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March 2009

Current News

Are Your Mortgage Payments a Problem? - March 26, 2009

Today, the Canada Mortgage and Housing Corporation (CMHC) launched a consumer outreach campaign to help borrowers understand the importance of working with lenders to find manageable solutions if they are facing financial difficulties in repaying their mortgage loans.

“CMHC has a long tradition of offering mortgage default management tools to lenders to help them assist homeowners whose financial circumstances have changed. We want to remind people that the best course of action is to speak to their lenders at the first sign of financial difficulty. With early intervention, cooperation and a well executed plan, you can work together with your lender to find a solution.” stated Mark McInnis, CMHC Vice-President of Insurance Underwriting, Servicing and Policy.

The campaign includes consumer information on the options available to homeowners who may be having difficulty meeting their mortgage payments. This information is also being provided to government partners and credit counseling organizations.

CMHC advises homeowners to:

1. Talk to your lender at the first sign of financial difficulty
2. Clarify your financial picture, both for yourself and your lender
3. Stay informed about what options and resources might be available to you
4. For Approved Lenders with CMHC-insured mortgages, we provide tools and the flexibility to make timely decisions when working with homeowners to find a solution to an individual’s unique financial situation. These tools include:
   
   

• Offering a temporary short-term payment deferral. Lenders may be prepared to offer greater payment flexibilities especially if previous lump sum prepayments have been made, or if an accelerated payment schedule has been previously chosen.
• Extending the original repayment period (amortization) in order to lower the monthly mortgage payments.
• Adding any missed payments (arrears) to the mortgage balance and spreading them over the remaining mortgage repayment period.
• Offering a special payment arrangement unique to an individual’s particular financial situation.
  

 

For more information on handling a difficult debt load, visit Industry Canada's web site dealing with this issue.

Home Buyers Thinking Energy Efficiency - March 25, 2009

According to the 16th Annual RBC Homeownership Study, almost all (95 per cent) Canadians said that low energy consumption is an important consideration when buying a home. Energy efficiency is rated just as important as the look and appearance of the home, cited by 94 per cent.

"Our study indicates that low mortgage rates and favourable housing prices are definitely influencing buying intentions this year," said Karen Leggett, head, Home Equity Financing, RBC Royal Bank. "But in today's economy, we're also seeing that many Canadians are increasingly mindful of longer term home features that will reduce their monthly energy costs."

An overwhelming 93 per cent of those planning to buy a home in the next two years are in favour of having a standardized energy rating available for all homes and three-quarters (77 per cent) also believe that environment friendly features are important factors to be considered when buying a home.

Downsizing is also gaining steam with 27 per cent of potential home buyers intending to buy a smaller home in the next two years, which is up significantly from 19 per cent in 2008, and 14 per cent a decade ago. Despite the shift towards downsizing, detached homes still remain the preferred choice (68 per cent) for Canadians looking to buy in the next two years, followed by condominiums and lofts (12 per cent), townhouses (eight per cent) and semi-detached homes (six per cent).

CSC Endorses Federal Stimulus Package - March 17, 2009

Initial assessments of the federal government's stimulus package show it is helping to ease the economic impact of the recession on one of Canada's most important sectors, according to the Construction Sector Council (CSC).

"We're confident this $30 billion injection over the next two fiscal years will provide the construction industry with a soft landing during these challenging economic times," said George Gritziotis, Executive Director of the Construction Sector Council.

Right now virtually the entire Canadian construction labour force is in transition as mega projects are delayed from coast to coast and residential spending declines.
The CSC's analysis shows the fiscal stimulus included in the federal budget, and anticipated in coming provincial initiatives, will boost construction spending and employment over the next three years. It will create the conditions needed to maintain the construction capacity that will be required to respond not only to the stimulus measures but to all future demands for infrastructure development and maintenance as our economy recovers.

"Construction employment is expected to show small gains from 2009 to 2010 and remain unchanged in 2011, and we think that's a very good sign compared to so many other sectors," Gritziotis added. Construction employment figures will be detailed in the final CSC national and provincial labour market forecasts available this spring.

The CSC's "Construction Looking Forward" national and regional forecasts provide colleges, government, labour and industry with accurate information on labour supply and demand to support the future needs of the construction industry in Canada.

