Housing Recovery? We May Have To Wait…
A Look Ahead: Forecasts for Canadian Real Estate & Mortgage Trends in 2014
As we say goodbye to 2013 and welcome in 2014, we can learn from this past year’s real estate market trends to predict expectations in the new year. According to the Canadian Real Estate Association, Canadian home sales turned out slightly better than expected in 2013 and sales will continue to increase in 2014.
Here are the forecasts for real estate and mortgage trends for all of Canada and Ottawa in 2014:
Real Estate Trends for Canada
• Housing starts (new home construction projects) will be stable. Total housing starts declined to 185,000 units in 2013 and will remain relatively moderate in 2014 with 184,700 units
• Resale of existing homes will increase modestly. It was expected that there would be resales of 456,700 units and then an increase of 468, 200 units in 2014.
• Prices of homes are expected to grow in line with inflation at 1.9%. The average MLS price is forecast to rise from $378,000 (2013) to $385,000 in 2014.
• Single-detached starts will be relatively more stable than multi-family starts
• Multi-family starts were expected to decline in 2013 and stabilize in 2014
• Urbanization will continue to be a dominant trend in 2014. As a result, it will generate an opportunity for redevelopment of urban locations and the rise in mixed-use projects
• Canada’s economy is expected to continue to grow at a slow rate and job growth is predicted to be slower, but still good in 2014. Despite the slower economic growth, it should not significantly disrupt the real estate market.
Real Estate Trends for Ottawa
• MLS sales will rise in the new year before moderating once more as mortgage rates start rising by mid 2014
• After strong market activity since 2012, new home construction will begin to stabilize to match demographical needs
• Resale of existing homes will lower before stabilizing in spring 2014
• Demand in existing homes will continue to be the strongest in Ottawa West (including West End, Kanata, Stittsville and Nepean)
• Ottawa will remain in a balanced market, where neither the buyers or sellers will have the upper hand
• Ottawa will see a decrease in apartment construction while the city focuses on the existing supply and unsold units. Low-rise multifamily dwellings, semis and rows starts will be 30% of the market in 2014
Mortgage Rates in 2014
Throughout Canada, mortgage rates will remain low by historical standards and supportive of housing demand.
In Ottawa, mortgage rates will see a modest and gradual increase but will remain low by historical standards. It is predicted that by the end of 2014, mortgage rates are forecast to be somewhat higher than in the third quarter of 2013.
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