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CMHC Report: Millennials Driving Growth, Little Change in Housing Inventory

CMHC’s latest Housing Market Assessment reports, “While house prices in Vancouver, Victoria, Toronto and Hamilton continue to move closer to levels supported by housing market fundamentals such as population, personal disposable income and interest rates, we continue to see a high degree of vulnerability in their overall assessment.”

For Victoria, they report, “The population of young adults, which is seen as a key driver of household formation, increased in Q4 supporting house price growth.”

We have been saying for quite some time that a large millennial demographic, predicted more than 20 years ago in David Foot’s book “Boom, Bust and Echo,” is primarily driving housing demand. The costs have spiralled upwards due to lack of supply created by poor regional governance and zoning policies, inefficient development processes and three levels of govt using housing as a cash machine to boost their revenues.

“Completed and unsold inventory of single and semi-detached units continued to climb, but total inventory remained well below the threshold for overbuilding.”

“The HMA framework did not detect overbuilding in the Metro Victoria housing market. Per capita completed and unsold units were well below threshold. There was little change in the overall inventory level.”

Our T-C column on supply not keeping pace with population growth supports this statement.   

In 2019, our population is 382,085, a rise of 10.9% since 2011. A record number of housing starts over the past two years have boosted housing to about 183,627 or 9.8% since 2011 still below population growth.

The CMHC assessment was done for across Canada and the interesting common denominator is the highly “vulnerable” markets of Victoria and Hamilton are near the two most expensive markets in Canada – Vancouver and Toronto – also highly “vulnerable.” This may indicate significant demand in Victoria and Hamilton coming from homeowners in Vancouver and Toronto selling and buying down.  In other words, a spillover effect.

The Victoria report is here.

The National report is here.

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