00

ed to remain subdued and growth is expected to slow, we                  5.00
have trimmed our forecast for the overnight rate to 1% at
the end of 2010 and 2.00% by the end of 2011 (from 1.0%-                 4.00

1.25 and 2.50% respectively).                                            3.00
                                                                                2006          2007      2008          2009       2010Q1      2011




                                                                         B RITISH C OLUMBIA
                                           B RITISH C OLUMBIA R EAL E STATE A SSOCIATION R EAL E STATE
  P AGE 8                                                                                                                                       H OUSING F ORECAST



R EAL E STATE B OARD OF G REATER V ANCOUVER

       Housing demand in Vancouver has moderated since the be-
                                                                                                                                  MLS® Prices
       ginning of the year. Advance purchases induced by low                                   Per cent                                                               Forecast
       mortgage interest rates late last year combined with tighter                             25                                                                               $700,000

       credit conditions introduced this spring for low equity                                  20
                                                                                                                                 Average
                                                                                                                                                                                 $600,000

                                                                                                                               Price (RHS)
       homebuyers generated a lull in summer sales activity. Re-                                15

                                                                                                10
                                                                                                                                                                                 $500,000

                                                                                                                                                                                 $400,000

       cent data points to a moderate increase in consumer demand                                 5                                                                              $300,000


       led by a double-dip in mortgage interest rates.                                            0                                                                              $200,000

                                                                                                 -5                                                 Per cent Change              $100,000
                                                                                                                                                         (LHS)
       After climbing 44 per cent to 36,257 units in 2009, MLS®                                 -10
                                                                                                      1995     1997      1999      2001      2003    2005    2007   2009
                                                                                                                                                                                 $0


       residential sales in Vancouver are expected to decline 15 per
                                                                                               Sources: CREA, BCREA Forecast

       cent to 30,900 units this year. Despite a noticeable contin-
       gent of wealthy international and immigrant purchasers, the
       Metro Vancouver housing market is primarily driven by the                               MLS®                                   09                     10f            11f
       financial condition and confidence of households that live,                             Sales:
       work and raise their families in the region. Slower than ex-                                            Total1 36,257                            30,900             33,200
                                                 pected economic
                 Housing Starts                                                                                                     44%                     (15%)           7.4%
Units (000s)
                                                 growth combined
 25
                    Vancouver CMA
                                                 with the inevitable                                   Detached 14,076                                  12,300             12,800
             Singles         Multiples
                                                 normalization of                                                                   51%                     (13%)           4.1%
 20


 15
                                                 interest rates will                                    Attached                    6,453                   5,400           5,700

 10
                                                 likely keep home                                                                   46%                     (16%)           5.6%
                                                 sales below the ten-                                 Apartment 15,239                                  13,200             14,000
 5
                                                 year average of                                                                    38%                     (13%)           6.1%
 0
      1995      1997       1999      2001   2003 34,000 units
                                                   2005   2007   2009   2011f
                                                                                               Avg. Price:
 Sources: CMHC, BCREA Forecast                   through 2011.
                                                                                                       Total 592,441                                   665,000             658,000
                                                   The annual average                                                              (0.2%)               12%                (1.1%)
       MLS® residential sales price in Greater Vancouver is esti-                                      Detached 853,363                                974,000             965,000
       mated to increase 12 per cent to $665,000 this year, after
                                                                                                                                   (1.8%)                   14%            (0.9%)
       edging down 0.2 per cent in 2009. Relatively stable home
       prices are expected in 2011 as the inventory of homes for                                        Attached 487,755                               545,000             538,000
       sale continues its downward trend, keeping market condi-                                                                    (2.8%)                   12%            (1.3%)
       tions in balance next year. The annual MLS® residential                                        Apartment 396,171                                430,000             425,000
       sales price is forecast decline by 1.1 per cent to $658,000 in                                                              (1.0%)                   8.5%           (1.2%)
       2011. The change primarily reflects a slightly lower level of                                                                 Housing Starts                    2
       home prices at the end this year.
                                                                                                                                      Vancouver CMA
       New home construction in the Vancouver CMA rebounded                                                      Total              8,339               15,000             15,520
       significantly from the recession. After a 57 per cent decline                                                               (57%)                    80%             3.5%
       in 2009, housing starts in the Vancouver CMA are expected
                                                                                                               Single               2,929                   4,830           4,020
       to climb 80 per cent to 15,000 units this year. While new
                                                                                                                                   (19%)                 65%               (17%)
       construction activity is likely to remain below the pace set in
       the years leading up to the recession, population growth and                                      Multiple                  5,410                10,170             11,500
       household formation over the next decade point to relatively                                                                (66%)                    88%             13%
       robust housing starts in the region.                                                    1. Sum of product types may not match as total may include
                                                                                               other property types; i.e., mobile, house and acreage
                                                                                               2. Sources: CMHC, BCREA Forecast


                                                                 B RITISH C OLUMBIA R EAL E STATE A SSOCIATION
P AGE 9                                                                                                                                                            H OUSING F ORECAST


