Housing market intelligence you can count on

Vancouver Housing Update

Robyn Adamache

Principal, Market Analysis (Vancouver)

February, 2017

Today’s Talk

Big Picture Market Drivers9 BC economy relatively strong in tepid

national environment

9 Vancouver driving BC growth

Housing Market off cyclical highs9 Fundamentals strong, market adjusting to

policy changes, imbalances

BC led the country in employment growth in 2016

3.2-1.6

-0.9-0.4

1.10.9

-0.1-0.4

-2.2-1.5

-3 -1 1 3 5

BC

Alberta

Saskatchewan

Manitoba

Ontario

Quebec

New Brunswick

Nova Scotia

Prince Edward Island

Newfoundland and Labrador

% Change 2016 vs. 2015

Source: Statistics Canada, Labour Force Survey

Vancouver housing outlook will be influenced by:

� Solid labour market (slightly muted job growth)

� Continuing population-based demand

� Supply constraints

� Increased uncertainty & market imbalances

4

1,200

1,250

1,300

1,350

1,400

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Vancouver employment growth slowing

Source: Statistics Canada, Labour Force Survey, E,L,S,C & G: Education, Law, Social, Community and Government.

+4.7%+60,600 Jobs

Vancouver CMA Employment (3 mo avg) (000s)

2015

By Occupation (BC)� Sales & Service +31K

� Bus, Fin, Admin +10K

� Trades, Trans & Equip +10K

� Health +9K

� E,L,S,C & G +7K

2016

BC unemployment rate matches Alberta

Unemployment, Seasonally Adjusted (%)

Alberta (8.8%)

BC (5.6%)

BC’s unemployment below Alberta’s since late 2015

2

4

6

8

10

2005 2007 2009 2011 2013 2015 2017

6

2016

Vancouver(4.9%)

Source: Statistics Canada, Last data point Jan 2017

Immigration to BC picking up again

Source: Statistics Canada, Q3 2016 latest data point

-5,000

0

5,000

10,000

15,000

20,000

2011 2012 2013 2014 2015 2016

Net Interprovincial Migration Net International Migration

Net Migration2013: 36,9332014: 46,5812015: 31,415

AgeProjected Average Annual Increase

(2016 - 2020)

Vancouver BC

15-24 -7,006 -10,780

25-44 15,460 27,683

45-64 6,918 2,813

65+ 17,458 34,510

Millennials and retirees will account for most growth

8

Annual population growth, Vancouver CMA(2016-2020)

-4%

-2%

0%

2%

4%

6%

15-24 25-44 45-64 65+

Source: B.C. Statistics P.E.O.P.L.E. 2016

West Van121

North Van647

Tri-Cities1,745

Ridge Meadows892Vancouver

2,836

Richmond1,448

Burnaby1,598

S. Surrey / W. Rock

1,119

Langley1,170

Delta308

15,000+ new households added each year (2016-2021)

Vancouver CMA 15,458

Source: B.C. Statistics P.E.O.P.L.E. 2016 Local Health Areas.

Surrey 2,911

New West 666 Abbotsford

-Mission880

Projected Annual Household Formation and

Growth Rates

City of Vancouver (2016 - 2021)2,836 (0.9%)

Most new households in East Van

West Side579 (1.0%)

North East445 (1.1%)

South Vancouver526 (1.0%)

Midtown689 (1.7%)

City Centre203 (0.3%)

Downtown Eastside395 (1.3%)

Source: B.C. Statistics P.E.O.P.L.E. 2016 Local Health Area. 

Net Housing Starts, New Households (000s) (Vancouver CMA)

0

5

10

15

20

25

2006 2008 2010 2012 2014 *2016

Net Housing Starts HH Growth

2016: Additions to housing stock outpace demand

Source: CMHC, Statistics Canada, BC Stats. Net Housing Starts = Housing Starts – Demolitions. *2016 demolitions estimated based on Jan – June 2016 data.

Modest supply of unsold new homes

Completed & Unabsorbed (Unsold) Units (Vancouver CMA)

Source: CMHCData is updated to Jan 2017

845

1560

500

1,000

1,500

2,000

2,500

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

House Town House Apartment

283

Rate of Home Ownership Similar to National Avg

Source: Statistics Canada

81%

80%

79%

77%

76%

70%

63%

56%

49%

74%

68%

68%

65%

Delta

Ridge Meadows

West Van

Richmond

Tri Cities

North Van

Burnaby

New West

City of Van

Calgary CMA

Toronto CMA

Canada

Vancouver CMA

Strong rental demand will keep investor buyers active

14Source: CMHC, Rental Market Survey, Condo Vacancy Survey, Oct 2016

0.4%

0.3%

0.9%

0.8%

1.0%

0.6%

0.7%

0.3%

1.2%

0.2%

0.0%

0.4%

0.5%

0.3%

Fraser Valley

North Shore

Suburbs

Van East

Van West

Downtown

Metro Rental CondoRental Apt

Rental Vacancy Rates

Uncertainties at play in housing outlook

→Policy changes

→Slowdown in emerging markets (especially China)

→Stronger than expected U.S economy

→Market imbalances

15

CMHC framework: strong evidence of overvaluation

Housing Market Assessment, 2017 Q1 Release

Weak Moderate Strong

16

Overheating Price Acceleration Overvaluation Overbuilding Overall

Previous Current Previous Current Previous Current Previous Current Previous Current

Canada

Vancouver

Victoria

Calgary

Toronto

Montreal

Vancouver market highly segmented

17Source: REBGV, FVREB, CMHC Calculations, Q4 2016

MLS® Average Price$856K

Qualifying Income$157K/Yr

$1.13M

$15.5MMLS® Average Price

$2.07MQualifying Income

$380K/Yr

MLS® Average Price$552K

Qualifying Income$101K/Yr$75K

Resale Market Trends

0%

20%

40%

60%

80%

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Greater Vancouver Fraser Valley

