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2014 Fredericton Housing Outlook Seminar CANADA MORTGAGE AND HOUSING CORPORATION Claude Gautreau – Senior Market Analyst Housing market intelligence you can count on 2013 Year in Review Supply 2014 Outlook Demand 2 Are Supply and Demand in Balance? Vacancy Rate Supply Price Growth Source: CMHC/CREA New Listings Demand Unabsorbed Units 3 Are Supply and Demand in Balance? 2nd Highest Recorded Level Vacancy Rate Supply Price Growth Source: CMHC/CREA New Listings Demand Unabsorbed Units 4 Are Supply and Demand in Balance? 2nd Highest Recorded Level Vacancy Rate Supply Price Growth Source: CMHC/CREA New Listings Historic High Level Demand Unabsorbed Units 5 Are Supply and Demand in Balance? 2nd Highest Recorded Level Vacancy Rate Supply Price Growth Source: CMHC/CREA New Listings Historic High Level Demand Unabsorbed Units Trending Upwards 6 Are Supply and Demand in Balance? 2nd Highest Recorded Level Vacancy Rate Supply Minimal/ Slowing Source: CMHC/CREA Price Growth New Listings Historic High Level Demand Unabsorbed Units Trending Upwards 7 Declining Employment + Declining Net-Migration + Above Average Construction Activity Excess Supply in some Market Segments Source: Statistics Canada Labour Force Survey/: Statistics Canada Tax Filer Data/CMHC 8 Housing Market Drivers 9 Total Employment (000’s) and Unemployment Rate (%) Fredericton CA 70 11% Employed (12 MMA) 10% Employed (000’s) Unemployment Rate (12 MMA) 50 9% 40 8% 30 7% 20 6% 10 5% 0 4% Source: Statistics Canada Labour Force Survey Unemployment Rate (%) 60 10 Annual Employment Growth Fredericton CA 10% 7.8% 8% 6% 5.2% 5.0% 4.6% 3.5% 4% 1.7% 2% 0% -0.2% -2% -4% -6% 0.4% 0.3% -0.9% -1.3% -2.7% -2.9% -4.1% 2000 2001 2002 2003 2004 Average Annual Increase (2000-2013) Source: Statistics Canada Labour Force Survey 2005 2006 +1.2% 2007 2008 2009 Employed (2013) 2010 2011 2012 2013 49,700 11 Annual Employment Change Fredericton CA 40 15-24 (12MMA) 25-44 (12 MMA) 45-64 (12 MMA) General Employment Trends 30 45-65 Rising 20 25-44 Declining 10 15-24 0 Jan-00 Declining Jan-02 Jan-04 Source: Statistics Canada Labour Force Survey Jan-06 Jan-08 Jan-10 Jan-12 Jan-14 12 Employment Change by Industry in 2013 Manufacturing Source: Statistics Canada Labour Force Survey Construction 13 Employment Change by Industry in 2013 Source: Statistics Canada Labour Force Survey Service Construction Transportation Public Administration Finance/ Insurance/ Real Estate Trade Manufacturing 14 Recent Employment Change – By Industry Employment Trends (2009-2013) By Demographic Group Average Annual % Change Last 5 Years Full-Time + 0.4% Part-Time +0.2% 15-24 - 4.7% 25-44 - 1.9% 45-64 + 5.1% Source: Statistics Canada Labour Force Survey 15 Annual Percentage Change Weekly Earnings Province of New Brunswick Ten-Year Average Annual Increase 8% 7% 3.4% 6% 5.2% 4.9% 4.6% 4.7% 5% 3.9% 4% 3.4% 3.0% 3% 2.9% 2.6% 2.2% 2.1% 2% 1.3% 1.5% 1.8% 1% 0% 2000 2001 2002 Source: Statistics Canada Labour Force Survey 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 16 Provincial Migration to Alberta 500 0 -500 -1,000 -1,500 -2,000 -2,500 -3,000 Most of the people leaving are under 45 years of age Source: Statistics Canada Tax Filer Data Out-migration briefly reversed following the 2008/2009 recession 17 Net Migration by County - New Brunswick 2006-2012 12,000 9,460 10,000 8,000 6,000 4,773 4,000 2,000 0 -2,000 -4,000 -2,488 -6,000 Source: Statistics Canada Tax Filer Data 18 Net Migration – Greater Fredericton York County 1,400 Net Gain Since 2000-2001 7,733 1,200 1,000 800 600 Average Annual Gain Since 2000-2001 644 Source: Statistics Canada Tax Filer Data 400 200 0 19 Migration Patterns York County 800 600 400 200 0 -200 -400 -600 Interprovincal 2007-2008 Source: Statistics Canada Tax Filer