                                                                                             F RASER V ALLEY R EAL E STATE B OARD

                                                                                                     MLS® residential sales in the Fraser Valley have posted re-
                              MLS® Activity                                                          cent gains after declining over the first half of the year. A
                                                                                                     return to near record low mortgage interest rates this fall has
     25000                      Unit Sales (LHS)      Avg Price (RHS)
                                                                                       $500,000
                                                                                       $450,000
                                                                                                     increased consumer purchasing power and is driving a mod-
     20000                                                                             $400,000
                                                                                       $350,000      est increase in demand. The expected lull in home sales over
     15000                                                                             $300,000
                                                                                       $250,000      the summer was the result of advance purchases late last year
     10000                                                                             $200,000


       5000
                                                                                       $150,000
                                                                                       $100,000
                                                                                                     and tighter credit conditions for low equity homebuyers in-
          0
                                                                                       $50,000
                                                                                       $0
                                                                                                     troduced in April. Housing demand is expected to increase
                                                                                                     more in line with gradually improving economic conditions
              1995    1997     1999   2001     2003   2005     2007     2009   2011f




    Sources: CREA, BCREA Forecast
                                                                                                     in 2011.
                                                                                                     MLS® residential sales climbed 24 per cent to 15,660 units
    MLS®                                     09                       10f                    11f     in 2009 as an affordability led rally in the market caused a
    Sales:                                                                                           significant spike in unit sales. However, home sales are ex-
                     Total1 15,660                             14,200                       15,100   pected to finish this
                                          24%                  (9.3%)                       6.3%     year down 9 per
                                                                                                                                               MLS® Prices
                                                                                                     cent to 14,200
              Detached                  8,584                   7,600                       8,000                              Per cent                          Forecast
                                                                                                     units, before in-
                                          35%                   (12%)                       5.3%                                  25                                                                 $500,000

                                                                                                     creasing 6 per cent          20
                                                                                                                                             Average
                                                                                                                                                                                                     $450,000
                                                                                                                                                                                                     $400,000
              Attached                  3,491                   3,000                       3,350    to 15,100 units in           15       Price (RHS)                                               $350,000

                                                                                                                                  10                                                                 $300,000
                                          24%                   (14%)                        10%     2011.                                                                                           $250,000
                                                                                                                                    5                                                                $200,000

          Apartment                     2,710                   2,750                       3,000
                                                                                                     Active listings in the
                                                                                                                                    0                                                                $150,000
                                                                                                                                                                                                     $100,000
                                                                                                                                   -5
                                                                                                                                                       Per cent Change
                                         4.6%                    1.5%                       9.1%     market are trending         -10                        (LHS)
                                                                                                                                                                                                     $50,000
                                                                                                                                                                                                     $0
                                                                                                                                        1995     1997      1999   2001   2003   2005   2007   2009
    Avg. Price:                                                                                      lower after increas-      Sources: CREA, BCREA Forecast

            Total 425,796                                     448,000                   446,000      ing during the
                       (1.4%)                                  5.2%                     (0.4%)       spring. Buyer’s mar-
              Detached 520,451                                552,000                   550,000      ket conditions that prevailed over the summer months are
                                       (3.3%)                    6.1%                       (0.4%)   now trending toward balance. As a result, less downward
                                                                                                     pressure on home prices is expected through 2011. The an-
           Attached 321,365                                   338,000                   336,000
                                                                                                     nual average MLS® residential sales price is estimated to
                    (4.7%)                                     5.2%                     (0.6%)
                                                                                                     increase 5 per cent to $448,000 this year after edging down
          Apartment 220,357                                   226,000                   225,000
                                                                                                     by 1.4 per cent in 2009. Home prices are expected to exhib-
                                       (4.0%)                    2.6%                       (0.4%)   it greater stability in 2011, albeit declining by 0.4 per cent
                                              Housing Starts2                                        to $446,000.
                                               Abbotsford CMA                                        Housing starts in the Abbotsford CMA are estimated to
                      Total                  365                      520                    535     climb 43 per cent to 520 units this year. Single detached
                                        (72%)                     43%                       2.9%     housing starts are expected to be 71 per cent higher this
                     Single                  210                      360                    350     year, while an overhang in the inventory of multiple units
                                                                                                     has left new unit construction flat. While single detached
                                        (41%)                     71%                       2.8%
                                                                                                     housing starts are forecast to remain near 2010 levels though
               Multiple                      155                      160                    185
                                                                                                     next year, population growth, land constraints and dwin-
                                        (83%)                    3.2%                        16%     dling inventories is expected to result in a 16 per cent in-
     1. Sum of product types may not match as total may include                                      crease in multiple starts in 2011.
     other property types; i.e., mobile, house and acreage
     2. Sources: CMHC, BCREA Forecast


                                                                 B RITISH C OLUMBIA R EAL E STATE A SSOCIATION
         P AGE 10                                                                                                                                    H OUSING F ORECAST



C HILLIWACK AND D ISTRICT R EAL E STATE B OARD

              MLS® residential sales in Chilliwack are expected to decline
              9 per cent to 2,060 units this year after a 12 per cent in-
                                                                                                                                         MLS® Prices
              crease in 2009. Tighter credit conditions for low equity                                Per cent
                                                                                                                                                                           Forecast
              homebuyers and slower than expected economic growth                                       20                                                                            $350,000


              have led to more sluggish consumer demand. However, a                                     15                               Average
                                                                                                                                       Price (RHS)
                                                                                                                                                                                      $300,000

                                                                                                                                                                                      $250,000
              moderate increase in unit sales is expected this fall as down-                            10
                                                                                                                                                                                      $200,000

              ward pressure on mortgage interest rates provides a much                                   5
                                                                                                                                                                                      $150,000

              needed lift to affordability and enables consumers a second                                0
                                                                                                                                                                                      $100,000

