Housing Market Outlook Manitoba

The province of Manitoba is expected to see 5,475 total starts in 2011, down from 5,888 in 2010. By 2012, starts will rise slightly to 5,500 units.

The province's economic outlook will help to keep starts stable over the course of the forecast horizon. Manitoba's real gross domestic product is projected to rise by 2.3 per cent in 2011 followed by growth of 2.5 per cent in 2012. Consumer spending, a key driver of growth in the province is expected to continue to rise over the forecast period.

Employment in Manitoba is projected to expand by one per cent this year with an unemployment rate of 5.3 per cent. The economic expansion is expected to boost employment by 1.2 per cent in 2012 and edge the unemployment rate down to 5.2 per cent. A growing economy and labour market, along with elevated migration to the province, will continue to support housing demand over the next two years.

In Detail

Single Starts: Provincial singledetached housing starts will finish 2011 almost eight per cent behind the results of 2010 at 3,675 units. While demand remains driven by continued gains in population, wage growth, and steady employment, parts of the province were affected by flooding and as a result building activity was curtailed for part of the year. Overall, starts will remain stable in 2012 at 3,700 units.

Multiple Starts: After a 23-year high for multi-family starts in 2010, builders slightly slowed production in 2011. The total number of semi-detached, row, and apartment starts in 2011 will still be among the highest of the last two decades. Despite the high level of construction, inventory levels remain in check as units are absorbed quickly in both the rental and condominium markets. As a result, multi-family starts will be 1,800 in 2011 and 2012.

Resales: The number of resale transactions in Manitoba will climb in 2011 at a slightly faster rate than in 2010. The supply of listings in the province's largest market of Winnipeg remains historically low, restricting choice for would-be buyers. Recent price gains in Winnipeg will encourage more owners to list, however, this will also slow demand among first time buyers. On balance, the above conditions will result in a modest increase to sales in 2012. Expect 13,600 units sold in 2011 and 13,900 in 2012.

Prices: Despite persistent sellers' market conditions, resale price gains have slowed thus far in 2011. The upward pressure on prices will continue to ease over the forecast period as the number of listings increases slightly and the market starts to turn towards more balanced conditions. Following a 10.3 per cent gain last year, expect price growth to moderate to around four per cent in 2011 to $232,000 and to $237,000 in 2012.

Source: Canada Mortgage and Housing Corporation (CMHC) 

Fixed Mortgage Rates vs. Variable Mortgage Rates

Fixed Rate
A fixed rate means that your interest rate remains the same (fixed) for the entire term (duration) of the loan. Generally, this means the percentage of interest will be a little higher since the lending institution may be losing money in the future if the interest rates rise. A fixed rate loan provides the buyer with the serenity of knowing the cost of their interest will stay the same over time. This means your payment and the amount that goes towards reducing the principal (original loan amount) will remain the same over time as well.

Variable Rate
A variable rate means the percentage of interest that you are repaying will vary based on the changes in the interest rate(s) of the overall market. Typically, fluctuations in your interest rate will not alter your monthly payment, but will vary the amount of your monthly payment that goes towards reducing your principal (original loan amount). This means if overall interest rates go down you will actually be paying off your loan more quickly. On the other hand, if interest rates increase, you will be paying off your loan more slowly. Accepting a variable rate does involve a certain amount of risk but can work to the advantage of the buyer over time.

Open Mortgage vs Closed Mortgage (mortgage types)

Open Mortgage
An open mortgage means that the loan can be paid back partially or in full without incurring any penalties. The mortgage can also be renegotiated if market conditions or your financial situation shift. Although an open mortgage provides more options and opportunities for life adjustments, this comes at a cost, as the interest rates for this type of loan tend to be higher. For those able to make larger payments or who plan on selling their home within a short period of time; however, an open mortgage can be a solid choice.

Closed Mortgage
The advantage of a closed mortgage is that the interest rates tend to be lower, but options are limited. Typically a homeowner may make extra payments or larger payments as long as the sum of the payments does not exceed a set amount determined in the loan agreement. Payments exceeding the agreed upon amount; however, would incur penalties.

Although most buyers will elect to choose a closed mortgage, there are advantages to choosing the open mortgage. For instance, if market conditions are expected to change, the type of mortgage should be balanced against the type of interest rate so that as the buyer your needs are .

Best Mortgage Rates Manitoba

No matter which province or territory you reside in, finding the best mortgage ratecan save you thousands of dollars. Obviously, there are not many people who can purchase property without taking out a home loan. Taking out a home loan lets you buy, live in and/or use a home without needing to come up with the full dollar amount at the time of purchase. Usually the amount of the loan is equal to the majority of the home’s worth, but the downfall of this is that you will be required to pay interest on the loan. Most lenders insist on a down payment, i.e., a payment equal to a portion of the property’s worth. For instance, if a home is worth $200,000 and the buyer would need to make a down payment of 10%. This would equal a $20,000 down payment ($200,000 x 10%). To make up the balance, the lender would loan you $180,000 ($200,000 minus the $20,000 down payment).

When you are dealing with interest rates on large amounts of money even a variance in interest rates as small as an eight of a percent can make a significant difference in the amount you will be required to repay. Typically the interest is also calculated over long periods of time, which puts even more emphasis on securing the best rate possible. To make things more complicated there are also different rate and mortgage rates. This can make it difficult to determine whether you are comparing apples to apples or apples to oranges.

Interest rates can vary widely even from day to day so locking in on the best rate is extremely important. One of the easiest ways to do this is to enlist the help of a mortgage broker who can act as an entry way to a variety of lending institutions – banks, credit unions, etc. Mortgage Rate Comparison website like Ratesheet.ca could help you get the best mortgage rates and save you thousands of dollars. Its is advised that you compare mortgage rates before you lock in with any lender.

A potential buyer also needs to understand how much is a reasonable amount to borrow as well as the implications of payment frequency.