Job growth to sustain Vancouver housing market in 2014

Job growth to sustain Vancouver housing market in 2014

A pick up in B.C.’s economy next year and the associated increases in jobs will bolster B.C.’s residential real estate market in 2014.

According to the latest housing market outlook released October 31 by the Canada Mortgage and Housing Corp. (CMHC), existing home sales are expected to rise 8% next year with the average price on the Multiple Listing Service forecast to edge up 1% in 2014.

In its report, the CMHC said demand for homes next year is “expected to ride the momentum of a rebounding market and post some positive gains.”

The improving market will be based on improved economic prospects for the province next year stemming from increased demand for B.C. goods from the province’s key export markets.

That is expected to bolster B.C.’s job market which is forecast to see a 1.5% increase in employment next year after marginal growth in 2013. After flat migration growth this year, an increase in the number of people migrating to B.C. should also boost demand for homes next year.

Housing starts, however, aren’t expected to rise substantially in 2014. The CMHC is forecasting 18,200 of new housing units this year and 18,400 units in 2014.

The relative glut of new, unoccupied homes is the main reason for the muted increase in activity over the next year. As of the end of September, there were 3,961 new housing units yet to be occupied, a 28% increase from the amount available a year ago.

Mortgage rates are expected to rise marginally next year, but CMHC suggested lending rates will remain “supportive” for the housing market given rates remain low by historical standards.

By the end of 2014, CMHC is forecasting the one-year posted mortgage rate to rise 0.25% from 2013 levels to between 3.25% and 3.75%, and the five-year posted mortgage rate to rise to between 5.25% to 6% from between 5% and 5.50% in 2013.

Courtesy of Business Vancouver