                                                                                                         -5                                      Per cent Change
              chance to lock in at near record low rates.                                              -10
                                                                                                                                                      (LHS)
                                                                                                                                                                                      $50,000

                                                                                                                                                                                      $0
                                                                                                              1995     1997      1999     2001    2003   2005    2007   2009
              Housing demand is expected to track more closely with the-
              overall improvement in the economy next year. Employ-
                                                                                                       Sources: CREA, BCREA Forecast




              ment in Chilliwack is trending upward, with the number of
              jobs in the region recently surpassing the peak in 2008.
              However, the unemployment rate remains above 9 per cent                                 MLS®                                  09                  10f             11f
              due to increases in the labour force. MLS® residential sales                            Sales:
              in Chilliwack are forecast to increase 7 per cent to 2,200                                              Total1 2,274                         2,060               2,200
              units in 2011, below the ten-year average of 2,450 units.                                                                   12%             (9.4%)               6.8%
                                                        With total active                                     Detached                    1,266            1,190               1,270
                                 Housing Starts         residential listings                                                              12%               (6%)               6.7%
                           Chilliwack CA
1,600
                                                        trending lower,                                              Condo                 852                  730             785
1,400
                   Multiples        Singles
                                                        market conditions                                                                 8.8%             (14%)               7.5%
1,200
                                                        are expected to shift
1,000                                                                                                 Avg. Price:
                                                        away from favour-
 800
                                                                                                              Total 296,601                              305,000           302,000
 600                                                    ing homebuyers to
 400
                                                        exhibiting balance                                                               (6.2%)           2.8%             (1.0%)
 200
                                                        between supply and                                    Detached 336,467                           346,000           344,000
   0
         1995       1997       1999      2001   2003
                                                        demand next year.
                                                       2005   2007   2009                                                                (5.4%)           2.8%             (0.6%)
        Sources: CMHC, BCREA forecast

                                                        The average annual                                           Condo 219,668                       226,000           223,000
                                                        MLS® residential                                                                 (7.1%)             2.9%               (1.3%)
              price is estimated to increase 3 per cent to $305,000 this                                                                    Housing Starts                 2

              year. In 2011, the average home price in Chilliwack is fore-                                                                       Chilliwack CA
              cast to decline by 1 per cent to $302,000. The modest de-
                                                                                                                       Total               368                  790             850
              cline in home prices reflects changes occurring in 2010.
              Home price levels are expected to remain relatively flat                                                                   (53%)             115%                7.9%
              through 2011.                                                                                           Single              229               355                 300
                                                                                                                                         (20%)              55%                (15%)
              Housing starts in Chilliwack have rebounded after a tumul-                                        Multiple                  139               435                 550
              tuous 2009 that saw total housing starts fall by over 50 per
                                                                                                                                         (72%)             213%                 26%
              cent. Reduction in the inventory of new homes for sale will
              contribute to an estimated 115 per cent increase in new
              home construction this year to 790 units. The upward tra-
                                                                                                      1. Sum of product types may not match as total may include
              jectory is expected to continue in 2011 with housing starts                             other property types; i.e., mobile, house and acreage
              forecast to rise a further 8 per cent 850 units. An increase in                         2. Sources: CMHC, BCREA Forecast
              multiple unit construction will be a key driver of activity.

                                                                       B RITISH C OLUMBIA R EAL E STATE A SSOCIATION
P AGE 11                                                   H OUSING F ORECAST


            BC M ARKET I NDICATORS




           B RITISH C OLUMBIA R EAL E STATE A SSOCIATION
 P AGE 12                                                                                                               H OUSING F ORECAST



K AMLOOPS AND D ISTRICT R EAL E STATE A SSOCIATION

      MLS® residential sales in Kamloops are estimated to decline
      6 per cent this year, after climbing 4 per cent in 2009. A                                               MLS® Prices
                                                                               Per cent
      general slowing in consumer demand during the first two                   30                                                                         $350,000

      quarters saw home sales decline 30 per cent January through               25                                                                         $300,000

      June. However, home sales have trended moderately higher                  20                     Average
                                                                                                     Price (RHS)
                                                                                                                                                           $250,000


      since the summer months and a downturn in mortgage inter-                 15

                                                                                10
                                                                                                                                                           $200,000

                                                                                                                                                           $150,000

      est rates is expected to help underpin housing demand for                  5                                                                         $100,000


      the balance of the year.                                                   0
                                                                                                                        Per cent Change
                                                                                                                                                           $50,000