According to Scotia Economics' latest Provincial Trends report, B.C.'s economy is expected to contract close to two per cent this year, as slowing construction and services activity reinforce continuing retrenchment in forest products and a less buoyant resource sector. Still, some support will come from completing infrastructure work for the upcoming 2010 Winter Olympic Games and several billions worth of public infrastructure projects being accelerated forward as a result of the federal stimulas package.

"Even the previously booming resource-driven economies in Western Canada have been caught in the middle of the global economic and financial storm," said Adrienne Warren, Senior Economist, Scotia Economics. "The sharp falloff in global commodity demand and prices are leading to substantial declines in retail and housing activity, in addition to deep cutbacks in capital spending plans."

43,000 Canadian Construction Jobs Lost - March 13, 2009

Employment fell for the fourth consecutive month in February (-83,000), bringing total losses since the peak of last October to 295,000 (-1.7%) according to a report released today by Statistics Canada. The February employment decrease pushed the unemployment rate up 0.5 percentage points to 7.7%.

All of the employment losses in February were in full-time (-111,000), while part-time employment edged up slightly. This continues the downward trend in full-time employment observed since October. Part-time employment has shown only a marginal increase over the same period.

In February, the largest decline in employment occurred in Ontario (-35,000), followed by Alberta (-24,000) and Quebec (-18,000).

Men aged 25 to 54 were particularly hard hit by February's employment decline (-66,000). Since the start of the labour market downturn, employment among core-age men has fallen by 170,000 (-2.7%).

Employment among 15 to 24 year-olds also continued to trend down in February (-29,000). This latest decline brings total losses since October to 104,000 (-4.0%), the fastest rate of decline of all age groups. The unemployment rate for youths was 14.2% in February, up 2.0 percentage points from last October.

A decrease of 43,000 in construction accounted for over half of the employment decline in February. There were also losses in professional, scientific and technical services; educational services; and natural resources. The only industries with gains in February were manufacturing and agriculture.

In February, the increase in average hourly wages was 3.9% compared with 12 months earlier. The most recent year-over-year increase in the Consumer Price Index was 1.1%.

Sharp decline in construction employment

In February, employment decreased by 43,000 in construction, the second large decline in three months. While the construction industry had the fastest growth from January to October 2008 (+4.9%), it has since experienced the steepest decline (-6.4%). The downward trend coincides with the recent weakness in building permits and housing starts.

Employment in February fell in professional, scientific and technical services, down 31,000 (-2.6%), mostly in legal services and in architecture, engineering and design services.

In February, employment edged down in educational services (-15,000) bringing declines since October to 44,000.

Employment in natural resources also declined in February (-8,000), all in mining, oil and gas extraction, with most of the decrease observed in Alberta.

In February, employment rose by 25,000 in manufacturing, with the largest gain in food products manufacturing. Transportation equipment manufacturing was little changed following declines the month before. Despite the overall increase in February, manufacturing employment is down 5.3% (-104,000) from 12 months earlier.

The number of workers employed in agriculture as their main job increased in February. However, over the last 12 months, employment in this industry is down 13,000 (-3.7%).

Employment losses in February were almost equally split among private sector employees, public sector employees and the self-employed.

Continued losses in Ontario

Employment in Ontario fell by 35,000 in February, mostly in construction and finance, insurance, real estate and leasing. This pushed the unemployment rate up 0.7 percentage points to 8.7%, the highest since April 1997. Since last October, the province's unemployment rate has risen by 2.0 percentage points, with increases concentrated in southwestern Ontario.

Since last October, just over half of the country's total employment losses have occurred in Ontario, well beyond the province's 39% share of the total working-age population. Employment in the province fell by 160,000 during this period, with the largest decreases in manufacturing; business, building and other support services; and construction.

In Quebec, employment declined by 18,000 in February, while the unemployment rate edged up 0.2 percentage points to 7.9%. The unemployment rate in Quebec has risen by 0.7 percentage points since last October.

Employment fell by 24,000 in Alberta in February, the second notable decline in three months. February's drop in employment pushed the unemployment rate for the province up by a full percentage point to 5.4%, the highest in almost six years. Since last October, losses have been mostly in construction and manufacturing.

The only other province with a notable employment decline in February was New Brunswick, down 2,900.

Employment down for men aged 25 to 54 and youths

In February, employment fell by 66,000 among core-aged men (25 to 54) while it was unchanged for women of the same age group. Since October, employment among core-aged men has fallen by 170,000 (-2.7%) while it has edged down 37,000 (-0.7%) among core-aged women.

