Low Mortgage Rates & Population Growth will Continue to support Demand: CMHC
Resale Home Market – Sales Slightly Lower in 2013
Sales in 2013 in both KCW and Guelph will be slightly lower than in 2012. Although the Guelph resale market is currently favouring sellers, all resale markets in the area will be balanced in 2013. Overall, sales of existing home sold through the Kitchener-Waterloo Association of Realtors® will decline 2.8 per cent in 2013, while sales through the Guelph and District Association of Realtors® will decline by 5.3 per cent.
The slow pace of economic growth, global financial uncertainty and less favourable mortgage market conditions will temper gains in sales early in 2013. Despite sales volumes dropping on an annual basis, improving economic conditions and stable home prices will support housing demand by the second half of 2013. Mortgage rates will remain close to current levels for most of 2013. The low mortgage rates will continue to support demand. Population growth will also support housing demand. Migration will add close to 2,800 persons in 2013.
First-time buyer demand has declined. Although income growth has kept pace with home price growth in 2012, tightened mortgage rules have delayed some renter households from making the move to home ownership. Low vacancy rates are one indication that renter households are staying put longer. Tighter mortgage market conditions mean first-time buyers (FTBs) will have to save more for a down payment or look for a more affordable home to purchase. This will result in some households remaining in rental accommodation longer. Move-up buyers will continue to drive demand as they are less sensitive to economic uncertainty and generally are households that have more equity.
Listings to Decline
In Guelph, listings declined in 2012. One source of listings is move-up buyers listing their homes for sale to buy new. But, with lot shortages leading to lower single-detached construction, some move-up buyers decided to remain in their current homes and not list their homes for sale. In 2013, listings will again decline as home prices remain relatively stable.
Little Price Growth
Kitchener prices will increase at a much slower pace than in Guelph in 2012. In 2013, both areas will see only marginal growth in home prices. With a balanced resale market, price growth has been more subdued in Kitchener. In Guelph, a sellers’ market led to higher price growth in 2012. Both markets will be balanced throughout most of 2013.
New Homes Market
In Guelph, starts will decline marginally in 2012 due to the slight decline in apartment construction. Construction will pick up in the second half 2012 and continue into 2013 as the City of Guelph moves to meet the targets set out in the Development Priorities Plan. In 2013, starts in Guelph will again remain virtually unchanged as an increase in single-detached construction is offset by a slight decline in apartment construction. Single-detached construction will move slightly higher in 2013 as more registered lots become available for construction. An increase in townhouse and apartment construction in the last couple of years has been in response to the shift to higher density housing due to the Places to Grow and a demographic shift to smaller households.
Read the complete Report and view the Stat Charts at CMHC Housing Market Outlook Fall 2012 Guelph and KW