                                                                                -5                                           (LHS)                         $0
                                                                                     1995     1997      1999    2001    2003   2005   2007   2009
      Gradually improving economic conditions are expected to
      stimulate some additional consumer demand in 2011 as                     Sources: CREA, BCREA Forecast




      mining, forestry and manufacturing sector employment
      trend higher. MLS® residential sales, supported by stronger            MLS®                               09                10f                11f
      employment, are forecast to rise 8 per cent to 2,380 units             Sales:
      next year. However, consumer demand will remain moder-                                Total1 2,334                        2,200               2,380
      ate compared to the years leading up to the recession, below
                                                                                                               4.4%            (5.7%)               8.2%
      the ten-year average of just under 2,500 unit sales.
                                                                                     Detached                  1,576            1,500               1,610
                                                     The inventory of                                          6.2%            (4.8%)               7.3%
              Housing Starts                         homes for sale                  Attached                   362              340                 345
                    Kamloops CA
900                                                  peaked during the                                          16%             6.1%                1.5%
               Singles         Multiples
800
700
                                                     summer months and          Apartment                       181              175                 185
600
500
                                                     is now trending                                           5.8%            (3.3%)               5.7%
400                                                  lower as are new
300                                                                          Avg Price:
200                                                  listings added to the
                                                                                     Total 300,349                             305,000         302,000
100
  0
                                                     market. More bal-
    1995 1997  1999   2001 2003 2005 2007 2009 2011f
                                                     ance between sup-                                         (2.3%)           1.5%            (1.0%)
Source: CMHC, BCREA forecast
                                                     ply and demand is               Detached 338,522                          344,000         341,000
                                                     expected to lead to                      (3.1%)                            1.6%            (0.9%)
    greater price stability. The average MLS® residential price                      Attached 273,955                          278,000         275,000
    in Kamloops is estimated to rise 1.5 per cent this year to                                                 (3.2%)           1.5%            (1.1%)
    $305,000, after declining 2 per cent in 2009. Next year, the
                                                                                Apartment 203,735                              205,000         202,000
    average MLS® residential price is forecast to edge down 1
                                                                                                               (1.9%)           0.6%            (1.5%)
    per cent to $302,000, remaining relatively unchanged from
    the start of the year.                                                                                       Housing Starts2
      After declining 24 per cent in 2008 and a further 27 per cent                                                    Kamloops CA
      in 2009, housing starts in the Kamloops CA are estimated                               Total              420               625                490
      climb 49 per cent to 625 units this year. New single de-                                 (27%)                             49%                (22%)
      tached construction is driving the increase, with an 80 per                      Single 195                                351                 260
      cent increase to 351 units expected this year. However, ele-                             (37%)                             80%                (25%)
      vated new home inventories and higher mortgage interest                         Multiple 225                               273                 230
      rates in the second half of 2011 will retard expansion of the                                            (17%)             21%                (16%)
      housing stock. Total housing starts are forecast to decline 22
      per cent to 490 units in 2011.                                          1. Sum of product types may not match as total may include
                                                                              other property types; i.e., mobile, house and acreage
                                                                              2. Sources: CMHC, BCREA Forecast


                                           B RITISH C OLUMBIA R EAL E STATE A SSOCIATION
P AGE 13                                                                                                                                                       H OUSING F ORECAST


                                                    O KANAGAN M AINLINE R EAL E STATE B OARD

                                                                                               MLS® residential sales through the Okanagan Mainline Real
                                        MLS® Prices
      Per cent
                                                                                               Estate Board (OMREB) are expected to decline 16 per cent
                                                                         Forecast
       25
                                            Average
                                          Price (RHS)
                                                                                    $450,000   to 4,800 units this year. Employment in Kelowna has kept
                                                                                    $400,000
       20
                                                                                    $350,000   above 100,000 year-to-date and is currently at a record lev-
       15

       10
                                                                                    $300,000
                                                                                    $250,000
                                                                                               el. However, while the fundamentals of local housing de-
        5                                                                           $200,000   mand appear well entrenched, the recreation and investment
                                                                                    $150,000
        0
                                                                                    $100,000   market continues to lag the rest of the market. With the at-
        -5                                      Per cent Change
       -10
                                                     (LHS)
                                                                                    $50,000
                                                                                    $0
                                                                                               tention of many recreation and investor buyers focused
             1995    1997      1999      2001    2003   2005   2007   2009
                                                                                               south of the border, residential sales will remain below the
        Sources: CREA, BCREA Forecast
                                                                                               ten-year average of 6,700 units this year and next. MLS®
                                                                                               residential sales in 2011 are forecast to rise 9 per cent to
     MLS®                                09               10f                11f
                                                                                               5,230 units.
                                                                                               Recent downward pressure on mortgage interest rates has
     Sales:                                                                                    helped increase the purchasing power of consumers and will
                    Total1              5,678           4,800           5,230                  be a key market driver heading into next year. Home sales
                                         4%             (16%)            9%                    through 2011 will reflect more gradual improvement in the
             Detached                   3,184           2,625           2,800                  overall economy.
                                                                                                                                  Housing Starts
                                        9.2%            (18%)           6.7%                   However, while eco-
                                                                                                                                     Kelowna CMA
                   876
             Attached                                     750             800                  nomic expansion and      3,000


                  25%                                    14%             6.7%                  the associated job       2,500
                                                                                                                                       Singles           Multiples




                                                                                               and wage growth          2,000

       Apartment 882                                      835             850
                 (8.9%)                                 (5.3%)           1.8%                  will underpin the        1,500

                                                                                                                        1,000
                                                                                               market, it will be        500
     Avg Price:                                                                                somewhat offset by           0

                Total 379,711 392,000 390,000                                                  gradually increasing             1995      1997      1999        2001   2003   2005   2007   2009



                       (6.6%)  3.2%   (0.5%)                                                   mortgage interest         Sources: CMHC, BCREA forecast




