Canada Mortgage and Housing Corporation expects new home construction to increase 30% in 2012.
CMHC forecasts new home starts in Kelowna to reach 1325, compared to 1025 in 2011.
Paul Fabri, Senior Market Analyst for CMHC in Kelowna, says it’s expected to be a very modest increase in housing starts for 2012.
“In 2010 there were 957 new home starts and we came in slightly higher this year. We will come in slightly higher again next year.”
Fabri says we can expect a bigger improvement on housing starts next year due to employment growth and population growth in the entire province.
“Although the growth is modest, it will trigger some demand for housing - and keep in mind interest rates are to remain low through the balance of this year and into 2012.”
According to Fabri the increase in 2012, although modest, will still exceed the growth from this year.
The supply for existing houses is also predicted to fall, says Fabri.
“There is a good supply of existing homes right now and if that comes down and the inventories of new homes come down then you’ll see builders construct new homes.”
The new homes are also projected at local buyers as Fabri explains there has been a drop in resort-owned homes or second residents.
“The biggest change that we have been seeing over the last 18 months is local buyers, and not as many buyers of investor owned properties that we saw, say, in the mid 2000s, where we saw a lot of buyers from Alberta and the lower mainland.”
Builders are now focusing on local buyers, such as families and seniors, rather than investors.
The key message that Fabri and CMHC are focusing on is that B.C. is seeing growth whether it be in employment or demand for housing.
“All areas in the interior of the province experienced the same kind of trends over the last few years. We saw a big demand for houses in the mid late 2000s then that moderated in the last year or so.”
As for the rental market in Kelowna the vacancy rate is up at 5.5 per-cent compared to 3.5 per-cent in 2010.
MLS is reporting an average price for 2010 at $419,884 compared to $405,000 in 2011 in the resale market.