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jimtan
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CMHC Forecast 2013 and 2014

Tue Aug 27, 2013 8:21 am

Alright! End of summer. Time for the kids to return to school. The boys and girls at CMHC have picked up a lesson two this year. They are no longer bearish!!!!

:roll:

CMHC spring 2013 forecast for 2013 and 2014. No need to point out that it isn't bearish. By May 2013, we already knew the market had stabilized.

https://www03.cmhc-schl.gc.ca/catalog/p ... 7621002794


Interestingly, CMHC is forecasting a price gain in 2014! From Page 3...

“Given the softer resale market, the current rate of new construction activity invites discussion around whether the supply of housing is outstripping demand. The difference between the number of households formed and the number of new housing units completed is often used as a rough gauge of whether the supply of new housing is sufficient to meet demand.

However, this neglects one key component – demolition of old structures – which is especially important in a developed area like the Vancouver CMA where much of the new construction tends to be in-fills or replacement structures.

For instance, a simple comparison of household formation versus completions of new housing units would suggest there was excess newly completed housing in Vancouver during the period 1996 – 2011 (Fig. 4).

During this time, however, there was an average of over 2,500 housing units demolished per year in Vancouver. Once demolitions are taken into account, household formation in Vancouver has actually been outpacing completions of new residential housing units during the past decade.”

Ever wondered why the vacancy rate is still so low after all that furious building?

READ THE WHOLE DOCUMENT. See what the CMHC forecasts for the economic drivers.
 
fishguy15
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Re: CMHC Forecast 2013 and 2014

Tue Aug 27, 2013 8:57 am

However, this neglects one key component – demolition of old structures – which is especially important in a developed area like the Vancouver CMA where much of the new construction tends to be in-fills or replacement structures.
Many, if not all, of the new detached properties are built with suites. Are these new units counted as one unit or two?
 
Geyser
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Re: CMHC Forecast 2013 and 2014

Tue Aug 27, 2013 2:02 pm

JT wrote:
Ever wondered why the vacancy rate is still so low after all that furious building?
Actually Jimmy, the vacancy rate continues to increase - just as one might expect with increasing inventory and falling immigration. No surprises there.


http://www.cmhc-schl.gc.ca/en/corp/nero ... 0-0815.cfm
Canada’s Rental Vacancy Rate Increases

OTTAWA, June 20, 2013 — The average rental apartment vacancy rate in Canada's 35 major centres1 increased to 2.7 per cent in April 2013, from 2.3 per cent in April 2012, according to the spring Rental Market Survey2 released today by Canada Mortgage and Housing Corporation (CMHC).
Vancouver's rate in April was 2.9%. That's up from 2.6% last April. If you're a renter, the trend is your friend.

And here's what Hollyburn Properties has been saying:
Vancouver rental market competition heats up

Looking for rental housing in Vancouver may be getting a little easier as vacancy rates edge up and with some landlords offering incentives to get good tenants.

Hollyburn Properties has been holding open houses for rental accommodation in Vancouver’s West End, a ploy unique in what has been a building owner’s, not a renter’s market.

Freshly renovated one-bedroom, one-bath apartments are on offer for $1,250 a month – not a bargain, but the company is throwing in three months free parking or $200 cash as an incentive.

“We're very proud of the product that we have,” said Allen Wasel of Hollyburn. “We'll do open houses and we'll keep offering incentives to get people into our buildings just to see our product.”

There are other signs it’s becoming a more competitive rental market, says Amy Spencer, of the Rental Housing Council of B.C.

“We've got some really great landlords that have some good buildings with energy efficiency upgrades. Some of them are offering things like no rent increases, free high-speed internet, upgraded suites, so it's an exciting time to be a renter actually,” Spencer said.

http://www.cbc.ca/news/canada/british-c ... tives.html
Giving tenants cash incentives or free parking sounds like a good idea when vacancies are increasing.
In fond memory of Taipan, a model of modesty, decency, dignity and tolerance. Long may we all prosper from the tremendous legacy of worldly wisdom and specialized real estate knowledge which he left in the "Arguments" thread.
 
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jesse1
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Re: CMHC Forecast 2013 and 2014

Tue Aug 27, 2013 6:07 pm

Demolitions. Great muckraking, jim! Small footnote however: SFH starts constitute 2-3 starts, though CMHC counts it as 1. Still, it's an important observation. Thanks for the info.

Here are City of Vancouver demolitions since 2002:
Image

Regional information is here:
http://www.metrovancouver.org/planning/ ... a_Book.pdf
See page 29.

While demolitions are an important component affecting dwelling supply it's far from clear they have accelerated recently that ends up tangibly limiting supply. If we look at SFH completed and unabsorbed data for Vancouver CMA, SFHs are sitting vacant:
Image

According to these data there are 1500 single/semi detached housing units in Vancouver CMA that have yet to be occupied. That's higher than during the recession. Of course the most recent data wouldn't have made it into CMHC's report.

