This morning I had the pleasure of attending the 2011 Housing Forecast Seminar at the Shaw Conference centre. I always look forward to this annual event as it helps to give me some sort of idea as to how the year ahead will unfold. Here is the Coles’ Notes overview of this morning’s presentation:
The Economy, Rates and Housing: In 20 Minutes or Less
Presented by: Ian Glassford, CFO of Servus Credit Union
The Global Economy- will show a continued recovery in 2011 and a weak recovery for developed economies. This sector is volatile but overall positive. There is some concern about dependence on a few economies including China, India and Germany.
The Canadian Economy- the economy can perform better than forecasted if commodities hold on, rates stay low and the dollar doesn’t get too strong. However, the economy can only go so far until the US rebounds.
Interest rates in the short term (next year or so)- will show modest upward pressure. Expecting modest interest rate hikes to start late spring/early summer. In Ian’s opinion, rates that are too low for too long create irresponsible behaviour from borrowers. If the rates increase too much, this could stall the economy so the Government of Canada has to find a healthy balance.
Interest rates in the medium term (1 to 2 years out)- the rates are likely moving up. The Bank of Canada sees “considerable monetary stimulus in place” meaning they have their foot on the gas and are warning that eventually they must put the brakes on.
Housing- the year will likely be very “ho-hum”. I personally think this is great news as the last 5 years have been extremely volatile and that is not good for the housing market in the long term.
Edmonton Economics & Housing Market Outlook
Presented by Richard Goatcher, Senior Market Analyst, CMHC Edmonton
Richard gave an overview of the overall economy as well as the Edmonton housing market. He concluded that the job losses experienced during the recession have reversed in recent months, full-time job gains are slowly returning and that we will really see this significantly in 2012, he also stated that employment growth will return in 2011.
Richard’s graph on interest rates showed annual average interest rates slightly lower in 2011 than they were in 2009 & 2010. Still significantly less than they were during the boom years.
Edmonton residential MLS sales have cooled since the beginning of 2010 (no surprise here) and that many experts believe we’ll have an opposite kind of year with modest sales to start and stronger sales as the year progresses (I tend to agree with Richard on this). Richard also added that we are currently in a buyers market with only 1 in 5 listings sell in a given month.
MLS System Market Forecast
Presented by Chris Mooney, REALTORS® Association of Edmonton
Rural Recreational Forecast- lots of choice with long days on market. Gasoline prices will have an influence on the value of rural properties.
Forecast: slow & no change.
Commercial Forecast- the 2010 sales were up and could be up even higher if all REALTOR® sales were reported. Commercial clients generally seem optimistic. Forecast: trend upwards with values over $300 million.
Multi-Family Forecast- the condo conversion trend is over (yay for that!), most multi-family sales will remain as rentals (I kind of disagree with this as lots of singles and child-free couples still choose condos), rents should creep upwards with little incentives for renters.
Forecast: low volume but steady
Residential Single Family Dwelling Forecast- the market will remain stable as long as external forces don’t intrude, steady as we go! Prices should rise 3% overall with seasonal fluctuations. Inventory up to 7,000 units in the spring and then normal thereafter.
Residential Condo Forecast- condo purchase are a lifestyle decision for singles (especially women), young couples and empty nesters. Most condos do not appeal to families. Newly completed condos will create pressure on re-sales.
Forecast: sales and prices to remain static
My two cents:
Overall this was a great forecast and there was a definite improvement in the attendee sentiment when compared with the forecast last January. This time last year I observed a lot of worried faces in the crowd and presenters that were trying their best to put a positive spin on a very uncertain market. This year was marked with a very calm, steady-as-she-goes energy. I don’t think anyone in the industry expects a repeat of the boom-times of 2007 and nor do we want it. I think we all realize that a balanced, healthy market is best for everyone.
A home is where you hang your hat and at some point you must make the choice between renting and buying. At the end of the day, you need a roof over your head. You can spend a great deal of time fretting over the “investment” and whether prices are going up, down, sideways or you can get on with your life in your new place.
Given this, I have to wonder what any first time buyer is waiting for! The interest rates are still at historical lows (and we aren’t sure how long this will be the case), there is lots of inventory to choose from and prices are down. If you’re a first time buyer there really isn’t much to dislike about the current market situation!