British Columbia Housing Market

HOUSING MARKET OUTLOOK - CANADIAN EDITION - THIRD QUARTER CMHC

Following a strong first half of 2010, the pace of new home constructionin British Columbia is expected to moderate during the second half of the year. The resale market in British Columbia has moved to
balanced conditions, with demand for homeownership in line with the supply of existing homes for sale.

Overall, housing starts will range from 22,100 to 25,600 homes in 2010,the range refl ecting the degree of uncertainty in the economic outlook. A number of one-time factors moved existing home sales andstarts forward in 2010, including the July 1st implementation of the Harmonized Sales Tax (HST), and thewidely-held expectation of gradually rising mortgage rates beginning midyear. During the second half of 2010,momentum in the economy and accompanying job gains will support homeownership demand, partly offsetting the impact of gradually rising mortgage rates. During the first five months of 2010, job growth was almost evenly splitbetween part-time and full-time positions. As the provincial economic recovery gains traction, job gains willshift to full-time positions, which will push income growth higher. At the same time, the population will expanddue to strong international migration. Most new migrants will settle in the Lower Mainland. This will fuel demandfor rental accommodation and homeownership.

In Detail Single Starts: The annual level of single-detached home starts will be onpar with the ten-year average this year. Activity is expected to ease in the second half of 2010.Multiple Starts: Builders continueto focus on smaller phased projects. Apartment condominiums, row and townhouse starts are trending higherand are forecast to reach 12,950 units this year. A number of larger scale projects are in the approvals process in the Vancouver and Victoria CMAs. These projects will likely get underway in 2011, boosting multipleunit starts next year.


Resales: The number of existing home sales recorded on the Multiple Listing Service® (MLS®) is expected
to be slightly lower than last year’s level. The forecast is that resales will remain in line with job and population
growth, approaching 83,000 sales in 2010 and 87,000 sales in 2011.

Prices: The average MLS® resale price in B.C. will increase in 2010 to $491,750. The sales-to-newlistings ratio, a predictor of home prices, points to modest price easing during the second half of this year. An increase in new listings and moderating levels of existing home sales moved the sales-tonew Listings ratio from 0.66 in the final quarter of 2009, to 0.49 in the first quarter of 2010. This level is consistent with balanced supply and demand conditions in the province. Resale market conditions will remain balanced and then move towards sellers’ market conditions as new listings are absorbed and resale demand is rejuvenated by improvingeconomic fundamentals. Moving into 2011, the average MLS® price is to be $493,700.