I also like the other major cities in BC: they have started to burn through their unabsorbed inventory in a big way. That's what five years of stagnation will do. Speculation: parts of BC have eaten through a good chunk of their inventory overhang and over the next several years will start to build again. That is a good thing from a certain point of view: they will need workers and as a plus those workers can afford to live where they work. Certainly a strong business case for some marginalized construction worker living in the overpriced and congested Vancouver area looking for greener pastures.
There is no shame in overpaying
 
jimtan
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Re: CMHC Forecast 2013 and 2014

Tue Aug 27, 2013 7:59 pm

However, this neglects one key component – demolition of old structures – which is especially important in a developed area like the Vancouver CMA where much of the new construction tends to be in-fills or replacement structures.
Many, if not all, of the new detached properties are built with suites. Are these new units counted as one unit or two?
Dear fishy,

The number of basement suites in new houses is probably limited in CoV as a proportion of new homes (predominantly condo). What's the rental vacancy rate? That's the bottom line.

Basement suites are probably more relevant in Surrey and Abbotsford. What's their vacancy rate?

What about Kelowna? Vacancy rate 5%. Do they have a lot of new houses and basement suites?

Thanks to Jesse for the demolitions chart. Have to remember that much of the demolition is for old large SFH, often used as multi-unit dwellings. So, each demolition actually means the lost of more than one unit. Any way you look at it, CoV vacancy is very tight by Canadian and American standards.

Certainly looks like demolitions have accelerated since 2008. This is a very bullish sign that vacant land and commercial property are increasingly scarce.

Anyway, the point raised by CMHC is that over a 15-year period, household formation has exceeded new supply. Forcing up prices. Explaining the movement of lower-income to the periphery. And, the increase use of basement suites.

This is market economics in action. Soon, the 300sf apartment is gonna look good. Somewhere, ETB is laughing.
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rofina
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Re: CMHC Forecast 2013 and 2014

Tue Aug 27, 2013 8:35 pm

However, this neglects one key component – demolition of old structures – which is especially important in a developed area like the Vancouver CMA where much of the new construction tends to be in-fills or replacement structures.
Many, if not all, of the new detached properties are built with suites. Are these new units counted as one unit or two?
Dear fishy,

The number of basement suites in new houses is probably limited in CoV as a proportion of new homes (predominantly condo). What's the rental vacancy rate? That's the bottom line.

Basement suites are probably more relevant in Surrey and Abbotsford. What's their vacancy rate?

What about Kelowna? Vacancy rate 5%. Do they have a lot of new houses and basement suites?

Thanks to Jesse for the demolitions chart. Have to remember that much of the demolition is for old large SFH, often used as multi-unit dwellings. So, each demolition actually means the lost of more than one unit. Any way you look at it, CoV vacancy is very tight by Canadian and American standards.

Certainly looks like demolitions have accelerated since 2008. This is a very bullish sign that vacant land and commercial property are increasingly scarce.

Anyway, the point raised by CMHC is that over a 15-year period, household formation has exceeded new supply. Forcing up prices. Explaining the movement of lower-income to the periphery. And, the increase use of basement suites.

This is market economics in action. Soon, the 300sf apartment is gonna look good. Somewhere, ETB is laughing.

You really think think that the majority of SFH today are indeed single family dwellings?

Second to that, you realize that completions have been outpacing population growth for sometime now, right?
 
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jesse1
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Re: CMHC Forecast 2013 and 2014

Tue Aug 27, 2013 9:01 pm

, the point raised by CMHC is that over a 15-year period, household formation has exceeded new supply
CMHC did not account for SFH utility increases when it made its assertion, ie turning a 3br bungalow into a 6-7br "SFH" (read:multi unit). Demos have not markedly increased relative to starts since at least 2000. Unabsorbed units are on the high side. I am not convinced CMHC has proven its case.
There is no shame in overpaying
 
jimtan
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Re: CMHC Forecast 2013 and 2014

Tue Aug 27, 2013 10:11 pm

, the point raised by CMHC is that over a 15-year period, household formation has exceeded new supply
CMHC did not account for SFH utility increases when it made its assertion, ie turning a 3br bungalow into a 6-7br "SFH" (read:multi unit). Demos have not markedly increased relative to starts since at least 2000. Unabsorbed units are on the high side. I am not convinced CMHC has proven its case.
So, why did prices surge in 2002-7 despite a rise in interest rates?

Why is the market stabilizing today despite Flaherty's brain fart, the American fiscal cliff etc? Why are people still buying? Why is the unsold SFH inventory so small? Why is ETB laughing? Why is the vacancy rate among the lowest in Canada? That's the bottom line.

You're looking for reasons to justify why you can't be wrong. I'm looking for reasons to explain why I've been right.
 
