Cranbrook’s housing market should see modest growth in 2013 with a slightly stronger improvement in 2014.
That’s the assessment by Paul Fabri, the B.C. southern interior’s housing market analyst with the Canadian Mortgage and Housing Corporation.
He was speaking to housing professionals and local elected officials at a luncheon on Friday, March 15 held by the Canadian Home Builders’ Association – Rocky Mountain.
“Looking at the year overall, look for a slower first half; expect demand to pick up in the second half of the year,” Fabri summarized to the luncheon attendees.
He broke down the housing market into the resale market and new housing starts.
The resale market was steadily higher in 2012, Fabri said, with home sales 26 per cent higher last year than in 2011.
“They are great gains, but keep in mind that is on a fairly low level,” said Fabri.
“This trend is consistent with most other markets in the interior of B.C.”
At the same time, there were fewer active listings in 2012, although it’s not completely a result of the increase in sales, he went on.
“Supply in active listings has trended lower in response to rising sales. That’s good news, though I suspect some sellers have chosen not to list or wait to relist until prices are showing stronger,” said Fabri.
While Cranbrook is still a buyer’s market, that trend could change soon.
“Rising sales coupled with reduced listing activity has pushed the sales to active listing ratio closer to a balanced market territory here in Cranbrook. However, given that prices have not really increased, I would still call Cranbrook’s resale market a buyer’s market right now. We are going to have to see some upward movement in prices before we call it a balanced market,” said Fabri, adding that he expects Cranbrook to move into a balanced market next year.
“I expect demand to pick up later in 2013 and 2014 as B.C. reports higher levels of migration and the provincial and regional economies report stronger growth,” he said.
The average price of a single family home remains around $300,000, Fabri pointed out.
“I expect home prices to remain essentially stable in 2013, edging slightly higher towards the second half of the year and perhaps slightly higher in 2014,” he said.
Today, households need an annual income of around $50,000 to purchase a single detached home in Cranbrook, Fabri calculated, lower than in 2008 when it was close to $70,000.
“The annual income required to purchase a single detached home in Cranbrook now is much less than it was at peak levels in 2008. That’s good news for home buyers and sometimes I think that’s a message that doesn’t get out enough to the buyer. So it’s a good time to buy a home in Cranbrook right now,” he said.
Meanwhile, the number of homes under construction is likely to improve this year after a sharp drop in 2009.
“Housing starts are predicted to pick up a little bit in 2013,” said Fabri, “but I think any increase in housing starts this year will be very modest.”
Employment, population growth and migration levels in the region all have an impact on the housing market, Fabri explained.
Employment levels improved in the Kootenays last year, up about 3.5 per cent over 2011. Most of the growth was in the service sector and mining, and it depends on the community, according to Fabri.
“The job picture in the Kootenays has varied by sector and location in the Kootenay region,” he said.
Cranbrook’s population is growing faster than elsewhere in the East Kootenay, Fabri explained. Between 2011 and 2012, it increased one per cent, whereas the region grew by 0.2 per cent.
“Cranbrook and the Elk Valley have reported higher levels of population growth than the Kimberley and Invermere areas,” said Fabri.
Most people moving into the region are coming from outside the province – largely Alberta, he went on. But international migration has increased significantly, too. Between 2007 and 2011 there were around 600 international migrants to the East Kootenay, while there were just 78 between 2002 and 2006.
“Net migration is just one indicator of housing demand, of how the local economy is going to perform,” said Fabri.
“While that migration has slowed, migration flows remain at a very high level. Migration flows fuel turnover, a rise in demand for goods and services and housing.”
All of these indicators suggest growth in demand for the local housing market, Fabri explained.
“In summary, when I look at the demand outlook locally, I think the demand outlook, like B.C. overall, is positive in a modest way. We are definitely seeing some positive trends in employment, and we are seeing some modestly positive trends in the migration side and big flows as well, and I think that bodes well for the local economy.”
However, while Fabri is predicting modest growth for the East Kootenay this year, there are a lot of outside factors that could affect that outlook.
“The U.S. economy is starting to see some signs of life. If that stalls, not good. The construction sector is picking up a little bit. That’s good for the wood products industry. If it stalls, not good. China last year was fairly flat in growth; growth is starting to pick up now which is good for B.C. exports. If that stalls, not good. The Eurozone looks like it’s starting to get its house in order. If that falls apart, not good,” said Fabri to temper his predictions.