Home prices on rise, trouble is building

Recent headlines have suggested that the average price of a house in Canada has stayed essentially flat when compared to the average price from last June.  According to the Canadian Real Estate Association, the national average price for homes sold in June 2017 was $504,458, up less than half a percent from one year ago.  The sales activity closer to home, however, tells a different story.

According to the Winnipeg Realtors Association, Winnipeg prices this June were about 5 percent higher than they were compared to last June.  The most recent WRA report stated that the average selling price for a residential detached home at the end of June was $321,421, up 4.9 percent from June 2016.  The average price for a condo was $243,184, an increase of just over 5 percent from last year.

These statistics should be good news for both those currently in the market to buy a home and those looking to sell.  But interestingly, fewer homes have been put on the market this year.  According to the Winnipeg Realtor Association, listings in and around Winnipeg were 4 percent lower in the first 6 months of 2017 when compared to the same timeframe last year.  And active listings heading into July sat at just over 4,900, down 9 percent compared to last July. 

A few weeks ago, we wrote about a number of government decisions that have made building a new home in Winnipeg more expensive for potential home buyers.  In addition to the increased costs these policies have added to building a new home, home builders are also dealing with increased prices of materials such as lumber and drywall due to U.S. trade policy.  The wildfires in BC this summer have also impacted lumber prices and increased material costs.  Building a new home is more expensive than it was just one year ago.

While Winnipeg housing start numbers continue to be strong so far in 2017, many are expecting the pace of residential building starts to cool considerably by the end of 2017 and into 2018.  In October, the City of Winnipeg will also decide if the current cap on new residential construction in part of the Waverley West development will remain in place.  If that cap remains in place, building permits for new homes or condos will no longer be issued in one of the most popular new communities in the city.  This would certainly reduce the availability of new housing stock in Winnipeg.

With fewer resale homes currently on the market in Winnipeg, potentially fewer new homes being built next year, and those that are being built coming with new fees and increasing costs, market pressures could cause housing prices in and around Winnipeg to heat up even faster next year.