Toronto Condo and Real Estate Blog

The value of building permits surged to their highest level ever in January, thanks to huge gains in the value of residential and non-residential permits

March 6 - Statistics Canada News Release

Builders took out a record $6.3 billion in building permits in January. January’s level was 11.3% higher than December 2006. It was the third time in four months that the $6-billion mark was surpassed.

These results point to a busy spring on building sites as building permits are a leading indicator for construction activity.

The value of non-residential permits increased 19.3% to a record $2.6 billion in January, the third monthly gain in four months. January’s gain was due largely to surges in the values of both industrial and institutional permits in Ontario.

In the residential sector, the value of building permits rose 6.3% to $3.7 billion after two monthly declines. This was the third highest monthly level on record. Intentions increased in both single- and multi-family components.

Provincially, the largest gain (in dollars) occurred in Ontario, where municipalities approved $2.6 billion worth of permits in January, thanks to a new record high in the non-residential sector.

On the other hand, the value of building permits fell in six provinces. The biggest decline in terms of dollars occurred in Alberta, where a large drop in commercial and industrial permits more than offset a gain in the housing sector.

Residential: Record-high value of single-family permits

Municipalities set a record for the value of building permits for single-family units for a second consecutive month. They issued $2.4 billion in single-family permits, up 2.8% from December. A major contributing factor was higher construction costs.

Demand remained high for single-family dwellings, as municipalities authorized 10,220 new units, a slight 0.6% decline from December. This level was 3.0% higher than the monthly average of 9,920 units set in 2006.

The demand for new single family units has been on an upward trend since the middle of 2006.

Following two monthly declines, the value of multi-family permits rebounded, rising 13.8% in January to $1.3 billion. The increase was powered by gains in the three types of multi-family dwellings (apartments/condominiums, semi-detached and row houses).

In January alone, permits for 10,005 new multi-family units were issued, up 27.4% from December. A vast majority of the January permits were for new apartments/condominiums.

Among the provinces, six showed increases in their value of housing permits in January. The largest gains (in dollars) were recorded in British Columbia (+16.7% to $719 million) and in Alberta (+15.1% to $758 million). The gains in both provinces were due to jumps in the values of single- and multi-family permits.

The housing sector continued to be positively affected by the very dynamic economy in Western Canada. Other contributing factors were advantageous mortgage rates, the continued strength in full-time employment and in personal disposable income as well as the high level of immigration.

Non-residential: Strong rebound in institutional and industrial components

Strong growth in the values of both institutional and industrial permits was the main factor behind the new monthly record in the non-residential sector.

Permits in the institutional sector rebounded a spectacular 69.3% to $620 million, after falling 51.1% in December. It was a fourth monthly increase over the last six months, and was largely the result of higher construction intentions for medical and educational buildings.

Among provinces, six showed gains in the institutional sector. The largest gain (in dollars) was recorded in Ontario (+115.0% to $337 million).

The value of institutional permits has been on an upward trend since February 2006.

In the industrial sector, the value of permits surged 45.9% to $650 million. The big gain, which followed an 11.1% decline in December, was the result of large increases in the manufacturing and utility building categories in Ontario. Alberta showed the biggest drop (in dollars) on the heels of a 125.6% gain in December.

The value of industrial permits has been on an upward trend since January 2006.

Commercial sector permits fell 2.6% from December to $1.3 billion. Behind this decline was the lower demand for permits associated with warehouses and recreation buildings. Despite the retreat, the value of commercial building permits in January remained 12.0% higher than the average monthly level in 2006.

Provincially, the biggest gain (in dollars) in the non-residential sector occurred in Ontario, where all three components (commercial, industrial and institutional) registered huge gains. In contrast, the largest decline (in dollars) occurred in Alberta, the result of important drops in the industrial and commercial components.

Several economic factors were consistent with the strength in the non-residential sector, including growth in consumer spending and declining vacancy rates for industrial and commercial buildings. In addition, corporate operating profits hit a record high in 2006.

Metropolitan areas: Strong growth in Toronto and Vancouver

Among the 34 census metropolitan areas, 16 showed higher value of permits compared with December 2006. Toronto and Vancouver had the strongest increases (in dollars), the result of strength in both the residential and non-residential sectors. In Toronto, the value of non-residential permits hit its highest value since March 2005.

The value of building permits hit a new high in January in Greater Sudbury.

In contrast, the largest decline occurred in Halifax where decreases in both the residential and non-residential sectors led the value of permits to its lowest level since February 2005.

The Building Permits Survey covers 2,380 municipalities representing 95% of the population. It provides an early indication of building activity. The communities representing the other 5% of the population are very small, and their levels of building activity have little impact on the total.

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Canadians voicing “buy now rather than later” preference

TORONTO, March 6, 2007 — The possibility of mortgage rates rising in 2007 seems to be of much less concern across Canada, according to RBC’s 14th Annual Homeownership Survey. In fact, over half (57%) of Canadians believe mortgage rates will drop or stay the same, compared to 31% last year. The RBC poll also reveals that 49% of Canadians are less apprehensive about interest rate increases, compared to 44% in 2006.

