Tuesday, November 22, 2011

CMHC Updates Ottawa Housing for 2012

OTTAWA — First-time buyers may have fuelled Ottawa’s most recent housing boom, but baby boomers are now in the driver’s seat, according to the Canadian Mortgage and Housing Corporation.

Representatives of the national housing agency told a conference Thursday that demand for homes in Ottawa is expected to remain strong thanks to continued immigration, a high-paid workforce and a growing baby boomer demographic looking to downsize into higher-end, high-density developments.

“They are really what has been driving the market in the last year,” CMHC senior market analyst Sandra Pérez Torres told the meeting at the Hampton Inn and Conference Centre. “Employment over the last year has really favoured people between 45 and 64 years of age. These are move-up buyers with more income.”

According to CMHC, more than 170,000 people in the capital region are between the ages of 55 and 74. That demographic made up more than 40 per cent of all condominium buyers in Ottawa last year. As baby boomers continue to age, CMHC expects that demographic to account for as much as 50 per cent of all condominium sales by 2016.

Condominiums could be the only market segment in Ottawa to show growth next year. CMHC expects builders to begin construction on 1,500 condominium projects in 2012, an increase over the 1,475 started in 2011. But construction of townhouses is expected to fall to 2,200 next year from 2,245 in 2011, while single-family homes will fall marginally to 1,850 from 2,000.

More than 80 per cent of all residential construction started in Ottawa in 2012 will happen in the suburbs, outside of the city’s greenbelt.

Pérez Torres said the suburbs offers buyers more affordable housing choices than they would find in the downtown core.

After two years of record sales, the resale housing market is likely to slightly soften, CMHC said. With increasing numbers of baby boomers looking to sell their larger homes, CMHC expects a record number of homes offered on the Multiple Listing Service (MLS). That in turn will see increases in housing prices in Ottawa taper off. However, high demand from people between the ages of 25 and 54 should create a more balanced market for resale homes and hold price increases in lockstep with inflation at around two per cent.

Pérez Torres said the large 25-through-54 demographic contains a variety of potential buyers. Some of its younger members will be looking for their first homes, while mid-range to older members will be seeking larger houses for their growing families.

Another factor that will help drive home sales in 2012 is the continuation of interest rates at their lowest in 60 years. CMHC said rates will likely remain at record low levels for most of next year.

In 2011, Ottawa resale home prices increased by around five per cent, according to CMHC. The average selling price of a home sold though MLS in Ottawa this year is $345,000.

CMHC also said that residents of the capital shouldn’t be worried about a housing market bubble. With strong employment numbers, decreasing debt levels, low vacancy rates, steady rental rates, stable price increases and a balanced market for home sales, Ottawa’s housing market looks rock solid.
“Those are the things you look for in a housing market bubble,” said Mathieu Laberge, CMHC’s deputy chief economist. “There is no empirical evidence of a housing market bubble.”
© Copyright (c) The Ottawa Citizen

Read more: http://www.ottawacitizen.com/business/Boomers+drive+housing+demand/5693111/story.html#ixzz1dV1XZN74

1 comment:

  1. Buying a new house or property is one of the biggest investments you will make and should be taken seriously.