Data 2008-2009 Intraprovincial 2009-2010 International 2010-2011 2011-2012 20 Net-Migration by Age Group (2002-2012) Greater Fredericton 86.3% 12,000 Under the age of 45 10,000 8,000 6,776 6,000 4,000 2,000 1,479 2,343 2,024 639 291 0 Share of Total 0-17 Yrs 18-24 Yrs 25-44 Yrs 45-64 Yrs 65 Yrs + 21.8% 34.6% 29.9% 9.4% 4.3% Source: Statistics Canada Tax Filer Data Total 100% 21 Housing Market Drivers Multi-Residential/Rental Market 22 Total Starts - Annual Fredericton CA 1,000 822 800 803 745 792 755 710 698 694 730 636 600 634 673 548 532 400 200 0 Source: CMHC 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 23 Multiple Starts as a Percentage of Total Starts Fredericton CA Multi-residential starts accounted for more than half of all new home starts in 2013 100% 80% 60% 49.2% 44.3% 40% 53.6% 46.6% 46.7% 45.5% 42.1% 39.8% 38.5% 33.1% 52.7% 32.1% 31.9% 23.5% 20% 0% Source: CMHC 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 24 Vacancy Rate – Historical Perspective Fredericton CA 7% 6.5% 6.2% 6% 5% 4.8% 4.8% 4.6% 4% 3.3% 3% 3.1% 3.4% 3.7% 3.4% 4.0% 4.3% 4.0% 3.0% 2.3% 2% 1.3% 1% 1.5% 1.3% 1.3% 2.6% 2.5% 1.6% 1.5% 0.9% 0.7% 0% 1989 Source: CMHC 1992 1995 1998 2001 2004 2007 2010 2013 25 Greater Fredericton Rental Market Vacancy Rate 8% 6.2% 6% 4% 4.3% 2.3% 2% 0% Source: CMHC 4.0% 2008 2009 2.6% 2010 2.5% 2011 2012 2013 Why has the Vacancy Rate Increased? 26 Greater Fredericton Rental Market Vacancy Rate 8% 6.2% 6% 4% 4.3% 2.3% 2% 0% 4.0% 2008 2009 2.6% 2010 2.5% 2011 2012 2013 Why has the Vacancy Rate Increased? Above-Average Construction Activity Source: CMHC 27 Rental Starts Fredericton CA 10-Year Average in Annual Starts 500 221 400 347 315 300 266 305 291 228 209 237 207 225 200 164 133 122 134 100 0 Source: CMHC 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 28 Apartment Completions – Historical Perspective Fredericton CA 50 2011-2013 Completions Higher than average 40 30 20 10 0 1983 Source: CMHC 1986 1989 1992 1995 1998 2001 2004 2007 2010 2013 29 Vacancy Rate by Submarket Fredericton CA 16% 2012 14% 2013 13.8% 12% 11.1% 10% 7.6% 8% 6.2% 6% 4% 4.0% 5.6% 4.8% 3.6% 3.1% 2.5% 2% 0% Source: CMHC Fredericton CA Southwest Northwest Northeast Southeast 30 Private Apartment Average Rent ($) by Unit Type Fredericton CA $1,200 2012 $1,000 2013 $1,000 $785 $800 $656 $591 $600 $771 $400 $200 $0 Bachelor One Bed Two Bed Three Bed Total Estimate of Average Rent Change1 – Oct 2012 to Oct 2013 Two Bedroom Units Three Bedroom Units 0.8% 1.5% 1The Source: CMHC Percentage Change of Average Rent is a measure of the market movement, and is based on those structures that were common to the survey sample for both years. 31 Private Apartment Average Rent ($) by Submarket Fredericton CA Average rent in the downtown core down slightly in 2013 $1,000 2012 2013 $900 $800 $771 $795 $759 $748 $679 $700 $600 $500 $400 Source: CMHC Fredericton CA Southwest Northwest Northeast Southeast 32 Apartments Under Construction Fredericton CA 294 Units under construction in December 2013 4.1% of the 2013 Rental Universe Vacancy Rate to remain high in historical terms 400 300 200 100 0 1989 Source: CMHC 1993 1997 2001 2005 2009 2013 33 2014 Outlook Rental Market Fredericton CA 2013 2014F % Change 2015F Vacancy Rate 6.2% 7.0% 0.8 pts 6.5% Average Rent $785 $795 + 1% $815 (Two Bedroom) Historically high number of apartment units under construction and reduced demand due to rising out-migration/declining employment Further increase in the vacancy rate expected in 2014 Expected rent increase in 2014 will range between 1.0% and 1.5% Source and Forecast: CMHC 34 Semi-Detached Starts – Historical Perspective Fredericton CA Ten-Year Average 40 22 Units 30 20 10 0 1989 Source: CMHC 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 35 Semi-Detached Units - Completed