Resale markets still in sellers’ territory (just barely)

MLS® Sales to Active Listings Ratio

19

Balanced

Source: CREA, last data point Jan 2017, MLS ® is a registered trade mark of the Canadian Real Estate Association (CREA)

City of Vancouver markets vary by home type

20%

40%

60%

80%

100%

120%

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Det House Townhouse Apartment

Sales-to-New Listings Ratio (3 mo avg)

Source: Real Estate Board of Greater Vancouver

Balanced

Stock of active MLS ® listings remains low

Source: REBGV, FVREB, Months Supply calculation CMHC: Months Supply = Active Listings / (3 month average sales). Last data point January 2017.

Number of Months Supply on MLS®, Vancouver CMA

15

10

4

0

3

6

9

12

15

18

2007 2009 2011 2013 2015 2017

Pace of resales slowing from cyclical high

Feb 201651,969

Dec 201629,144

0

20,000

40,000

60,000

2006 2008 2010 2012 2014 2016

MLS® Sales, seasonally-adjusted annual rate

2222

10-Year Average 33,092

Source: CREA, REBGV, Annualized by CMHC, December 2016 last data point

Pace of resales slowing from cyclical high

Feb 201651,969

Dec 201629,144

Feb 201628,709

Dec 201615,145

0

20,000

40,000

60,000

2006 2008 2010 2012 2014 2016

MLS® Sales, seasonally-adjusted annual rate

10-Year Average 14,831

2323

10-Year Average 33,092

Source: CREA, REBGV, FVREB, Annualized by CMHC, December 2016 last data point

Foreign buyer activity down from peak

Source: Province of BC

10%

15%

1%3% 3%

4%

11%

19%

1%

6%

3%5%

June July Aug Sept Oct Nov

Transactions $ Value% transactions involving foreign buyers, Metro Vancouver

-70%

-65%

-60%

-52%

-40%

-37%

Sales at higher end decline more than at lower endMLS® Sales 2016, Vancouver CMA

Source: REBGV, FVREB, CMHC calculations. Pre Tax: Jan – July 2016, Post Tax: Aug – Dec 2016

0

2,000

4,000

6,000

8,000

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

$4M+

$2M to $4M

$1M to $2M

$750 to $1M

$500K to $750K

< $500K

% Change

Post Taxvs.

Pre TaxForeign Buyer`s Tax

Avg price trend accentuated by foreign buyer tax

26

$300,000

$600,000

$900,000

$1,200,000

2006 2008 2010 2012 2014 2016

Greater Vancouver Fraser Valley

Dec 16 $592K

Dec 16 $980K

Source: REBGV, seasonally adjusted by CMHC, Last data point December 2016 26

Average MLS ® Price (SA), Foreign Homebuyer Tax

27

Detached homes drive average price trend

$0

$500,000

$1,000,000

$1,500,000

$2,000,000

2009 2010 2011 2012 2013 2014 2015 2016

Detached Townhouse Apartment

Average MLS ® Price (SA), REBGV

Source: REBGV, seasonally adjusted by CMHC, Last data point December 2016

$1.6M

$610K

$771K

28

Pace of price growth to slow

Source: CREA, REBGV, CMHC forecast Q4 2016.

$400,000

$600,000

$800,000

$1,000,000

$1,200,000Inner range Outer range

Average MLS® Price, REBGV Actual Average MLS® Price 2016$1.02M

Price growth slowing

+18%

+23%+17%

-20%

0%

20%

40%

60%

2006 2008 2010 2012 2014 2016

Single Detached Town House Apartment

Sources: CREA, calculations by CMHCLast data point: January 2017* Lower Mainland includes all centres of the Fraser Valley Real Estate Board and the Real Estate Board of Greater Vancouver (Including the Vancouver CMA and the Abbotsford-Mission CMA)

Year-over-year change, MLS ® HPI Benchmark Price, Lower Mainland*

Benchmark Price

$1.2M

$464K

$558K

Area2016 Q4

Price/ Sqft

Year over Year

% Chg

DT – Downtown $950 24%

CB – Coal Harbour $1,296 33%

WE - West End $923 20%

YA -Yale Town $1,028 14%

FC – False Creek $874 14%

30

WE$613K

YA$775K

DT$587K

FC$675K

Downtown resale condo prices up

Source: REBGV*Data up to Dec 2016

CB$1.16M

Median MLS Price 2016*

Affordable home types & areas lead price growth

Top performing properties in 2015

Tsawwassen (Detached) 32%

Ladner (Detached) 30%

West Vancouver (Detached) 29%

North Vancouver (Detached) 27%

Burnaby East (Detached) 26%

Source: CREA, based on MLS® HPI Benchmark price growth

Top performing properties in 2016

Squamish (Town House) 66%

Abbotsford (Apartment) 39%

Mission (Town House) 39%

North Delta (Town House) 37%

Abbotsford (Town House) 35%

32

Housing Outlook

9 Strong fundamentals will drive demand, supply scarce

9Market adjusting to policy changes and market imbalances

9 Sales and new construction will move closer to average levels

9Home prices will rise at a slower pace

Canada Mortgage and Housing Corporation

www.cmhc.ca

Robyn AdamachePrincipal Market Analyst (Vancouver)radamache@cmhc.ca

Thank You!

https://www03.cmhc-schl.gc.ca/hmiportal/en/#Profile/2410/3/Vancouver

34

Google: cmhc portal