“When we assess the consumer sentiment being expressed in this year’s study, a picture emerges of confident Canadians weighing their home buying options in a very positive light,” explained Catherine Adams, RBC’s vice-president of Home Equity Financing.

At the same time, while over half of Canadians (59%) believe housing prices will rise in 2007, home buying intentions are holding steady, with three in ten Canadians (28%) planning to buy a house over the next two years.

As for the value Canadians place on home ownership, the vast majority
(90%) think purchasing a home is a good investment, according to RBC’s poll. As well, the percentage of Canadians who estimate that the market value of their homes has increased by 50% or more over the past two years, has doubled since last year’s survey (11% compared to 6%.)

“It’s clear an overwhelming majority of Canadians believe purchasing a home is a good investment. In fact, the average Canadian estimates their home has increased by 22% in the last 2 years,” Adams added. “And the ‘buy now’ message is coming through loud and clear across all age groups - from 25 through to 55 plus.”

Of those Canadians planning to buy a house within two years, an increasing number are looking at a shorter purchasing window. Over half (58%) of all Canadians are saying buy now, don’t wait for next year. Forty-four per cent (up from 37% in 2006) are looking at buying within the next 12 to 18 months.

RBC Homeownership Survey 2007 Details

Regional differences
Focusing on very likely to buy intentions, BC, Ontario, and the Prairies are holding steady from last year, but the numbers have softened in other regions with Alberta going from 18% to 12%; Atlantic going from 14% to 10%.

Renters and owners
Of Canadians who plan to buy a house within the next 18 to 24 months, 62% are renters and 48% are owners. Within the shorter timeframe of the next 12 months, owners outnumber renters, 27% to 18%.

Housing type preferences
Detached homes continue to be the housing type of choice for most Canadians who are likely to buy a home in the next two years - 72% voiced this preference. Condominiums were preferred by 10%, down from 12% last year. Semi-detached homes were cited by 7%, up from 4% in 2006. Townhouses fell to last choice, named by 6% of Canadians planning to buy in the next two years, down from 8% last year.

More Canadians thinking “small” for next home purchase
Desiring a bigger house continues to be the most popular reason for an upcoming move, cited by 48% of Canadian home owners who are planning to purchase a home in the next two years. However, an increasing number are now saying they’ll be looking for a smaller home - 33% compared to 20% in 2006. Eighteen per cent responded that they’ll be considering a home about the same size as their present one.

Gently used tops newly built
Of Canadians planning to buy a house in the next two years, more are likely to buy a resale home (77%) than a newly-built home (23%). This compares to 74% who favoured resale in 2006, and 26% who preferred a newly-built home.

(These are some of the findings of an RBC poll conducted by Ipsos Reid between January 18 and 22, 2007. The online survey is based on a randomly selected representative sample of 2,404 adult Canadians. With a representative sample of this size, the results are considered accurate to within ±2.0 percentage points, 19 times out of 20, of what they would have been had the entire adult Canadian population been polled. The margin of error will be larger within regions and for other sub-groupings of the survey population. These data were statistically weighted to ensure the sample’s regional and age/sex composition reflects that of the actual Canadian population according to the 2001 Census data.)

RBC is the largest residential mortgage lender in Canada with more than $109 billion in loans outstanding at the end of 2006 and over 15.% of the Canadian mortgage market. As the country’s number one source of financial advice on homeownership, RBC conducts consumer surveys as one way to provide insight to Canadians about the marketplace in which they live.

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March 6, 2007 — Toronto Real Estate Board Members reported 6,772 sales in February, an increase over February 2006 (6,756 sales) and the second best total for this month ever recorded, Toronto Real Estate Board President Dorothy Mason announced today.

“While the weather last month may have been cold, Toronto’s real estate market remained hot,” noted Ms. Mason. “And while it is too early to make predictions, it is clear from the start of 2007 that the spring season is likely to produce sales numbers at east comparable to those of the past several years, which have been record or near-record performances.”

Meanwhile, average prices climbed 4% over the previous month to $368,687 as sales activity accelerated. They were also up 4% from the February 2006 figure of $353,928.

The average time-on-market was a torrid 35 days.

Breaking down the totals:

2,522 sales were reported in the 28 West districts and averaged $342,060

1,224 sales were reported in the 14 Central districts and averaged $504,381

1,395 sales were reported in the 23 North districts and averaged $389,306

1,631 sales were reported in the 21 East districts and averaged $290,392

Neighbourhood Corner - Unionville

So far this year, 10 of the 14 sales in Unionville (part of N-11) were of detached homes. These averaged $641,390, up 22% over the $523,188 recorded during the first two months of 2006.

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Contact the Jeffrey Team for more information