Two good signs for renovators: Housing starts, home sales recovering gently
Housing starts and housing resales are good predictors of renovation activity. Both housing starts and resales are trending upwards into next year.
By Steve Payne
At the beginning of this year, there were some disturbing headlines popping up in some newspapers and magazines – to the effect that a housing crash in Canada was a possibility.
Not a brutal, almost depression-causing crash like the U.S. experienced four years ago. But a major crash. And this would have had the effect of seriously collapsing the renovation market.
After all, homeowners feel more comfortable financing home renos when their house is perceived to be increasing in value. Housing starts are higher when consumers are on the move, comfortable about financing larger homes (or their first homes).
Well, there’s good news. Canada Mortgage and Housing Corporation (CMHC) says that housing starts across the country are expected to pick up speed into the later part of 2013. That is expected to continue in 2014 owing to improved employment stats, higher economic growth and increased immigration.
Still, housing starts in 2013 will likely be lower than they were last year, because the year got off to a slow start.
CMHC says housing starts will end up between 173,300 and 192,500 units this year, with a mid-point forecast of 182,900 units.
That’s lower than the 214,827 starts last year.
In 2014, housing starts are expected to range between 166,500 and 211,300 units, with a mid-point forecast of 188,900 units.
Existing home sales are expected to range between 412,000 and 474,800 units in 2013, with a mid-point forecast of 443,400 units, down from the 2012 level of 453,372 sales.
Home resales are expected to run between 435,800 and 501,400 units, the mid-point forecast being 468,600 units.
The average MLS price is forecast to be between $359,400 and $380,000 in 2013 and between $362,400 and $392,200 in 2014
“So far in 2013, the average monthly growth rates of MLS sales, new listings and prices have all been increasing,” said Mathieu Laberge, the agency’s deputy chief economist. “This follows a period of average monthly declines that held sway over the second half of 2012.
“This change in the trend of the resale market is expected to eventually lead to a similar change in the trend of the new home market, as housing starts dynamics typically lag the resale market by one to three quarters.”