With employment losses heavily concentrated among men aged 25 to 54 in recent months, their unemployment rate increased from 5.5% last October to 7.3% in February. For core-aged women, the rate rose from 4.7% to 5.5% over the same period.

Employment among youths aged 15 to 24 continued to trend down in February (-29,000), pushing their unemployment rate up 1.5 percentage points to 14.2%, the highest since December 2001. The employment decline in February brings total losses since October to 104,000 (-4.0%), the fastest rate of decline among all age groups.

Among workers aged 55 and over, employment in February increased by 17,000 for women, while it was little changed for men. Since October, employment increased by 1.9% among older women while it edged down among older men.

 

New Home Prices Continue to Drop - March 11, 2009

Contractors' selling prices decreased 0.6% between December and January, a slightly faster pace than the 0.1% decline observed the previous month says a report released this morning by Statistics Canada. This resulted in a New Housing Price Index of 156.4 (1997=100).

Between December and January, prices declined 2.8% in Edmonton, followed by Calgary (-2.1%), Victoria (-1.1%) and Vancouver (-0.7%). Builders in all four cities report difficult market conditions.

In Saint John, Fredericton and Moncton, new housing prices increased 1.4% from a month earlier, as builders increased their list price or returned to list price after reporting lower negotiated prices in previous months.

In both St. John's and Saskatoon, prices increased 0.8% from a month earlier while Québec posted a monthly increase of 0.6%.

The New Housing Price Index decreased by 0.8% in January compared with the same month a year earlier. This was the first year-over-year decrease at the Canada level since January 1997.

In the Prairie region, 12-month declines were recorded in Edmonton (-10.4%), Calgary (-6.5%) and Saskatoon (-2.7%).

On the West Coast, Victoria (-4.2%) and Vancouver (-3.2%) each posted year-over-year declines.

 

Home Builders Profits to Fall 20 Per Cent - March 11, 2009

Declining housing starts will cut home builders' profits by almost 20 per cent this year, according to the Conference Board's Canadian Industrial Outlook: Canada's Residential Construction Industry - Winter 2009.

"Years of frenzied construction activity had left the market overdue for a correction," said Valerie Poulin, Economist. "With demand for new homes waning across Canada due to poor economic conditions, the market drop-off appears to be more severe than expected. Even the federal government's budget measures to stimulate the industry are expected to have only a mild impact in the short term."

Residential construction industry revenue growth is expected to fall drastically this year, recording its largest decline since 1995. A small price drop is expected to contribute to the fall in industry revenues, but the primary cause will be the decline in housing starts.

With consumer confidence at levels not seen since the 1982 and 1990-1 recessions, consumers are postponing expenses such as undertaking renovations or buying a home. As well, the tighter credit conditions are further dampening new home demand.

Residential construction profits will drop to $3.2 billion in 2009 and are expected to fall further in 2010 to below $3 billion.

First Time Buyers Driving Home Sales - March 11, 2009

A report released today by RE/MAX confirms that entry-level purchasers are now the engine driving home-buying activity in almost every major centre in Canada.

The 2009 RE/MAX First-Time Buyers Report, highlighting first-time buying activity in 32 residential housing markets across Canada, found that improved affordability is prompting many first-time buyers to get off the fence, out of the rental, and into the market. While a sense of caution still prevails, more and more first-timers are finding it hard to pass up the chance to become homeowners in today's buyer-centric real estate climate. Increased inventory and longer days on market coupled with the lowest lending rates ever are presenting opportunities that have not been seen in almost a decade.

"Canadian markets from coast-to-coast are ripe for a reawakening as the weather warms up," says Elton Ash, Regional Executive Vice President, RE/MAX of Western Canada. "First-time buyers seem more acclimatized to economic factors, even though the barrage of bad news continues to flow. Those who are secure in their jobs, have accumulated good down payments, and have acceptable credit ratings are continuing to venture forward, undeterred by tighter lending criteria."

Although the year got off to a slow start, February home sales were well ahead of those reported in January. The upward trending is expected to continue as more and more first-time buyers enter the market in the weeks ahead. The flurry of activity in the lower-end may also serve to kick-start sales in the mid-to-upper end of the market, which have, as expected, been relatively sluggish in recent months. While inventory and days on market was up virtually across the board, it's noteworthy that several markets reported tighter conditions in the lower end of the market, where demand and buyer activity remains quite healthy.

