Slower demand will depress Vancouver prices before sales recover in 2010
Province
Homebuyers take heart.
Vancouver‘s housing market will be kind to buyers in 2009 and into early next year, Canada Mortgage and Housing Corp. said yesterday.
Sluggish housing demand, combined with a generous supply of unsold homes, will keep pushing prices down, it said. Sales are expected to stay tepid this year before recovering in 2010.
“Low mortgage rates and home prices will attract buyers, particularly first-time homebuyers through 2009,” CMHC senior market analyst Robyn Adamache said.
The sharp decline in new-home building early this year is expected to ease but will persist throughout 2009 and into 2010, CMHC said.
B.C. housing starts should fall to 19,725 units this year from 34,321 in 2008 — a 42.5-per-cent decline — before recovering slightly to 21,700 in 2010. Steeper prices for new homes compared with existing structures and a high number of existing homes for sale means less spillover demand for new homes, CMHC said.
“Builders have acted quickly in response to changing market conditions, delaying new projects until existing inventories of both new and resale homes are absorbed,” Adamache said.
Some developers and marketers of new projects have responded quickly by offering price cuts to attract homebuyers, CMHC said.
Nationally, new construction should fall to 141,900 unit in 2009, but rise to 150,300 units for 2010. “The decline in housing starts in 2009 can be attributed to several factors, including the current economic climate, increased competition from the existing home market, and the impact of strong house-price growth between 2002 and 2007,” CMHC chief economist Bob Dugan said.
“However, housing-market activity will begin to strengthen in 2010 as the Canadian economy recovers, bringing housing starts more in line with demographic fundamentals over the forecast period.”
CMHC said existing home sales would fall to 357,800 units in 2009 from 433,990 the previous year but rise to 386,100 units in 2010.
The average sales price is expected to decline to $283,100 this year and to stay flat in 2010, it said. Last year’s average price was $303,607.
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