Tag Archives: global financial crisis
Housing prices to flatten in most markets
Dianne Nice – Globe and Mail
After three years of volatility, the Canadian housing market is settling into a more moderate pace of activity.
An RBC report on the Canadian home resale market says home prices will increase by 4.4% this year before they flatten to 0.4% growth for 2012. Home resales are expected to increase by 0.9% this year and remain unchanged next year.
“Our view is that less turbulent economic and policy environments will support a smoother process going forward,” the RBC report says. “The main policy shift will be one toward progressively higher interest rates, which will cool demand but not deep-freeze it.”
Since 2008, the housing market has experienced a lot of volatility due to the global financial crisis and domestic policy changes, including stricter mortgage lending rules and the introduction of the HST in Ontario and British Columbia.
Canadian property values have roughly doubled in the past decade and rebounded quickly to new record-high levels following the 2008 market downturn. In the United States, by contrast, housing prices have still not recovered.
The Alberta resale housing market is expected to post the strongest gains this year with 7% growth, a partial recovery from the 13.6% decline it suffered in 2010. The other Prairie provinces will average 4.5% growth this year, the report says. Alberta and Saskatchewan will see modest increases in real estate prices (0.5% and 2.1%, respectively) for 2012.
For all other provincial markets, price gains next year are forecasted to be at their weakest during a time of economic expansion since the mid- to late-1990s.
“In the case of British Columbia, we expect that extremely poor affordability will cause a partial reversal of the recent substantial gains and forecast an absolute decline of 1.6% (on an annual basis) in 2012,” the report says.
“The perplexing developments in the B.C. market in the past several months — whereby home prices have surged in segments of the Vancouver-area market despite slower resales — are expected to be partly reversed in the coming year, making British Columbia the only province experiencing a price decline (on an annual basis) in our forecast for 2012,” the report says.
Resale activity in Ontario and the Atlantic provinces is expected to be flat this year and weaker next year.
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Contact the Jeffrey Team for more information – 416-388-1960
Laurin & Natalie Jeffrey are Toronto Realtors with Century 21 Regal Realty.
They did not write these articles, they just reproduce them here for people
who are interested in Toronto real estate. They do not work for any builders.
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Housing Finance
CMHC Housing Outlook
Canada’s housing finance system continued to serve the needs of the Canadian population during the global financial crisis as growth in lending to households was sustained. Throughout Canada, mortgage arrears remained low and mortgages remained available. Historically low mortgage interest rates benefitted homebuyers as well as those renewing or refinancing their existing mortgages.
The relative resiliency of Canada’s housing finance system derives from several factors, including financial industry practice, government involvement and regulatory oversight, and consumer behaviour.
There were signs of improved housing finance and capital market conditions in 2009. By October 2009, the use of the Bank of Canada’s regular short-term liquidity facilities had declined to nearly half of the level of its peak use of $40 billion in December 2008. The Insured Mortgage Purchase Program had lower auction volumes in 2009 than in 2008, and was ended in March 2010. It resulted in purchases through auctions of $69 billion of National Housing Act Mortgage-Backed Securities (NHA MBS). This helped mortgage lenders obtain the funding needed to make mortgages to consumers at reasonable interest rates.
The lowering of the Bank of Canada benchmark rate to 25 basis points and the improved capital market conditions contributed to reductions in mortgage rates averaging 153 basis points and 149 basis points for posted five-year fixed and variable mortgages respectively.
Current Market Developments
Due to the economic downturn of 2009, housing starts in Canada moderated in the first half of 2009 and then began to recover. Housing starts in 2009 reached 149,081 units, down from the unsustainable level of 211,056 units in 2008, with most of the decrease occurring in starts of multiple-family dwellings.
Sales of existing homes through the Multiple Listing Service® (MLS®), which had trended lower in 2008, began to recover in January 2009. Overall, MLS® sales reached 465,251 units in 2009, up from 431,823 in 2008.
Historical lows in interest rates, when coupled with a small inventory of existing homes listed for sale, helped to push the average MLS® price up by 5.0% in 2009 to $320,333.
To a large extent, resale price gains in 2009 reflected a rebound back to levels that prevailed prior to the economic downturn. In particular, measured from the fourth quarter of 2007 to the fourth quarter of 2009, resale home prices rose 7.1%. This translates to an average annual rate of price growth of 3.5% over this period, which is in-line with average historical rates.
Renovation spending for alterations and improvements grew by 2.8% and reached about $40.3 billion in 2009, accounting for approximately three-quarters of total renovation spending.
The New Housing Price Index (NHPI) fell 2.3% in 2009. The NHPI is a measure of change in the prices of new homes of constant size and quality. Although it decreased on a national and annual basis, it increased in many cities, and increased overall in the fourth quarter.
The apartment vacancy rate in the purpose-built rental market for existing units in Canada’s 35 major urban centres moved up to 2.8% in October 2009, compared to 2.2% in October 2008.
The highest average monthly rents for two-bedroom apartments in new and existing structures were in Vancouver ($1,169), Calgary ($1,099), and Toronto ($1,096); the lowest were in Saguenay ($518), Trois-Rivières ($520), and Sherbrooke ($553).
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Contact the Jeffrey Team for more information - 416-388-1960
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GTA new home sales a tale of two markets
Canada News Wire
Sales of new high-rise condominium suites held firm in June while sales of new low-rise homes retreated due to record-low inventory levels of that product type, the Building Industry and Land Development Association (BILD) announced today.
According to RealNet Canada Inc., BILD’s official, independent source of new home market intelligence, there were 2,920 new homes and condos sold in June 2010. While high-rise condo sales remained right in line with 2009 (and 2008), low-rise (single-detached, semi-detached town-home) sales were off by 46%, resulting in a 26% decrease in total new home sales June/June. “It’s a tale of two markets,” quipped BILD President and CEO Stephen Dupuis.
With the first half of 2010 in the books, the recovery in new home sales is revealed by a 69% increase in total new home sales driven by a dramatic 142% increase in sales of high-rise condominium suites. Even compared with January-June 2008, total new home sales are up a healthy 22%.
“By this point last year, the new housing market was nearing full recovery from the global financial crisis. We’re now comparing apples with apples and on that basis, the new home market appears to be on relatively solid footing at this time,” Dupuis said.
He pointed out that the low-rise market is up 29% on a year-to-date basis, with the June decline reflecting an over-shot last year when sales spiked by 60%, as well as the record low inventory levels of detached, semi-detached and townhomes. “With relatively few new project openings thus far this year, low-rise sales have been naturally constrained,” Dupuis stated.
June new home sales were split 60% high-rise, 40% low-rise and through the first six months of the year 53% high-rise, 47% low-rise.
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Contact the Jeffrey Team for more information - 416-388-1960
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