Winner-peg and Why We Love It
By Ben Myers
The new housing market in Winnipeg has quietly been very strong for some time; the Statistics Canada new home index price in the Winnipeg Census Metropolitan Area (CMA) has increased by an average of 6.6% per year over the past ten years, higher than both Toronto and Ottawa. In addition to strong price growth, housing starts increased 15.7% in 2013 to 4,705 in the CMA according to CMHC, well above the ten year average of 3,161 units. Winnipeg is embracing condominium living with 1,151 condominium apartment starts in the CMA in 2013, a 46.4% increase over 2012. There were more condo starts in 2013 in the Winnipeg CMA than there were between 1998 and 2005!
Part of the increase in condominium activity can be attributed to the City of Winnipegs push to promote a revitalization of the downtown area. The Downtown Residential Development Grant (DRDG) established by the City of Winnipeg and the Province of Manitoba offered approximately $40 million in grants for residential development in Winnipeg’s downtown. The DRDG obtained applications for approximately 30 projects totaling nearly 1,400 units. With the assistance of CentreVenture Development Corporation, an arms-length agency of the City of Winnipeg, approximately $250 million in development has been added to downtown Winnipeg since 2008. Major hotels, offices and rental projects are under construction or planned for the downtown, which has flourished with the return of the Winnipeg Jets and the renewed interest in the core that the CentreVenture team has created.
According to the City of Winnipegs Downtown Trends publication, 72,000 people go downtown to work each weekday. In addition, some 40,000 students go to school downtown on a typical day. However, there are just 16,000 people living in downtown Winnipeg. That is a huge discrepancy, but according to a Winnipeg Downtown Workers Survey, 83% of respondents who work downtown but do not reside downtown said they would move downtown if there were more housing choices available.
Price growth has been strong and starts are near record highs. All forecasts are calling for a retrenchment in starts activity in 2014 from the 4,705 in the CMA in 2013 with calls for 3,500, 3,600, 4,000 and 4,100 housing starts this year from TD Economics, Altus Group, Conference Board of Canada, and CMHC respectively all well above the ten year average.
Many other economic indicators for Winnipeg are quite positive as well, Altus Group is forecasting 2014 employment growth for the Winnipeg CMA of 4,500 jobs in 2014 and 5,400 jobs in 2015 compared to 1,700 in 2013. Statistics Canada indicates that the Winnipeg unemployment rate of 5.8% in January 2014 is below that of Halifax, Montreal, Ottawa, Toronto, Kitchener-Waterloo, London and Vancouver. Resale prices have been consistent and growing with appreciation of 5.6%, 5.7% and 5.2% in 2011, 2012 and 2013 respectively.
People living outside of Manitoba might be shocked to find out how high the prices are for new single-detached homes in the Winnipeg CMA. In January 2014 the average absorbed single-detached home in the CMA was approximately $448,000, an increase of 15.8% over January 2013. Based on a 120 unit sample of ground-oriented home prices collected by Fortress Real Developments for the Winnipeg CMA, the average asking price was $475,000, with pricing in southeast Winnipeg topping $520,000 and southwest Winnipeg topping $550,000.
CMHC is forecasting a jump in new single-detached pricing of 2.5% in 2014, which may have to be adjusted based on the nearly 16% increase the January figures indicated. As we have seen in Vancouver, Toronto, Ottawa and Calgary, these higher prices for low-rise homes have driven young people to the condominium market. CMHC also recently commented that Winnipegs demographic profile is showing a higher level of growth in younger households who have the propensity to rent or purchase a condominium, and older households looking to downsize. Therefore, the opportunity exists to purchase single-detached homes in Winnipeg that are appreciating quickly right now, or capitalize on a condominium market that is poised to take off in the coming years.
In the Metropolitan Housing Outlook publication from last year, The Conference Board of Canada stated that the medium-term outlook [for Winnipeg] features a decent economy and brisk population growth that will underpin continued resale transactions and price advances, along with buoyant housing starts. Excellent ownership affordability and evidence of slight pent-up demand for new construction are additional positive factors. As an investor in rental properties, no better words can be said. In addition, according to CMHC, the year-over-year change in the average rent for a two-bedroom apartment in the Winnipeg CMA is 4.8%.
Because of the tremendously positive fundamentals, in 2014, Fortress Real Developments and Mady Development Corporation will launch the tallest tower between Toronto and Calgary in downtown Winnipeg. This mixed-use project called Sky City Centre Winnipeg will include residential condominiums, office space, and retail. A project this ambitious didnt come without extensive research on the housing market conditions in the Winnipeg Census Metropolitan Area (CMA), the City of Winnipeg, and downtown Winnipeg.
Either as an investor or an end-user, the data for Winnipeg is extremely positive.
Ben Myers is the Senior Vice President, Market Research and Analytics at Fortress Real Developments. You can read more from Ben at www.FortressRealDevelopments.com or follow him on twitter at @BenMyers29
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