Tag Archives: residential mortgages
Canadian Housing Observer 2012
Highlights from the 10th anniversary edition
The number of residential mortgages that were three months or more in arrears was trending down in 2011 and the first half of 2012, with an average of 0.41% and 0.36%, respectively. Conservative mortgage lending practices in Canada are among the factors contributing to this performance.
Comment: Not that any of us should have been concerned about 3 of 1,000 mortgages being in default. Not like the 300 in 1,000 in some parts of the US. Which is 100x higher percentage-wise, but actually 1,000x higher when you account for their 10-fold higher population.
From 1955 to 2011, the average annual rate of housing starts was 180,300 units per year. Starts in 2011 were 194,000 units – 2.1% higher than starts of 190,000 units in 2010.
Comment: And yet, again, naysayers cry about slowing housing starts. Pulling one month of of a 10-year trend means nothing.
The average quarterly inventory of all newly completed and unoccupied housing units per 10,000 population in 2011 was 5.5 units, 2.8% above the historical average of 5.4 units.
In 2011, sales of existing homes rose a modest 2.6% to 458,401 units, well below the 2007 peak of 521,036 units. The average resale price of a home in Canada increased 7.1% in 2011.
The average national vacancy rate in apartment structures of 3 or more units for all centres of population 10,000 or more declined to 2.5% in October 2011 from 2.9% a year earlier.
Comment: And Toronto has a vacancy rate less than 1%! Which is why all the investors buy condos to rent out!
After falling during the recession in 2009, employment grew 1.4% in 2010 and 1.6% in 2011. Total employment rose above pre-recession levels, and the national unemployment rate dropped for the second year in a row, to 7.4%.
Comment: And now it is down to 7.2%. Compared to the US where it is about 2% higher.
The net worth of Canadian households increased in 2011. After adjustment for inflation, net worth per capita was about $7,000 higher than prior to the recession.
Inflation-adjusted disposable income grew – more strongly in 2010 than in 2011 – in conjunction with the employment gains. The real collective net worth of Canadian households has recovered since the economic downturn.
Comment: Employment is up, household worth is up, asset values are up. All good news.
Household growth in Canada was stronger from 2001 to 2011 (averaging about 175,000 per year between 2001 and 2006 and 177,000 between 2006 and 2011) than in the previous decade (when it averaged about 154,000 per year), consistent with stronger population growth and rising immigration during the period.
Comment: And yet the naysayers point to declining immigration and fewer households being created. I think CMHC has the right stats.
The average homeowner equity in CMHC’s insured portfolio in 2011 has remained constant from 2010 at 44% and averaging 66% of the total home value among homeowners with mortgages.
Comment: Which goes completely against all the talk of home owners all owing money if prices fall. Even with the stupid and unrealistic 25% bandied about the past year, that would still leave most people with 19-41% equity in their homes.
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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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CMHC Releases its Tenth Annual Review of the State of Housing in Canada
As a result of prudent mortgage lending practices, the number of mortgages in arrears in Canada were trending down in 2011 and the first half of 2012, according to the Canadian Housing Observer, released today by Canada Mortgage and Housing Corporation (CMHC).
“The Canadian Housing Observer is an indispensable source of information about housing’s role in the economy, and better information helps contribute to the stability and efficiency of Canada’s housing system,” said Karen Kinsley, President of CMHC. “This marks the 10-year anniversary of this publication, relied on by many in the private, non-profit and government sectors for its analysis and insight into the dynamics of Canadian housing,” added Kinsley.
