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Written on December 12th, 2013

Metro Vancouver home prices to rise in 2014: Re/Max

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The average price of a home in Metro Vancouver is expected to rise to $800,000 next year, up $35,000 from 2013’s average of $765,000, RE/MAX forecasts in its Housing Market Outlook 2014.

The real estate company said the 2014 increase will follow a similar $35,000 jump in average price from 2012 to 2013.

Sales of residential units in Metro are expected to increase by 1,000, from 28,000 in 2013 to 29,000 next year.

2013 sales represent a 10 per cent increase over the 25,445 sales reported in 2012, the outlook said.

“Housing starts in the Vancouver CMA are expected to top 18,200 in 2013 and climb another percentage point to 18,400 in 2014,” the outlook said.

Nationally, Canada can expect an “exceptionally healthy” housing market in 2014 thanks to improvements in the overall economy that helped produce a surge in the latter half of this year, said Re/Max.

Home sales are expected to climb two per cent to 475,000 units next year after a three per cent increase to well over 453,000 projected for 2013 when all the numbers are in.

At the same time, the value of an average Canadian home is forecast to escalate three per cent to $390,000 in 2014 after rising four per cent to $380,000 in 2013, according to a survey of the group’s independent brokers and affiliates.

Meanwhile, the outlook is for the residential housing market to remain in “clear balanced territory” throughout 2014, although some pockets and price points may see continued shortages.

Re/Max says its optimism is largely based on an improved outlook for Canada next year which is expected to see the country enjoy economic growth second only to the 2.8 per cent rate of the United States among Group of Seven countries.

And it says that while Canada’s economic growth is currently forecast at 2.3 per cent , it could move higher given the impact of strengthening global economies on the Canadian manufacturing sector.

“Canadian housing markets are on solid ground after a somewhat harrowing first and second quarter of 2013,” said Gurinder Sandhu, executive vice-president and regional director, RE/MAX Ontario-Atlantic Canada.

Better than expected economic performance, relatively stable inventory levels and the threat of higher interest rates down the road “proved mid-year game changers, providing the stimulus necessary to jump-start home buying activity,” Sandhu said.

As a result, the momentum that emerged in the latter half of the year is expected to spill over into 2014, setting the stage for continued growth and expansion in most residential markets, Re/Max said.

Overall, 23 of 25 markets surveyed, or 92 per cent, are set to experience average price increases by year-end 2013, with Hamilton-Burlington the leader at 7.5 per cent, followed by Barrie, Ont. and District at seven per cent, Calgary and St. John’s, NL, at six per cent, and Greater Vancouver, Winnipeg and the Greater Toronto Area at five per cent.

The forecast for 2014 shows the upward trend continuing, with values expected to again climb in 92 per cent of markets surveyed, led by Greater Toronto at six per cent.

Quebec and Atlantic Canada have been the exceptions to the rosy performance in 2013, with sales expected to fall below 2012 levels.

But even there things should improve next year, Re/Max said.

“Both regions should rebound in the new year, led by Halifax-Dartmouth (five per cent), Moncton (three per cent), Greater Montreal (two per cent) and Quebec City (two per cent).”

Although there are several factors that are expected to contribute to rising housing prices on a national basis, one of the most pressing is build out, Re/Max said.

“Nowhere is that more obvious than in Vancouver, where the mountains and the ocean have prevented further growth, and the Greater Toronto Area, where the greenbelt has stymied future development.”

“As such, the availability of low-rise homes relative to the population is expected to contract, placing further pressure on prices,” it said.

“We’re definitely seeing a greater commitment to higher density at a municipal level,” said Elton Ash, regional executive vice-president, RE/MAX of Western Canada.

“In fact, the trend already underway in Vancouver and Toronto, has gained serious momentum in smaller markets where cities are moving to infuse vibrancy into the urban core through mixed-use residential/commercial/retail development.”

with files from Canadian Press