             Detached 444,631 462,000 465,000                                                  rates expected to
                       (7.8%)  3.9%    0.6%                                                    begin in the third quarter.
             Attached 328,963 335,000 330,000                                                  The average annual MLS® residential price is expected to
                                        (5.3%)           1.8%          (1.5%)                  increase 3 per cent to $392,000 this year, after declining 7
                                                                                               per cent in 2009. While the inventory of active listings re-
       Apartment 247,071 252,000 250,000
                                        (13%)             2.0          (0.8%)                  mains relatively high, it is trending lower as a result of a
                                                                                               sharp pullback in new listings added to the market. The av-
                                           Housing Starts2                                     erage annual MLS® residential price is forecast to remain
                                                Kelowna CMA                                    relatively unchanged in 2011, albeit down by 0.5 per cent to
                                         657             980             990                   $390,000.
                    Total
                                        (71%)            49%            1.1%                   Housing starts in Kelowna CA are expected to increase 49%
                    Single               404             615             590                   in 2010 to 980 units. Construction of new single-family
                                        (47%)            53%           (4.2%)                  homes is anticipated to be this year, 615 units while multi-
             Multiple                    253             365             400                   family starts are expected to rise 44% to 365 units. Total
                                        (83%)            44%            10%                    housing starts are forecasted to increase by 1.0 per cent to
    1. Sum of product types may not match as total may include                                 990 starts in 2011 on the strength of additional multiple
    other property types; i.e., mobile, house and acreage                                      units in the latter half of the year.
    2. Sources: CMHC, BCREA Forecast


                                                          B RITISH C OLUMBIA R EAL E STATE A SSOCIATION
   P AGE 14                                                                                                                                       H OUSING F ORECAST



S OUTH O KANAGAN R EAL E STATE B OARD

         MLS® residential sales in the South Okanagan region are
         estimated to decline 11 per cent to 1,375 units this year,                                                                 MLS® Sales
         after a 4 per cent increase in 2009. Housing demand in the                                  Units


         South Okanagan this year reflects an overall moderation in                                        3,000


         the province. Tighter credit conditions for low equity and                                        2,500



         investor home buyers introduced last April has reduced the                                        2,000

                                                                                                           1,500

         purchasing power of many consumers. In addition, recrea-                                          1,000


         tion buyers have not returned to pre-recession levels as rela-                                      500



         tive bargains in the US draw many Canadians to purchase                                               0
                                                                                                                   1995     1997    1999   2001    2003    2005   2007   2009


         homes south of the border.                                                                 Sources: CREA, BCREA Forecast




         Recent downward pressure on mortgage interest rates has
         lifted the purchasing power of households and is expected to                              MLS®                                09                  10f             11f
         generate some additional demand in the fall and winter
                                                                                                   Sales:
         months. Going forward, home sales are expected to more
         closely match overall improvement in the economy and pop-                                                 Total1            1,545                1,375          1,450
         ulation growth. This means a gradual upward trend in con-                                                                   4.3%                 (11%)          5.5%
         sumer demand. However, home sales are not expected to                                            Detached                    855                  740            780
                                               surpass the ten-year                                                                  5.9%                 (14%)          5.4%
                    MLS® Prices                average through next                                        Attached                   185               170               180
Per cent
                                      Average
                                    Price (RHS)
                                               year. MLS® residen-
                                                               Forecast
                                                                                                                                     (8%)             (8.1%)             5.9%
 25                                                                       $400,000
                                               tial sales in the South                                                                278               250               270
 20                                                                       $350,000
                                                                                                      Apartment
 15                                            Okanagan are fore-         $300,000

                                                                          $250,000                                                   14%              (10%)              8.0%
                                               cast to increase 6 per
 10
                                                                          $200,000
   5

   0                                           cent to 1,450 units in
                                                                          $150,000

                                                                          $100,000
                                                                                                   Avg Price:
  -5

 -10
                                               2011.
                                        Per cent Change
                                             (LHS)
                                                                          $50,000

                                                                          $0
                                                                                                                   Total 314,833 321,000 318,600
       1995     1997      1999   2001   2003   2005   2007   2009
                                                                                                                    (7.2%)  2.0%   (0.9%)
                                                 The average MLS®
Sources: CREA, BCREA Forecast
                                                                                                          Detached 372,766 392,000 390,000
                                                 residential price is
                                                 estimated to increase                                              (9.7%)  5.2%   (0.5%)
         2 per cent to $321,000 this year. Home prices experienced                                         Attached 266,277 285,000 284,000
         some downward pressure over the summer months as a re-                                                                     (9.1%)                7.0%           (0.4%)
         sult of an imbalance between supply and demand. However,                                     Apartment 240,771 245,000 242,000
         a sizable decline in the number of new listings added to the                                                               (13%)                 1.8%           (1.2%)
         market is beginning to draw down total active listings. This
         shift in market conditions is expected to provide greater sta-                                                                    Housing Starts2
         bility to home prices in 2011. The average MLS® residential                                                                          Penticton CA
         price is forecast to edge down 1 per cent to $318,600 in                                                  Total             132                   245             270
         2011.                                                                                                                      (58%)                 86%             10%
         Housing starts in the Penticton CA are estimated to increase                                              Single             54                    65             60
         86% to 245 units this year, due to a rebound in multiple                                                                   (28%)                 20%            (7.7%)
         starts. However, the pace of expansion of the housing stock                                         Multiple                 78                   180             210
         is expected to slow to 10 per cent next year, as builders                                                                  (76%)                 131%            17%
         draw down existing inventories.                                                           1. Sum of product types may not match as total may include
                                                                                                   other property types; i.e., mobile, house and acreage
                                                                                                   2. Sources: CMHC, BCREA Forecast


