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May 2009

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Fed Money Available for Social Housing Renovations - May 24, 2009

Social housing across Canada can now access funding for renovation and retrofit projects, the Honourable Diane Finley, Minister of Human Resources and Skills Development and Minister Responsible for Canada Mortgage and Housing Corporation (CMHC), announced today.

“Social housing projects funded and administered by CMHC can now access the funding they need to move forward quickly on repairs and renovations needed to enhance aging housing stock across Canada. This funding benefits communities by renewing social housing, as well as improving the quality of life for the people who live there,” said Minister Finley. “These projects will also have tremendous spin-off benefits in terms of creating jobs and helping to stimulate our economy.”

As part of Canada’s Economic Action Plan, the Government announced $1 billion for social housing renovation and retrofit. Of this amount, CMHC will deliver $150 million targeted to federally administered social housing. The remaining $850 million is being delivered by the provinces and territories on a cost-shared 50/50 basis under the Affordable Housing Initiative to the existing social housing projects they administer.

Eligible repairs include general improvements, energy-efficiency upgrades or conversions and modifications in support of persons with disabilities.

To get more information on this program or make an application visit the CMHC web site.

Home Construction Expected to Pick Up in 2010 - May 19, 2009

Housing starts are expected to decline to 141,900 for 2009, but increase to 150,300 for 2010, according to Canada Mortgage and Housing Corporation’s (CMHC) second quarter Housing Market Outlook, Canada Edition report.

“The decline in housing starts in 2009 can be attributed to several factors, including the current economic climate, increased competition from the existing home market, and the impact of strong house price growth between 2002 and 2007” said Bob Dugan, Chief Economist for CMHC. “However, housing market activity will begin to strengthen in 2010 as the Canadian economy recovers, bringing housing starts more in line with demographic fundamentals over the forecast period”.

Existing home sales, as measured by the Multiple Listing Service (MLS®)1, are expected to decline to 357,800 units in 2009 from 433,990 in 2008, but increase to 386,100 units in 2010. The average MLS® price is also expected to decrease to $283,100 in 2009 and to stabilize in 2010.

In British Columbia, housing starts are expected to improve after 2010 when the economy improves. By 2013, housing starts should return to their long-term average and more closely match the rate of household formation.

New House Prices Continue to Fall - May 11, 2009

Contractors selling prices decreased 0.5% in March compared with a 0.7% decline in February according to a report filed earlier this morning by Statistics Canada. This resulted in a New Housing Price Index of 154.6 (1997=100).

Between February and March, prices declined by 1.2% in Calgary and Edmonton, followed by Vancouver (-1.1%) and Victoria (-0.9%). In Calgary and Edmonton, declines were attributed to lower material and labour costs and lower lot prices from developers. In Vancouver and Victoria, builders reported lower prices due to competition and slow market conditions.

Prices also declined in St. Catharines–Niagara (-0.9%), Saskatoon (-0.7%), Charlottetown (-0.4%), Toronto (-0.3%) and Hamilton (-0.2%). In St. John's, new housing prices increased by 0.4% compared with February, followed by Montréal (+0.3%) and Québec (+0.1%).

The New Housing Price Index decreased by 2.4% in March compared with the same month a year earlier. This was the third consecutive year-over-year decline at the Canada level as a result of lower prices in most surveyed cities.

On the Prairies, 12-month declines were recorded in Edmonton (-12.3%), Saskatoon (-11.2%) and Calgary (-8.7%).

On the West Coast, Vancouver (-7.8%) and Victoria (-6.6%) each posted year-over-year declines.

Among surveyed cities, the largest year-over-year increases were in St. John's (+20.8%) and Regina (+12.8%). In Québec, the 12-month growth rate was 8.1%, while in Montréal prices increased 3.5%.

Compared with March 2008, contractors' selling prices were 4.1% higher in Winnipeg and 3.9% higher in Saint John, Fredericton and Moncton.