"While the current economic crisis has caused some first-time buyers to either take it slowly or apply the brakes, home ownership remains a top priority for those who are able to take advantage of reduced carrying costs, rock bottom interest rates and lower house prices," explains Michael Polzler, Executive Vice President and Regional Director, RE/MAX Ontario-Atlantic Canada. "Affordability has greatly improved and buyers are firmly in the drivers' seat in just about every market we surveyed. The new reality is that homeownership remains well within reach for most first-time buyers."

According to the RE/MAX Report, buyers are clearly in control in most Canadian markets. Of the 32 markets surveyed, 22 (69 per cent) remain firmly in buyer's market territory. These include Vancouver, Surrey, Port Coquitlam, Chilliwack, Kelowna, Victoria, Edmonton, Calgary, Saskatoon, Regina, Ottawa, Peterborough, London-St. Thomas, Niagara Falls, Mississauga, Metro Toronto, Northern GTA, Kingston, Windsor, Hamilton-Burlington, Barrie, and Halifax-Dartmouth. Ten (31 per cent) report more balanced conditions: Winnipeg, Kitchener-Waterloo, Sudbury, North Bay, St. Catharines, Saint John, Moncton, Fredericton, St. John's, and Charlottetown.

Forty per cent of markets offered single-detached homes priced under $200,000, including Charlottetown, Saint John, Moncton, Peterborough, Niagara Falls, St. Catharines, Windsor, Fredericton, Halifax-Dartmouth, London, North Bay, Kingston, Saskatoon and Winnipeg. More than two-thirds (71 per cent) offered condominiums starting under $200,000, (Moncton, Fredericton, Halifax-Dartmouth, Sudbury, North Bay, Peterborough, Mississauga, Burlington, Niagara Falls, St. Catharines, Kitchener-Waterloo, London, Windsor, Surrey, Chilliwack, Victoria, Kelowna, Edmonton, Saskatoon, Regina, and Winnipeg).

The most affordable markets for detached homes, based on starting prices are: Moncton ($115,000), Charlottetown ($120,000), and Saint John ($130,000) in Eastern Canada; Windsor ($75,000), Niagara Falls ($119,000), and St. Catharines ($125,000) in Ontario; Winnipeg ($185,000), Saskatoon ($190,000), and Regina ($210,000) in Western Canada.

BC Housing Starts Down 12.8 Per Cent - March 9, 2009

The seasonally adjusted annual rate of housing starts declined to 134,600 units in February from 153,500 units in January, according to Canada Mortgage and Housing Corporation (CMHC).

“Increased listings and reduced sales in the existing home market continue to impact the new home market,” said Bob Dugan, Chief Economist at CMHC’s Market Analysis Centre. “The decrease in February housing starts is partly attributable to the volatile multiple starts segment. In any given month and given its relative importance, the volatility of the multiple starts segment can exaggerate monthly movements up or down in the rate of housing starts.”

The seasonally adjusted annual rate of urban starts decreased 14.9 per cent to 107,800 units in February. Urban multiple starts decreased 17.5 per cent to 63,300 units, while urban single starts fell 11 per cent to 44,500 units in February.

February’s seasonally adjusted annual rate of urban starts moderated in all of Canada’s regions except Atlantic Canada, where urban starts increased by 10.8 per cent. Urban starts fell by 19.6 per cent in Quebec, 14.4 per cent in Ontario, 19.4 per cent in the Prairies, and 12.8 per cent in British Columbia.

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

New home construction is slowing to more sustainable levels and starts are forecast to come in at 160,250 units, within a range of 141,000 to 180,000 units in 2009. These trends are reflected in the year-to-date actual starts. These decreases, however, should be viewed in the context that housing starts have been exceptionally strong over the past 7 years, exceeding 200,000 units per year.

House Building Intentions Down 17.5 Per Cent - March 5, 2009

Contractors took out $4.4 billion in building permits in January, down 4.6% from December according to a report issued this morning by Statistics Canada. Increases in both institutional and commercial permits were not enough to offset the decreases in the value of residential intentions in five provinces. (See Chart)

In the residential sector, the value of permits fell 17.5% to $2.2 billion with declines in both multi-family and single-family permits.