                                                                    B RITISH C OLUMBIA R EAL E STATE A SSOCIATION
P AGE 15                                                                                                                                             H OUSING F ORECAST


                                                                                        K OOTENAY R EAL E STATE B OARD

                                                                                        Housing demand in the Kootenays is now weighted more to
                                        MLS® Sales                                      local buyers. While recreation and investor buyers are still
      Units
                                                                                        an important component to the market, they are garnering a
      4,000
      3,500
                                                                                        smaller proportion of total home sales than prior to the re-
      3,000
      2,500
                                                                                        cession. Leakage of recreation purchasers to the US has im-
      2,000                                                                             pacted every recreation market in the province. MLS® resi-
      1,500
      1,000
                                                                                        dential sales are estimated decline 2 per cent to 2,075 units
       500                                                                              this year, before increasing 4 per cent to 2,150 units in
           0
               1995     1997       1999    2001   2003    2005   2007    2009   2011f   2011.
        Sources: CREA, BCREA Forecast

                                                                                        While the pace of provincial economic growth will slow in
                                                                                        2011, nearly all the jobs lost during the recession have been
     MLS®                                 09             10f            11f             recovered. Local economic conditions are favourable, with
                                                                                        coal prices at an elevated level and metal and mineral prices
     Sales:                                                                             30 per cent higher than
                     2,119
                 Total1                             2,075           2,150               a year ago as a result of
                                                                                                                                  MLS® Prices
                    (6.4%)                         (2.1%)           3.6%                demand from emerging        Per cent

           Detached 1,344                           1,285           1,325               markets. However,            35                                                 Forecast            $350,000


                                                                                        while lumber prices
                                                                                                                     30
                    (1.9%)                         (4.4%)           3.1%                                             25
                                                                                                                                                                                            $300,000

                                                                                                                                                 Average                                    $250,000


           Attached                      104          110               125             have posted increases        20
                                                                                                                     15
                                                                                                                                               Price (RHS)
                                                                                                                                                                                            $200,000


                                        (18%)        5.8%               14%             over the past year,          10
                                                                                                                      5
                                                                                                                                                                                            $150,000

                                                                                                                                                                                            $100,000

                                         126          140               155             weak demand from the          0
                                                                                                                                                             Percent Change
       Apartment                                                                                                     -5
                                                                                                                                                                  (LHS)
                                                                                                                                                                                            $50,000


                                        (32%)        11%                11%             US is not expected to       -10
                                                                                                                          1995      1997      1999   2001     2003   2005     2007   2009
                                                                                                                                                                                            $0



                                                                                        turnaround until 2012.
     Avg Price:                                                                                                     Sources: CREA, BCREA Forecast



                                                                                        The annual average
                  Total 274,118 275,000 272,000                                         MLS® residential price in the Kootenay region is estimated
                     (4.7%)  0.3%   (1.1%)
                                                                                        to increase 0.3 per cent to $275,000 this year. The number
           Detached 291,710 292,000 290,000
                                                                                        of new listings added to the market has declined noticeably
                     (7.5%)  0.1%   (0.7%)                                              since early in the year and total active listings are expected
           Attached 266,259 275,000 275,000                                             to continue on their recent downward trend. More balance
                                    (1.6%)           3.3%           0.0%                between supply and demand will create greater price stabil-
                                                                                        ity in the Kootenay housing market. Home prices in the
       Apartment 207,503 199,000 197,000
                                        14%        (4.1%)          (1.1%)               Kootenays are expected to remain relatively flat through
                                                                                        2011. The average MLS® residential price is forecast to
                                           Housing Starts2                              edge down 1.1 per cent to $272,000 in 2011.
                                               Cranbrook CA                             Housing starts in the Cranbrook CA are estimated to in-
                      Total              106         117             95                 crease 10% to 117 units this year, due to a strong pace of
                                        (50%)        10%           (19%)                single detached construction activity. Some moderation in
                 Single                  102         115             90                 construction activity is expected in 2011, with total housing
                                        (41%)        13%           (22%)                starts forecast to decline 19 per cent to 95 units. However,
               Multiple                   4           2               5                 given the small market size, this forecast could vary signifi-
                                        (89%)       (50%)          150%                 cantly from actual activity as a result of a small variation in
     1. Sum of product types may not match as total may include                         the number of multiple unit starts.
     other property types; i.e., mobile, house and acreage
     2. Sources: CMHC, BCREA Forecast


                                                         B RITISH C OLUMBIA R EAL E STATE A SSOCIATION
P AGE 16                                                                                                                                   H OUSING F ORECAST



N ORTHERN L IGHTS R EAL E STATE B OARD

   MLS® residential home sales in the Northern Lights Real
   Estate Board area, which includes the census agglomeration
   of Dawson Creek, and the municipalities of Chetwynd and                                                                     MLS® Sales
                                                                                                 Units
   Tumbler Ridge, are estimated to climb 29 per cent to 440
   units this year. Investment in the region’s shale rock natural                                 700
                                                                                                  600

   gas deposits, particularly in the area south of Dawson Creek,                                  500
                                                                                                  400

   has grown and companies are attracted by the province’s                                        300
                                                                                                  200
   attractive royalty policies. Although US natural gas con-                                      100
                                                                                                    0
   sumption is expected to remain relatively flat over the next                                          1995   1997    1999        2001    2003    2005   2007    2009   2011f


   year, continued capital investment and related jobs is ex-                                       Sources: CREA, BCREA Forecast

   pected to continue to underpin housing demand.
   The BC economy is estimated to grow by 3.4 per cent this
                                                   year. However,
              MLS® Prices                          the pace of expan-
Per cent                                                                                      MLS®                             09                  10f             11f
 30
                                          Forecast sion has recently$250,000
 25              Average                           slowed and more                            Sales:
 20            Price (RHS)                                          $200,000