BC Housing Starts Better than Rest of Canada - May 8, 2009

The seasonally adjusted annual rate of housing starts decreased to 117,400 units in April from 146,500 units in March, according to Canada Mortgage and Housing Corporation (CMHC).

“The decrease in April's housing starts is partly attributable to the volatile multiple starts segment,” said Bob Dugan, Chief Economist at CMHC's Market Analysis Centre. “Most of the decline has occurred in the condominium segment in Ontario.”

While some improvement is expected, new home construction is unlikely to match the pace set over the past seven years, which exceeded 200,000 units per year. Housing starts will be more closely aligned to demographic demand, which is currently estimated at about 175,000 units per year.

The seasonally adjusted annual rate of urban starts decreased 24 per cent to 96,800 units in April. Urban multiple starts decreased 32.7 per cent to 54,700 units, while urban single starts moved down 8.7 per cent to 42,100 units in April.

April's seasonally adjusted annual rate of urban starts increased 1 per cent in British Columbia. Urban starts declined 43.7 per cent in Ontario, 16 per cent in Atlantic Canada, 7.1 per cent in Quebec, and 3.0 per cent in the Prairies.

Rural starts were estimated at a seasonally adjusted annual rate of 20,600 units in April.

Big Jump in Non-Res Building Permits - May 6, 2009

Contractors in Canada took out $4.5 billion in building permits in March, up 23.5% from February, halting five consecutive monthly declines according to a report released this morning by Statistics Canada. March's increase came mainly from the non-residential sector in Ontario, Quebec and Alberta. Intentions in the non-residential sector rose 47.9% to $2.3 billion, in the wake of increases in the commercial and institutional components in those provinces. British Columbia, on the other hand, showed a decline in permits.

In the residential sector, the value of permits advanced 5.0% to $2.2 billion. This increase was the result of higher construction intentions in both multi-family and single-family permits.

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

Following a 30.0% decrease in February, the value of the non-residential sector increased in six provinces, mainly as a result of gains in the commercial and institutional components.

In the commercial component, the value of permits increased 45.6% to $1.4 billion. This increase came mostly from higher construction intentions for office buildings in Ontario.

Permits in the institutional component increased 89.2% to $722 million, following a 54.2% decline in February. This increase was largely the result of higher construction intentions for medical buildings in British Columbia and government and education buildings in Ontario.

In the industrial component, the value of permits fell 8.8% to $216 million following a 14.7% increase in February. The decline in March was due to lower construction intentions in Prince Edward Island, Ontario, Nova Scotia and Newfoundland and Labrador.

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

Municipalities issued $817 million worth of multi-family permits in March, up 7.3% from February. Quebec and Alberta accounted for most of the increase, although four other provinces showed higher intentions for the construction of multiple dwellings. In contrast, British Columbia posted a large decline.

Single-family permits halted their eight-month decline, increasing 3.7% to $1.4 billion. Ontario and Alberta accounted for most of the gain.

Municipalities approved 11,305 new dwellings in March, up 10.5%. This was due to a 26.5% increase in multi-family units to 6,479. The number of single-family units approved declined 5.6% to 4,826 units.

Permits up in half of the provinces

The value of building permits increased in half of the provinces in March.

The most significant increases occurred in Ontario (+45.7% to $1.8 billion), Quebec (+30.3% to $1.0 billion) and Alberta (+34.1% to $696 million). The increases were mostly a result of higher construction intentions in the non-residential sector.

Declines occurred in the Atlantic provinces, except for Newfoundland and Labrador, as well as Manitoba and British Columbia.

Permits up in most census metropolitan areas

The total value of permits was up in 24 of the 34 census metropolitan areas.

Permits values increased in Toronto as higher construction intentions in all non-residential components more than offset decreases in the residential sector.

The increase in permit value in Edmonton came from both the residential and non-residential sectors.

