Ontario housing conditions will stabilize
Stable economic conditions across the province will help stabilize housing demand in 2010 according to the 2009 Third Quarter CMHC Housing Market Outlook – Canada Edition released today.
Highlights of the Ontario forecast include:
The Ontario economy will stabilize at year end before gradually recovering in 2010.
Ontario real estate sales will stabilize and range between 160,000 and 190,000 unit sales this year and next – reaching 174,0001 units in 2009, and 166,750 units in 2010.
Resale volumes will be down from the peak in 2007 but will be in line with volumes earlier this decade.
After experiencing buyers market conditions early this year, balanced market conditions will be sustained through 2010 – real estate prices will rise by 1.6% in 2009 and 0.8% in 2010.
Comment: Toronto is in the throes of a serious sellers market, though. With record sales volumes in June, July and August, and inventory levels falling to 38% in August – there are just fewer and fewer homes to buy. This is creating bidding wars (1 in 6 sales in Toronto in August were multiple offers) and pushing prices upwards.
After declining in 2009, new home starts will edge up and reach 50,000 units in 2010 but owing to economic uncertainty will range between 45,800 and 60,000.
High levels of affordability will support demand for detached housing in the immediate term but a shift to more inexpensive multi-family housing will occur as affordability erodes in late 2010.
Hamilton, Thunder Bay, Ottawa and Kitchener new home markets will enjoy greater growth prospects as these centers represent the tightest Ontario resale markets.
“A gradually improving provincial economy, improved financial market conditions and high levels of affordability will help stabilize housing activity next year” said Ted Tsiakopoulos, CMHC’s Ontario regional economist. “However, less pent-up demand and cautious consumer spending resulting from modest employment and personal income gains are factors that will temper Ontario‘s housing recovery in 2010,” added Tsiakopoulos.
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