How many Millennials are opting for condos over houses: census<\/a><\/strong>\r\n <\/div>\nCMHC\u2019s outlook provides a two-year forecast of housing starts, sales, prices and key economic indicators in regions and cities across the nation.<\/p>\n
In contrast to the resale apartment and townhouse segments, single-detached home prices are expected to see reduced pressure in 2018 and 2019 due to fewer sales, increased new listings and rising inventories.<\/p>\n
“You have a higher level of activity that’s expected in the apartment\/condominium and townhouse segments and then a lower level of activity in the single-detached segment, largely due to affordability reasons,\u201d says Bond.<\/p>\n
With this disparity in the resale housing segments, CMHC says the region\u2019s resale market will continue to operate in \u201ctwo speed mode\u201d over the next two years, a trend that began in mid-2016.<\/p>\n
In Metro Vancouver\u2019s new home market, Bond says demand for housing will be fueled by relatively low mortgage rates, solid population growth and increased employment opportunities during the next two years.<\/p>\n
Construction starts are expected to ease next year and in 2019 compared to record-highs achieved last year.<\/p>\n
The CMHC predicts a total of 25,225 housing starts this year, followed by 23,125 starts in 2018 and 21,340 in 2019.<\/p>\n
Despite the projected annual slowdown, starts will still exceed the 10-year average of 18,746 over the next two years.<\/p>\n
CMHC attributes the continued elevated pace of construction to low inventory levels of both new and existing homes, along with strong economic and demographic fundamentals.<\/p>\n
Metro Vancouver\u2019s rental market is also expected to see elevated demand over the next two years, with increased net migration and a continued imbalance between incomes and home prices.<\/p>\n
The rental market will experience additional pressure from rising prices in the new and resale markets, says CMHC. Increased prices \u2014 especially for more affordable, entry-level condos \u2014 will decrease the amount of renters moving into homeownership, as it will take households longer to save for a down payment.<\/p>\n
\u201cWe do expect demand for rental apartments to remain high, which will result in continued low vacancy rates and then upward pressure on rents,\u201d says Bond.<\/p>\n\n
According to CMHC, there are some risks that may affect the forecast for Metro Vancouver\u2019s housing market over the next two years.<\/p>\n
One of these risks is the impending rule changes to Canada\u2019s mortgage regulations.<\/p>\n
This month, the Office of the Superintendent of Financial Institutions (OSFI), announced a new mortgage stress test that will come into effect on January 1st, 2018. The new rule will require all uninsured mortgage borrowers to qualify against the Bank of Canada\u2019s five-year benchmark rate, or at their contract mortgage rate, plus an additional two per cent.<\/p>\n
Bond says the new mortgage regulations are factored into CMHC\u2019s forecast, as they could impact the amount of buyers entering the market.<\/p>\n
“It’s something that might limit housing demand because it could limit the purchasing power of buyers, so we have taken that into account in our forecast,\u201d says Bond. <\/span><\/p>\n
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