The 2012 Observer examines important housing highlights including:
* The rate of Canadian residential mortgages that were three months or more in arrears declined from 0.41% in 2011 to 0.36% in the first half of 2012;
* The net worth of Canadian households increased in 2011, with inflation-adjusted per capita net worth about $7,000 higher than prior to the recession;
* Moncton has the highest rate of household growth of major urban centres (also known as Census Metropolitan Areas or CMAs), from 2006 to 2011, followed by Kelowna, St. John’s, Calgary and Edmonton; more detail is available in the attached chart outlining the growth in the number of households in selected municipalities;
* With the number of households headed by seniors expected to rise through 2036, flexible housing can help meet their needs for comfort, security, independence, well-being and aging-in-place;
* Renovation spending in Canada grew 3 % in 2011 to $43.8 billion;
* The inventories of completed and unoccupied housing units per 10,000 population are near the historical average, suggesting overall inventories are in line with population growth;
* The recently introduced Canadian Covered Bond Legal Framework will support financial stability by facilitating diversified funding for lenders and strengthening the robustness of the Canadian covered bonds market;
* The average resale price of a home in Canada in 2011 was $363,116, with Vancouver having the highest average resale price at $779,730, while Trois-Rivières had the lowest average resale price at $156,919;
* Housing starts in Canada rose 2.1 % in 2011 and were above the long-term average at 194,000 units;
Available both in print and online, the Observer gives readers access to a broad range of statistical information on housing conditions. Online users can access a broad range of statistical information on housing conditions from national, regional and local perspectives.
New for 2012: interactive local data tables now include over 160 municipalities. Using the interactive tables and charts, various housing indicators (e.g. housing starts, rents and rental vacancy rates, household type and tenure, and core housing need) can be viewed quickly online.
The new data tables allow users to select the range of data for selected communities that is of interest to them. The online publication and data are available at www.cmhc.ca/observer.
As Canada’s national housing agency, CMHC draws on more than 65 years of experience to help Canadians access a variety of quality, environmentally sustainable and affordable housing solutions. CMHC also provides reliable, impartial and up-to-date housing market reports, analysis and knowledge to support and assist consumers and the housing industry in making informed decisions.
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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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Canada’s housing ‘like the fountain of youth’ — for now
John Greenwood – Financial Post
Canada’s banks, which emerged from the financial crisis mostly unscathed, stole the spotlight as they were recognized as the world’s strongest, but there’s a good argument to be made that our real estate market deserves some glory, too.
Consider: for the better part of a decade house prices have been on the rise — apart from a brief decline in early 2009 — in most major cities across the country. If you zoom in on certain regions like Calgary or, say, Ontario cities like Windsor that have been hit by troubles in the auto industry, the curve gets a bit bumpy, but on a national basis Canadian real estate looks pretty good. Compared to the rest of the world, it’s a bastion of stability.
The U.S. market is a basket case. Since 2006 prices have tumbled more than 30% across the country and even now distressed sales account for more than one-third of total transactions, according to Moody’s.
In Europe the numbers are even more dramatic. In Spain, prices almost doubled between 2000 and 2006 but over the past three years they’ve fallen as much as 25% in some regions. House prices in Ireland have fallen below the level they were at in 2003, according to Bloomberg. Meanwhile, the U.K. market has been treading water since 2010 with some economists calling for a steep decline as the troubled economy begins to bite.
The Canadian housing market “is like the fountain of youth,” said one analyst. Rising real estate values, he explained, have helped drive consumer spending and provided fuel for the home building industry, a major source of jobs. According to the CMHC, residential development represents about 20% of the domestic economy.
Importantly, residential mortgages are the biggest single asset on bank balance sheets. When the global meltdown that started in 2008 began to threaten the banks in this country, the federal government stepped in by buying up billions of dollars of mortgages from lenders while the CMHC boosted its securitization program. The move effectively moved the risk of default from the banks to the government, providing banks with incentive to increase mortgage lending. Which they did.
But by boosting the level of securitization the government provided a buffer between the housing market and the banks, allowing them to benefit from rising prices but at the same time protecting them from potential losses in the event of a correction.
The good news is that at least for the moment a correction does not appear to be in the cards.
“The housing market is quite healthy,” said Mathieu Laberge, deputy chief economist at the CMHC. “Despite the financial uncertainty in global markets, economic fundamentals remain supportive of the housing market in Canada.”
Indeed, according to Capital Economics, things are about to heat up again. Growth in housing investment “appears to have re-accelerated again in the third [quarter],” the research group said in a recent note, adding that overall residential investment could get a boost for at least one or two more quarters and possibly more.
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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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