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jesse1
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Re: CMHC Forecast 2013 and 2014

Tue Aug 27, 2013 11:18 pm

I pointed out demolitions do not suggest housing undersupply. This is not justifying my world view, it's objectively analyzing data. I have no agenda. Sorry to disappoint you.
There is no shame in overpaying
 
Geyser
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Re: CMHC Forecast 2013 and 2014

Tue Aug 27, 2013 11:37 pm

JT wrote:
Why is the market stabilizing today despite Flaherty's brain fart, the American fiscal cliff etc? Why are people still buying? Why is the unsold SFH inventory so small? Why is ETB laughing? Why is the vacancy rate among the lowest in Canada?
I notice that when it's close to closing time and the barman shouts "last call, time gentlemen please" there is a sudden uptick in beer sales. Should I invest in beer? Also, as ignored in my recent post, immigration to Vancouver has tanked, Vancouver vacancy rates continue to climb and landlords are offering cash incentives to attract potential renters.

A quick Google dug up this:
Single Family Home Inventory Graph – July 24, 2012
12 Comments Posted by an observer on July 24, 2012
Here is a breakdown of single family home inventory for each of the main regions since March 13th.  Most people who are following things won’t see too many surprises (except possibly Burnaby inventory being up 69% and Vancouver East 48% along with North Vancouver that did not make the chart being up 59%) but viewing this in graphical form is a good way to comprehend the data.
Who to believe? Jimmy or the short order cook?
In fond memory of Taipan, a model of modesty, decency, dignity and tolerance. Long may we all prosper from the tremendous legacy of worldly wisdom and specialized real estate knowledge which he left in the "Arguments" thread.
 
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Re: CMHC Forecast 2013 and 2014

Wed Aug 28, 2013 4:35 am

What lovely handwaving. The statistics show BC's population declining? Just say it's predicted to go up over the next two years, no reasoning required. Likewise their prediction of a continued low interest rate environment. How else can the CMHC justify sunshine and lollipop market outlooks?
The CMHC's interests lie with the industry, their analysis has '4 out 5' doctors' validity.
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the dogs bark but the caravan moves on
 
fishguy15
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Re: CMHC Forecast 2013 and 2014

Wed Aug 28, 2013 9:10 am

Anyway, the point raised by CMHC is that over a 15-year period, household formation has exceeded new supply. Forcing up prices. Explaining the movement of lower-income to the periphery.
Comprehension does not seem to be a strong suit of yours. Please re-read the CMHC study that you quoted in your OP. One is not like the other... :roll:
For instance, a simple comparison of household formation versus completions of new housing units would suggest there was excess newly completed housing in Vancouver during the period 1996 – 2011 (Fig. 4).
And you get all excited about people cherry picking when you simply pull shit out of your ass...
 
westcoastfella
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Re: CMHC Forecast 2013 and 2014

Wed Aug 28, 2013 10:00 am

You really think think that the majority of SFH today are indeed single family dwellings?
Indeed. I remember when we were last looking for a house in Vancouver and Burnaby, during mid-2009, I was shocked by the lack of homes on the market WITHOUT a basement suite or two. It was quite difficult to find, only a small fraction of homes we saw on the market had a basement that was actually considered primary owner living space - and many of those were owned by people planning to add a suite. The thought of buying a house and then having to demo a basement was not palatable, so we gave up. It was at that point that I started wondering if there were better places to be than Vancouver... and sure enough, there were.

PR's with basement suites are comparatively rare in Toronto, albeit they are on the rise - homes are generally either fully owner-occupied, or they are split into suites and fully rented out. We have several friends in TO that own SFH's - none of them have suites, nor do they know others that have rental suites.
 
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WhipMaster
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Re: CMHC Forecast 2013 and 2014

Wed Aug 28, 2013 12:53 pm

It was at that point that I started wondering if there were better places to be than Vancouver... and sure enough, there were.
..... a truly heart warming story. Is this why the change in your attitude? You moved away to somewhere better for you and bought there?
Perfect! :mrgreen:
Vancouver is not for everybody.
At least you are happy. :mrgreen:
Hoo~Cudda~Not~Nod~ed????? :-)
 
jimtan
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Re: CMHC Forecast 2013 and 2014

Wed Aug 28, 2013 9:56 pm

Anyway, the point raised by CMHC is that over a 15-year period, household formation has exceeded new supply. Forcing up prices. Explaining the movement of lower-income to the periphery.
Comprehension does not seem to be a strong suit of yours. Please re-read the CMHC study that you quoted in your OP. One is not like the other... :roll:
I'm making the obvious correlation between tight supply and sustained higher prices. Don't know why you can't make the simple connection?

:roll:
For instance, a simple comparison of household formation versus completions of new housing units would suggest there was excess newly completed housing in Vancouver during the period 1996 – 2011 (Fig. 4).
And you get all excited about people cherry picking when you simply pull shit out of your ass...

I work with data that is consistent with the model. And, the model has to be verified by the results.

The bottom line is that I'm right and you're wrong.

:roll: :mrgreen:

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