“Demand for new homes will soften in 2015 due to more choice in the resale market, and a lack of job growth,” commented Warren Philp, CMHC Market Analyst. “A slight improvement in employment conditions in 2016 will lead to greater housing demand and therefore starts will edge up,” concluded Philp.
Sales will increase by just 1.2 per cent to 1,460 homes sold in 2015, and be stable at 1,450 homes sold next year. Thunder Bay’s tight resale market will become more balanced as the year progresses, due to a greater growth in new listings than in sales. As a result, average price growth will moderate from 8.1 per cent in 2014 to 4.7 per cent this year and 2.9 per cent in 2016.
The average vacancy rate will increase this year due to no job growth and more renters transitioning into homeownership. Employment will support rental demand next year, causing the vacancy rate to decrease. Expect two-bedroom average rents to increase by slightly more than 2.0 per cent both in 2015 and 2016.
Ontario Real Estate Overview
Following inclement weather in early 2015, Ontario housing activity will increase throughout most of 2015 before slowing next year, foresees the Second Quarter 2015 CMHC Housing Market Outlook released today. Ontario annual home starts will range between 56,800 to 64,200 units in 2015 and 54,500 to 63,600 units in 2016.
“An improving economy will be more supportive of the Ontario housing market in 2015 than it has been in the recent past,” said Ted Tsiakopoulos, CMHC’s Ontario Regional Economist. “However, as mortgage carrying costs continue to grow, particularly for single family homes, demand will increasingly shift to more affordable housing.”
Demand is expected to be stronger in resale markets neighbouring the GTA. Strengthening preferences for higher density dwellings as well as for home rental versus ownership are also expected.
Sales of existing homes, typically less expensive than new homes, will gradually lead the market higher. MLS(R) sales are forecast to range between 192,800 to 218,000 units in 2015 before slowing between 182,900 to 213,400 units in 2016. Ontario home prices will grow at a slower rate over the forecast horizon.
As Canada’s authority on housing, CMHC contributes to the stability of the housing market and financial system, provides support for Canadians in housing need, and offers objective housing research and information to Canadian governments, consumers and the housing industry.