The value of permits in the non-residential sector increased 12.2% to $2.3 billion. This was due mainly to higher construction intentions for institutional and commercial permits in Ontario.

The total value of intentions fell in every province except Ontario, Saskatchewan and Prince Edward Island.

Residential sector: Intentions down for both single- and multi-family permits

Municipalities issued $696 million worth of permits for multi-family dwellings in January, down 36.2% from December.

Ontario accounted for most of the decline at the national level, although seven provinces reported a decrease. Saskatchewan, Nova Scotia and British Columbia were the only provinces showing increases.

The value of single-family permits decreased 4.3% to $1.5 billion. Alberta, Ontario, Newfoundland and Labrador and Nova Scotia accounted for January's drop.

Municipalities approved 11,065 new dwellings in January, down 19.4%. This was mainly due to a 33.0% decrease in multi-family units to 5,180. The number of single-family units approved declined 1.9% to 5,885 units.

 

Non-residential sector: Increases in both institutional and commercial components

Strong growth in the values of both institutional and commercial permits in Ontario was the main factor behind January's increase in the non-residential sector.

Permits in the institutional component increased by 64.2% to $833 million. This increase was largely the result of higher construction intentions for medical buildings in Ontario.

In the commercial component, the value of permits increased 12.4% to $1.2 billion. The increase resulted mostly from higher construction intentions for storage and recreational buildings in Ontario.

The value of industrial permits remained volatile and fell 50.7% to $207 million, following a 30.7% increase in December. January's decline was due mostly to lower construction intentions for manufacturing buildings in Quebec and Ontario.

Permits down in most provinces

The value of building permits fell in seven provinces in January. The most significant declines occurred in Quebec (-19.8% to $960 million and Alberta (-22.4% to $585 million). In both, the decrease was due to lower construction intentions in the residential and non-residential sectors.

Ontario reported a 13.1% increase to $2.0 billion. This was a result of higher construction intentions in institutional and commercial buildings, which more than offset a decrease in the value of residential permits. Saskatchewan and Prince Edward Island also reported an increase as a result of gains in both residential and non-residential sectors.

Metropolitan areas: Large decreases in Toronto and Montréal

The total value of permits was down in 19 of the 34 census metropolitan areas. Permit values declined 12.9% in Toronto, as lower construction intentions in the multi-family component more than offset increases in the non-residential sector and single-family permits.

In Montréal, permit values fell 19.7% as a result of decreases in both residential and non-residential sectors. In contrast, Barrie and Oshawa posted the largest increases, mainly the result of higher construction intentions in the institutional component.

House Buying Intentions Level Off in BC - March 4, 2009

According to the 16th Annual RBC Homeownership Survey, 78 per cent of British Columbians - the highest percentage in the country - believe a buyer's market exists right now. Only five per cent indicated sellers hold an advantage given current prices and conditions.

"Despite concerns about the economy, buying intentions remain healthy in B.C. and in check with the national average," said Kevin Lutz, regional manager, Mortgage Specialists, RBC Royal Bank. "Based on these figures most British Columbians believe that the time is right for buyers, and most remain largely confident that the long-term value in a home makes for a good purchase."

The survey, conducted by Ipsos Reid, found that homebuying intentions in the province remain unchanged from last year, with 26 per cent of residents saying they intend to buy in the next two years. A majority (55 per cent) think it makes more sense to wait until next year to purchase a home, rather than buy now.

According to the survey, 81 per cent of those polled in B.C. said that buying a home is a good or very good investment. On average, B.C. homeowners approximate the value of their home at $355,571 - the highest average home value across Canada. On average, they also estimate that the value of their homes increased 10 per cent over the last two years.

Among those who plan to purchase this year or next, 27 per cent said they will do so because their current home does not meet their needs. Twenty-three per cent cited attractive house prices, and another 23 per cent said they will purchase to own a bigger home. Eighty-three per cent said they plan to purchase resale and most (76 per cent) will opt for a detached house.

Future B.C. homebuyers also said environmental considerations would weigh on their purchase decision. Over 90 per cent of respondents indicated that buying a home with low energy consumption was important to them and 72 per cent said the same about environmentally-friendly features. Further, 93 per cent of those surveyed were interested in having standardized energy ratings for their homes.

 

 

 

 

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