 15                                                tepid growth is  $150,000                               Total1          340                     440              410
 10
  5                                                forecast through $100,000
                                                                                                                          (28%)                    29%            (6.8%)
  0
  -5
                                                   2011. Overall    $50,000                        Detached                283                     355              340
                           Per cent Change
 -10
 -15
                                (LHS)              housing demand in$0                                                    (27%)                    25%            (4.2%)
       1995    1997      1999    2001   2003   2005
                                                   the Northeast is
                                                      2007   2009

                                                                                                                            42                      55              50
                                                                                                    House &
 Sources: CREA, BCREA Forecast
                                                   expected to edge
                                                                                                    Acreage               (19%)                    31%            (9.1%)
                                                   lower next year as
   international trade struggles to return to pre-recession lev-                              Avg Price:
   els. MLS® residential units sales are forecast to decline 7 per                                          Total 222,294 210,000 215,000
   cent to 410 units in 2011.                                                                                 16%   (5.5%)   2.4%
   Home prices in the Northern Lights Real Estate Board                                            Detached 217,236 212,000 215,000
   climbed 16 per cent to $222,294 in 2009. However, the                                                      14%   (2.4%)   1.4%
   mix and proportion of home quality and type as well and the                                      House & 303,071 262,000 268,000
   relative few number of sales can skew average home prices                                        Acreage 14%      (14%)   2.3%
   for the region. Notwithstanding, the annual average MLS®
                                                                                                                               Housing Starts2
   residential price in the region is estimated to decline 5.5 per
   cent to $210,000 this year and forecast to edge higher by 2                                                                 Dawson Creek CA
   per cent to $215,000 in 2011.                                                                           Total             53                     135            100
   New home construction activity in the Dawson Creek CA is                                                Starts           13%                    155%           (26%)
   highly variable but we expect the pace of housing starts to
   trend in a range of 135 starts in 2010 and 100 starts in 2011.
   Single-family home construction was over 7 times higher in                                 1. Sum of product types may not match as total may include
                                                                                              other property types; i.e., mobile, house and acreage
   2010 versus 2009 at 45 starts and we expect that construc-
                                                                                              2. Sources: CMHC, BCREA Forecast
   tion activity will continue at this pace in 2011. As with other
   small markets, the key source of forecast variance is multi-
   family construction since a single large project could signifi-
   cantly skew the underlying trend.

                                                               B RITISH C OLUMBIA R EAL E STATE A SSOCIATION
P AGE 17                                                                                                                     H OUSING F ORECAST


                                                          BC N ORTHERN R EAL E STATE B OARD

                                                                Residential home sales in the BC Northern Real Estate Board
                                                                (BCNREB) area are forecast to increase 5 per cent in 2011,
                                                                with a total of 3,900 homes changing hands through the
                                                                Multiple Listing Service® (MLS). Northern BC is a large
    MLS®                 08           10f          11f          and increasingly diverse economic region that includes the
    Sales:                                                      communities of Kitimat, Prince George, Quesnel and Fort
                3,618               3,720         3,900
                                                                St. John. Gradually improving economic conditions, higher
             Total1                                             commodity prices and investment in the resource and energy
               (10%)                2.8%          4.8%
                                                                sector have buoyed consumer demand in the North. As a
      Detached 2,082                2,150         2,260
                                                                result, housing demand has bucked the provincial trend this
               (9.8%)               5.3%          5.1%
                                                                year, posting a year-over-year gain of 3 per cent. Unlike
      House & 608                    610           630          previous post-recession periods, Northern BC has exhibited
       Acreage 1.8%                 0.3%          3.3%          surprising resiliency to the cyclical demand for commodities.
    Avg Price:                                                  However, communities reliant on forestry will continue to
             Total 211,805 214,000 212,000                      face challenges from a
               (1.7%)               1.0%   (0.9%)               weak US housing
                                                                                                     MLS® Prices
      Detached 225,911             228,000 226,000              market. Despite a        Per cent

               (3.2%)               0.9%   (0.9%)               rally in lumber prices,   25                                                                   $250,000


                                                                housing starts in the     20                                 Average
                                                                                                                                                               $200,000
       House & 279,293 285,000 283,000
                                                                                                                           Price (RHS)
                                                                                          15
                                                                US remain at one-                                                                              $150,000
       Acreage (4.8%)   2.0%   (0.7%)                                                     10


                                                                third of peak levels.      5                                                                   $100,000


    Prince George                                               While weakness in US
                                                                                           0

                                                                                           -5                                            Per cent Change
                                                                                                                                                               $50,000



    Sales:                                                      new construction ac-      -10
                                                                                                1995    1997      1999     2001   2003    2005
                                                                                                                                              (LHS)
                                                                                                                                                 2007   2009
                                                                                                                                                               $0



