CMHC Forecasts Return to Stability in 2011

There is news that demographic fundamentals will be a guiding force in 2011 for housing activity, according to the Q1 2011 forecast released by CMHC.

After moving somewhat lower during the end of 2010, CMHC predicts that housing starts will start to stabilize in 2011 and continue through to 2012.

According to the forecast, “Housing starts will be in the range of 157,300 to 192,900 units in 2011, with a point forecast of 177,600 units. In 2012, housing starts will be in the range of 154,600 to 211,200 units, with a point forecast of 183,800 units.”

“Modest economic growth will continue to push employment levels higher this year and next. This, in conjunction with relatively low mortgage rates, will continue to support demand for new homes. Housing starts will remain in line with long term demographic fundamentals over the course of 2011 and 2012,” said Bob Dugan, Chief Economist for CMHC

CMHC predicts that existing home sales will be in the area of 398,500 to 485,500 units for 2011- with a point forecast of 441,500 units with expectation that this will increase through to 2012. The point forecast for 2012 is 462,900 units; they expect MLS sales will move from 406,300 to 519,700.

There is expectation that the market, although achieving some balance in 2011, will remain in the sellers’ market range. Building on MLS price gains that happened at the end of 2010, as a further indication of a return to balance, they feel that MLS price will keep on a growth curve consistent with “economy wide” inflation that will carry through 2011-2012.

Highlights from across the country include a Western bucking of the rest of the national trend, where in B.C, there is expectation that starts will increase by 1.6%. Alberta will hold the status quo.

In Ontario, the improving economy will provide momentum for an upswing in housing starts, but CMHC feels that they will not be realized until 2012.

New Brunswick is expected to be the weakest of the Atlantic Provinces.

Most of the rest of the country is expecting to see a decline in housing starts, but there is promise of return to growth towards 2012.