and Unabsorbed Monthly Fredericton CA 25 Unabsorbed inventory on the rise 20 15 10 5 0 Source: CMHC 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 36 Semi-Detached – Average Annual New Home Price vs. Starts Fredericton CA $275,000 40 $250,000 35 $225,000 $200,000 30 $175,000 25 $150,000 20 $125,000 Source: CMHC $186,083 $203,405 $198,800 $252,051 $181,806 $225,120 $207,280 $217,065 $0 $108,586 $25,000 $127,033 $50,000 $130,333 10 $79,300 $75,000 $93,750 15 $65,000 $100,000 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 5 0 37 Row Starts - Annual Fredericton CA Row starts continue to maintain a significant share of the multiresidential market 125 98 100 97 90 85 74 75 64 63 58 47 45 50 25 0 77 13 2000 Source: CMHC 4 4 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 38 Percentage of Row Starts for Homeownership Fredericton CA 100% 100% 100% 88% 79% 75% 63% 56% 55% 51% 50% 28% 25% 0% Source: CMHC 20% 0% 0% 0% 2000 2001 2002 4% 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 39 Row Units - Completed and Unabsorbed Monthly Fredericton CA 50 Unabsorbed inventory on the rise 40 30 20 10 0 Source: CMHC 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 40 Condominium Starts as a Percentage of Multiple Starts Fredericton CA Condominium starts as a percentage of multiple starts have been trending down since peaking in 2006 70% 60% 50% 46% 40% 22% 21% 20% 30% 30% 29.2% 30% 17% 10% 10% 0% 0% 2000 2001 0% 0% 0% 2002 2003 2004 4% 0.0% 2005 2006 2007 2008 2009 2010 2011 2012 2013 -10% Source: CMHC 41 Condominium Starts by Type Fredericton CA 2013 Condo starts were all row type 120 Apartment Row 100 80 60 40 20 0 2000 Source: CMHC 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 42 2014 Outlook Multiple Starts Fredericton CA 2013 2014F % Change 2015F Multiple Starts 355 260 - 27% 220 Significant increase in the rental inventory will put upward pressure on the local vacancy rate leading to reduced apartment starts Semi-detached starts expected to remain stable Source and Forecast: CMHC 43 Housing Market Drivers Multi-Residential/Rental Market New Home Market – Single Family Homes 44 Single-Detached Starts Fredericton CA Single-detached starts trending down since 2008 700 600 495 494 500 415 419 400 475 402 387 356 432 403 370 339 367 318 300 200 100 0 Source: CMHC 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 45 Why the declining trend? 46 Why the declining trend in single-detached construction? Price Widening Gap between average new home and existing home Reduced Demand Re-balancing of Supply/Demand 47 Single-Detached Average Price – New vs. Existing Fredericton CA $300,000 New *Existing $250,000 $200,000 $150,000 $100,000 $50,000 $0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 *Existing Homes = Single-Detached, 0-5 years old Source: CMHC/The Real Estate Board of the Fredericton Area Inc. 48 Average New Home Price Fredericton CA $350,000 $300,000 $266,806 $250,000 $200,000 $205,000 $211,914 $207,781 $225,002 $245,269 $245,486 $258,868 $258,804 2000 $177,100 $0 $156,651 $50,000 $149,007 $100,000 $131,674 $150,000 $119,056 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Annual Increase 10 Year Average + 5.6% Source: CMHC 2013 Average Two Storey $323,738 49 Average New Home Price vs. New Home Price Index Fredericton CA New Home Price Between 2001 and 2013, the increase in new home price exceeded the annual NHPI The increase in the new home price has been driven largely by consumer preferences Source: CMHC/Statistics Canada 30% Avg New Home Price - % Chg 25% Annual NHPI - % Chg 20% 15% 10% 5% 0% -5% 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 50 Average New Home Price Fredericton CA $350,000 Moncton Saint John Fredericton Average Annual Change in New Home Price 2010-2013 Moncton $300,000 + 8.4 % $250,000 Fredericton $200,000 Saint John + 2.2 % + 3.1 % $150,000 $100,000 Source: CMHC Saint John posted the highest average price in 2013 2000 2002 2004 2006 2008 2010 2012 51 Single-Starts and Unabsorbed Single-Detached Units Fredericton CA 70 60 Single Starts (12 MMA) 50 Unabsorbed (12 MMA) Unabsorbed inventory trending up since 2006 40 30 20 10 0 Source: CMHC 52 Single-Detached Starts by Submarket Fredericton CA 140 2012 124 120 2013 111 98 100 91 80 60 42 40 30 31 22 20 0 Source: CMHC F'ton City Kingsclear Lincoln Saint Mary's 26 20 Douglas 53 2014 Outlook Single Starts Fredericton CA 2013 2014F % Change 2015F Single Starts 318 280 - 12% 260 The average price of a new home was stable in 2013 Reduced demand will lead to fewer starts in 2014 Source and Forecast: CMHC 54 Housing Market Drivers Multi-Residential/Rental Market New Home Market – Single Family Homes Resale Market 55 MLS® Unit Sales Greater Fredericton 3,000 2,500 MLS® sales have been trending down since 2007 2,448 1,869 2,000 1,500 1,000 500 0 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 Source: CREA MLS® is a registered trademark of the Canadian Real Estate Association 56 MLS® Sales by Submarket Greater Fredericton 2,500 2012 Fredericton City Oromocto Woodstock - 3.8% - 1.5% - 2.6% 2013 1,957 2,000 1,500 1,249 1,900 1,201 1,000 500 266 262 235 229 207 208 Oromocto Woodstock Remainder 0 Fredericton City Source: The Real Estate Board of the Fredericton Area Inc. MLS® is a registered trademark of the Canadian Real Estate Association Total 57 MLS® Sales by Price Range Greater Fredericton 81% of 2013 MLS® Sales under $250,000 80% 70% 60% 50% 40% 37.3% 30% 25.0% 18.3% 20% 10.8% 10% 7.0% 0% $0 $150k $150k $200k $200k $250k Source: The Real Estate Board of the Fredericton Area Inc. MLS® is a registered trademark of the Canadian Real Estate Association $250k $300k $300k $400k 1.2% 0.3% $400k $500k $500k + 58 Percentage Change in MLS® Sales by Price Range Greater Fredericton 40% 18.6% 20% 3.3% 0% -2.9% -1.3% -2.0% -12.0% -20% -23.7% -40% -60% -64.3% -80% Total $0 $150k $150k $200k Source: The Real Estate Board of the Fredericton Area Inc. MLS® is a registered trademark of the Canadian Real Estate Association $200k $250k $250k $300k $300k $400k $400k $500k $500k + 59 New Listings – Historical Perspective Greater Fredericton 500 400 New Listings near historically high levels in 2013 300 200 100 0 Jan-81 Jan-85 Jan-89 Jan-93 Source: CREA MLS® is a registered trademark of the Canadian Real Estate Association Jan-97 Jan-01 Jan-05 Jan-09 Jan-13 60 Average Days on Market Greater Fredericton Lowest among NB’s three large urban centres 140 120 100 85 80 80 78 74 70 69 70 2004 2005 2006 79 84 84 2009 2010 72 80 86 90 60 40 20 0 2000 2001 2002 2003 Source: The Real Estate Board of the Fredericton Area Inc. MLS® is a registered trademark of the Canadian Real Estate Association 2007 2008 2011 2012 2013 61 Sales to New Listings Ratio Greater Fredericton A sales to new-listings ratio between 40% and 60% generally indicates a BALANCED market. 100% 80% 60% 40% 20% 0% Jan-81 Jan-85 Jan-89 Jan-93 Source: CREA MLS® is a registered trademark of the Canadian Real Estate Association Jan-97 Jan-01 Jan-05 Jan-09 Jan-13 62 Average MLS® Sale Price Greater Fredericton $250,000 2012 Average MLS® Sale Price 2013 Average MLS® Sale Price $180,485 $178,402 $200,000 $150,000 $105,245 $115,312 $119,191 $130,502 $138,094 $141,117 $152,268 $159,219 $165,175 $170,563 $180,485 $178,402 $0 $105,818 $50,000 $100,518 $100,000 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Source: CREA MLS® is a registered trademark of the Canadian Real Estate Association 63 Annual Price Growth (%) Greater Fredericton Average % Change 2001-2013 12% 9.6% 10% 7.9% 8% 6% + 4.6% 9.5% 5.8% 5.3% 5.8% 4.6% 3.4% 4% 3.7% 3.3% 2.2% 2% 