                        832           850          860          tivity is expected to
      Detached                                                                             Sources: CREA, BCREA Forecast



                      (3.5%)         2.2%         1.2%
                                                                continue through
                                                                2011, robust US
    Avg. Price:
                                                                household formation of over 1.2 million annually will even-
      Detached 235,453 243,000 242,000                          tually draw down existing US housing inventories and ignite
                      (2.2%)         3.2%         0.0%          lumber production across the province.
                            Housing Starts2
                                                                The annual average MLS® residential price is estimated to
                             Prince George                      rise 1 per cent to $214,000 this year. New listings added to
             Total      145          225           235          the market are down sharply from last spring and total active
                       (33%)         55%          4.9%          listing are retreating from their cyclical high. Market condi-
                                                                tions are trending toward more balance and greater stability
             Single     113          165           170
                       (23%)         45%          3.7%
                                                                in home prices is expected to carry through next year. The
                                                                annual average MLS® residential price across the BCNREB
       Multiple          32           60           65           area is forecast to edge down 1 per cent to $212,000 in
                       (54%)         88%          8.3%          2011. The annual average home price in Prince George is
   1. Sum of product types may not match as total may include   estimated to increase 3 per cent to $243,000 this year and
   other property types; i.e., mobile, house and acreage        remain relatively unchanged in 2011.
   2. Sources: CMHC, BCREA Forecast




                                         B RITISH C OLUMBIA R EAL E STATE A SSOCIATION
 P AGE 18                                                                                                      H OUSING F ORECAST

                                  Housing Forecast Summary— Fall 2010

                                                         Unit Sales                               Average MLS® Price ($)
            Board Area                      2009            2010F            2011F            2009              2010F          2011F
                                            7,660           6,200            6,500           476,137           501,000        495,000
              Victoria
                                             24.1%          (19.0%)           4.8%             (1.8%)            5.2%          (1.2%)
                                            7,280            6,700           6,900           316,118           328,000        326,000
        Vancouver Island
                                             6.8%            (8.0%)           3.0%             (4.4%)            3.8%          (0.6%)
                                              263             280              280           237,125           240,000        238,000
 Powell River Sunshine Coast
                                             25.2%           6.5%             0.0%             (6.7%)            1.2%          (0.8%)
                                            36,257          30,900           33,200          592,441           665,000        658,000
       Greater Vancouver
                                             44.2%          (14.7%)           7.4%             (0.2%)           12.2%          (1.1%)
                                            15,660          14,200           15,100          425,796           448,000        446,000
            Fraser Valley
                                             24.4%           (9.3%)           6.3%             (1.4%)            5.2%          (0.4%)
                                            2,274            2,060           2,200           296,601           305,000        302,000
    Chilliwack and District
                                             11.7%           (9.4%)           6.8%             (6.2%)            2.8%          (1.0%)
                                            2,334            2,200           2,380           300,349           305,000        302,000
     Kamloops and District
                                             4.4%            (5.7%)           8.2%             (2.3%)            1.5%          (1.0%)
                                            5,678            4,800           5,230           379,711           392,000        390,000
       Okanagan Mainline
                                             4.0%           (15.5%)           9.0%             (6.6%)            3.2%          (0.5%)
                                            1,545            1,375           1,450           314,883           321,000        318,600
         South Okanagan
                                             4.3%           (11.0%)           5.5%             (7.2%)             2.0          (0.9%)
                                            2,119            2,075           2,150           274,118           275,000        272,000
             Kootenay
                                            (6.4%)           (2.1%)           3.6%             (4.7%)            0.3%          (1.1%)
                                              340             440              410           222,294           210,000        215,500
         Northern Lights
                                            (28.1%)          29.4%            (6.8%)           16.0%            (5.5%)         2.4%
                                            3,618            3,720           3,900           211,805           214,000        212,000
            BC Northern
                                            (10.4%)          2.8%             4.8%             (1.6%)            1.0%          (0.9%)
                                            85,028          74,950           79,700          465,725           498,500        495,600
              BC Total
                                             23.4%          (11.8%)           6.3%             2.4%              7.0%         (0.6%)

BCREA Economics provides timely research, analysis,                        British Columbia Real Estate Association
and information on economic factors affecting British                   BCREA represents 12 member real estate boards and their
Columbia and its housing markets.                                       more than 18,000 REALTORS® on all provincial issues,
                                                                        providing an extensive communications network, standard
This publication/research is generously funded, in part, by the         forms, economic research and analysis, government rela-
Real Estate Foundation of British Columbia.                             tions, required post-licensing courses and continuing edu-
                                                                        cation.
    Cameron Muir                                                        To demonstrate the profession’s commitment to improv-
    Chief Economist                                                     ing Quality of Life in BC communities, BCREA supports
    604.742.2780                                                        growth that encourages economic vitality, housing oppor-
    cmuir@bcrea.bc.ca                                                   tunities, environmental preservation, property owner
                                                                        rights and better communities.
    Brendon Ogmundson
    Economist
    604.742.2796                                                                  www.bcrea.bc.ca
    bogmundson@bcrea.bc.ca


The information contained in this report has been drawn from sources believed to be reliable, but the accuracy or complete-
ness of the information is not guaranteed, nor in providing it does the British Columbia Real Estate Association assume any
responsibility or liability.



                                      B RITISH C OLUMBIA R EAL E STATE A SSOCIATION

				
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