â€œModest economic growth will continue to push employment levels higher this year and next,â€ said Bob Dugan, chief economist for CMHC. â€œThis, in conjunction with relatively low mortgage rates, will continue to support demand for new homes.â€
Investors will benefit this year and the next from higher than normal immigration rates, keeping demand for rental properties strong and vacancy rates stable, said the report. But in the longer term, a slowing birth rate will eventually lead to less demand in housing, CMHC said.
While housing starts are predicted to be down in most areas in 2011, British Columbia and Alberta will prove to be exceptions, according to CMHC. Overall, there were 189,930 units started nationally in 2010, and thatâ€™s predicted to drop to 177,600 in 2011, then 183,800 in 2012. In last yearâ€™s forecast, CMHC had predicted 174,800 starts in 2011.
The overnight mortgage rate, which has not changed since September 2010, is expected to remain flat in 2011, said the report.
â€œMortgage rates, particularly short term mortgage rates and variable mortgage rates, are also expected to remain at historically low levels,â€ said the report.
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In its outlook for the Canadian housing market, CMHC also said mortgage rates likely will remain flat this year, net migration will increase, and unemployment will drop. That all adds up to an even stronger market next year, the report said. The national average price will reach $358,200 by the end of 2012, which is a 4.3% increase from the average price of an existing home in the fourth quarter of 2010 of $343,516.