0% -2% -4% -0.5% -1.2% 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Source: CREA MLS® is a registered trademark of the Canadian Real Estate Association 64 Average MLS® Price by Submarket (000’s) Greater Fredericton Year-over-Year Change in Average MLS® Sale Price Fredericton City Oromocto Woodstock - 1.3 % - 3.2 % + 0.2 % $240 2012 2013 $200 $160 $120 $80 $40 $0 Greater F'ton F'ton City Source: The Real Estate Board of the Fredericton Area Inc. MLS® is a registered trademark of the Canadian Real Estate Association Oromocto Woodstock 65 Resale Market Classification Greater Fredericton Current Conditions – Resale Market MLS® Sales Decreasing Buyer’s New Listings Stable/High Buyer’s Sales to New Listings Ratio Decreasing Buyer’s Price Growth Decreasing Buyer’s Days on Market Increasing Buyer’s Greater Fredericton Source: The Real Estate Board of the Fredericton Area Inc. MLS® is a registered trademark of the Canadian Real Estate Association BUYER’S 66 Housing Market Drivers Multi-Residential/Rental Market New Home Market – Single Family Homes Resale Market 2014 Outlook 67 2014 Outlook Resale Market Fredericton CA 2013 2014F % Change 2015F MLS® Sales 1,869 1,800 - 4% 1,725 $178,402 $178,500 0% $178,000 Average Price Market conditions to remain favourable to buyer’s in 2014 Decline in existing home sales expected in both 2014 and 2015 due to reduced demand for existing homes Prices to continue to decline moderately in 2014 due to ample supply and fewer buyers Source: The Real Estate Board of the Fredericton Area Inc./CREA MLS® is a registered trademark of the Canadian Real Estate Association Forecast: CMHC 68 2014 Outlook Residential Housing Starts Fredericton CA 2013 2014F % Change 2015F Total Housing Starts 673 540 - 20% 480 Single Starts 318 280 - 12% 260 Multiple Starts 355 260 - 27 % 220 Large number of apartment units under construction during the last half of 2013 will lead to reduced multiple starts in 2014 Last year’s decline in single-detached construction to extend into 2014 with a moderate decline in single starts Source and Forecast: CMHC 69 Thank You Questions? CANADA MORTGAGE AND HOUSING CORPORATION 70 Contact Information www.cmhc.ca or Call Claude Gautreau at (506) 851-2742 CANADA MORTGAGE AND HOUSING CORPORATION 71 Disclaimer The information, analyses and opinions contained in this document are based on various sources believed to be reliable, but their accuracy cannot be guaranteed. The information, analyses and opinions shall not be taken as representations for which Canada Mortgage and Housing Corporation or any of its employees shall incur responsibility. ©2014, Canada Mortgage and Housing Corporation. All rights reserved. CMHC grants reasonable rights of use of this document’s content solely for personal, corporate or public policy research, and educational purposes. This permission consists of the right to use the content for general reference purposes in written analyses and in the reporting of results, conclusions and forecasts, including the citation of limited amounts of supporting data extracted from this document. CMHC retains the right to request that such use be discontinued for any reason. No use whatsoever can be made of the name, logo or other official marks of CMHC without the prior written consent of CMHC. The use, reproduction or broadcast of the document itself, in whole or in part, in its physical, electronic or any other form, is prohibited. Subject to the preceding conditions, any use, reproduction or transmission of the content of a CMHC document must include the source of the information, including statistical data, acknowledged as follows: “Source: CMHC (or “Adapted from CMHC,” if appropriate), 2014 Fredericton Housing Outlook Seminar February 27, 2014.” CANADA MORTGAGE AND HOUSING CORPORATION 72