The value of building permits in Vancouver fell 42% to $192 millions, the sixth decline in seven months. This was a result of drops in all components except for permits for industrial projects.

Is Housing Market Beginning to Balance - May 5, 2009

Canada's housing market is showing signs of emerging from its winter hibernation, according to the latest Real Estate Trends report released today by Scotia Economics. Nationally, home sales strengthened in both February and March, and preliminary reports suggest this firming trend continued in April.

The Real Estate Trends report notes that the rise in demand, combined with fewer new listings, has restored a better balance to the market. The national new-listings-to-sales ratio averaged 2.2 in March, down from a cycle peak of 2.7 last November (about 2.0 is considered balanced). Average home prices steadied in February and March, though were still down almost eight per cent year-over-year, or five per cent on a regional sales-weighted basis.

"These 'green shoots' are encouraging," said Adrienne Warren, Senior Economist and Real Estate Market Specialist, Scotia Economics. "On an annualized basis, average home prices in early 2009 are running about six per cent below last year's levels, while sales volumes are down 16 per cent. This is tracking a slightly better performance than our forecast for a 10 per cent decline in average prices this year, and at the low end of our forecast for a 15 per cent to 20 per cent drop in sales.

"Nonetheless, we still feel there is more downside than upside risk to home sales and prices," added Ms. Warren. "The significant deterioration in domestic labour markets in recent months suggests little prospect for a major resurgence in demand near-term. Meanwhile, a still high level of active listings relative to underlying demand will continue to pressure prices."

The report states that in contrast to the pickup in home sales, residential construction is being reined in even faster than anticipated, with builders quick to respond to falling new home prices, rising inventories and greater resale competition. Housing starts slumped to a decade-low of only 139,000 annualized units in Q1. Residential permit demand has slipped even further to around the 125,000 unit mark.

"While exacting a heavy toll on domestic demand and employment, the correction is nonetheless a necessary cyclical adjustment to an extended period of overbuilding," said Ms. Warren. "We now expect Canadian housing starts to total only 140,000 units this year, down from our February forecast of 155,000. The longer-term sustainable rate of housing starts, taking into account population growth and depreciating stock, is around 175,000 units annually."

The many construction cranes still dotting the skylines of Canada's major urban centres are raising concern over a pending oversupply of high-rise units. The supply of new condo units coming onto the market is now outpacing demand, pointing to some degree of overbuilding, and consequent downward pressure on prices, in the year ahead. However, the risk of developing a late-1980s-type glut, and an ensuing broad reversal in prices, still appears low.

The report highlights a number of factors that should help to contain unsold condominium inventory, including sharply lower multi-unit starts, falling permit demand, tighter financing requirements for developers, low rental vacancy rates and improving first-time buyer interest.

"In addition," continued Warren, "we expect an increasing number of pre-construction project cancellations. A large share of unsold units are in pre-construction stage. Many of these projects will likely not go ahead, failing to achieve a sufficiently high level of sales to obtain financing. To the extent that any existing projects are cancelled, this in turn will create a pool of displaced buyers re-entering the market."

The report also shows that shifting demographics and demand preferences suggest the market can sustain a higher level of condominium housing stock than in the past. Multi-unit dwellings accounted for a record 24 per cent of Canada's owner-occupied housing in 2006, up from 20 per cent in 2001 and just 16 per cent in 1991. Between 2001 and 2006, the number of homeowners living in single-detached homes rose just six per cent, while the number of homeowners choosing apartment-style living shot up 35 per cent.

The aggregate picture masks significant regional differences. Multi-unit housing is primary an urban phenomenon, as roughly three-quarters of Canada's apartment starts in recent years have been in the nation's six largest metropolitan areas: Toronto, Montreal, Vancouver, Ottawa, Calgary and Edmonton. Vancouver takes top spot for high-density living, with fully 50 per cent of homeowners opting for multi-units, double the national average.

 

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