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February 2009

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Expect Housing Sales/Prices to Drop in 2009 - February 19, 2009

Housing starts reached 211,056 units in 2008, a decrease from 228,343 in 2007, according to Canada Mortgage and Housing Corporation’s (CMHC) first quarter Housing Market Outlook, Canada Edition report. Starts are expected to be about 160,250 for 2009 and about 163,350 for 2010.

“The new home market is moderating due to a number of key factors,” said Bob Dugan, Chief Economist for CMHC. “The economic downturn will result in a decrease in demand for home ownership leading to a decline in housing starts and existing home sales in 2009. Housing market activity will begin to strengthen as the Canadian economy rebounds in 2010 and the level of housing starts over the forecast period will be more in line with demographic fundamentals.”

Existing home sales, as measured by the Multiple Listing Service (MLS®), are expected to decline 14.6 per cent during 2009 to 370,500 units. In 2010 the level of MLS® sales is expected to increase by 9.3 per cent to 405,000 units. The average MLS® price is also expected to decrease over the course of 2009. Average prices are forecast to be $287,900 for 2009, a decline of 5.2 per cent, while 2010 will see little change from 2009 average prices.

As Canada’s national housing agency, Canada Mortgage and Housing Corporation (CMHC) draws on more than 60 years of experience to help Canadians access a variety of quality, environmentally sustainable, and affordable homes — homes that will continue to create vibrant and healthy communities and cities across the country.

Housing Sales Relected in Leading Indicators - February 19, 2009

The rate of decline of the composite index accelerated from 0.5% in December to 0.8% in January say figures released this morning by Statistics Canada. This was the largest and most widespread decrease since the index turned down in September. Among the 10 components, 6 fell, 1 was unchanged and 3 increased.

The housing index contracted by 7.0% in January, its largest monthly decline since June 1990. Both existing home sales and housing starts have fallen sharply since last October. Housing starts are almost 50% below their highs touched in the spring of 2008, with the largest losses in Western Canada.

Still, consumer spending accounted for two of the three components that expanded. Despite the slump in housing demand, purchases of furniture and appliances rose slowly. Sales of other durable goods grew 0.2%, and auto sales in January recovered some of their fourth-quarter losses.

The two indicators of manufacturing demand fell in unison, even before extensive shutdowns were implemented in the auto industry. The ratio of shipments to inventories declined again, as firms could not cut production as fast as sales were falling. New orders swung from an increase to a 3.6% decline as exports turned down. The US leading indicator fell for the 17th straight month.

The financial indicators remained divided. The Toronto stock market posted a fifth consecutive decline. However, the money supply (+1.5%) continued to expand.

Housing Starts Down Over 29 Per Cent in BC - February 9, 2009

The seasonally adjusted annual rate of housing starts declined to 153,500 units in January from 172,200 units in December of 2008, according to Canada Mortgage and Housing Corporation (CMHC).

“To a certain extent, the decline in housing starts coincides with recent developments in the existing home market. Reduced sales and increased listings in the existing home market have led to reduced spillover demand in the new home market,” said Bob Dugan, Chief Economist.

The seasonally adjusted annual rate of urban starts decreased 15.6 per cent to 126,700 units in January. Urban multiple starts decreased 12.2 per cent to 76,700 units, while urban single starts fell 20.2 per cent to 50,000 units in January.

January’s seasonally adjusted annual rate of urban starts moderated in all of Canada’s five regions. Urban starts declined 8.6 per cent in Atlantic Canada, 1.4 per cent in Quebec, 14.6 per cent in Ontario, 30.3 per cent in the Prairies, and 29.1 per cent in British Columbia.

Rural starts were estimated at a seasonally adjusted annual rate of 26,800 units in January.

Actual starts in rural and urban areas combined decreased by an estimated 35.8 per cent in January this year compared to relatively high levels in January last year. Actual starts in urban areas have decreased by an estimated 40.4 per cent compared to the same month in 2008. Actual urban single starts for 2009 are 44.2 per cent lower than they were a year earlier while urban multiple starts are down 38.1 per cent.

As Canada’s national housing agency, CMHC draws on more than 60 years of experience to help Canadians access a variety of quality, environmentally sustainable, and affordable homes — homes that will continue to create vibrant and healthy communities and cities across the country.

Federal Budget to Provide Construction Jobs - February 5, 2009

Canada’s Economic Action Plan provides $1 billion over the next two years to address the need for renovation and energy retrofits to existing social housing. Renovations will include general improvements and energy efficiency upgrades. Canada’s Economic Action Plan also provides for $400 million to build more seniors housing, $75 million for new housing for persons with disabilities, and $600 million for new housing and repairs to existing housing on-reserve and in the North.

This builds on the Government’s September 2008 announcement for $1.9 billion over five years for housing and homelessness programs for low-income Canadians.

The Honourable Diane Finley, Minister Responsible for Canada Mortgage and Housing Corporation (CMHC), highlighted key initiatives from Budget 2009: Canada’s Economic Action Plan that will benefit many Canadians including low-income seniors, persons with disabilities, First Nations and those in Northern Canada.

“In a time of economic uncertainty, housing is of particular importance to Canadians,” said Minister Finley. “Strengthening the stock of social housing will help vulnerable Canadians, while also creating jobs and opportunities now for those in construction and other industries.”

“This investment in social housing will help Canadians on fixed incomes to live with independence and dignity and remain in their communities, close to family and friends,” said Minister Baird. “This initiative is also a good way to get the economy moving because it puts construction workers and trades people to work quickly as well as help those who make a living producing or selling building and renovation materials.”

 

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