Canadian housing starts trended lower in October(2019.11.12)
The trend in housing starts was 218,598 units in October 2019, compared to 223,276 units in September 2019, according to Canada Mortgage and Housing Corporation (CMHC). This trend measure is a six-month moving average of the monthly seasonally adjusted annual rates (SAAR) of housing starts. "The national trend in housing starts decreased in October," said Bob Dugan, CMHC's chief economist. "Multi-family starts in urban centres trended lower following four months of consecutive gains, offsetting a modest increase in the trend of urban single-detached starts in October". Monthly Highlights Vancouver Housing starts in Vancouver Census Metropolitan Area (CMA) trended lower in October 2019 compared to October 2018, driven by a 15% decline in the multi-units sector. However, the year-to-date multi-units starts, mostly concentrated in the City of Vancouver and the City of Surrey, was up 31% compared to the same period last year, contributing to an increase of total starts between 2018 and 2019. Kelowna Housing starts in the Kelowna CMA were up significantly in October, relative to the same month last year, as some new large multi-unit projects got underway. In particular, a large number of rental apartment units got underway representing 73% of the overall number of multi-unit starts in the month of October. The number of rental units that have gotten underway in October represents the first meaningful increase in rental housing starts in over a year. Edmonton Total housing starts increased in the Edmonton CMA in October 2019 as multi-family unit construction more than doubled compared to the same month last year. This increased occurred across all multi-family housing types, with the largest increase occurring in apartment units. Year-to-date, new housing construction continues to increase, despite elevated inventory levels. Regina Total housing starts in Regina trended higher in October after builders increased the pace of single-detached construction. Despite the increase in the six-month trend, actual residential starts have declined by 57%, year-to-date, from the same period in 2018. The reduction is due to a number of factors including elevated new housing inventory, moderate economic conditions, higher construction costs and weaker new home demand. Thunder Bay The trend for overall housing starts in the Thunder Bay CMA increased considerably in October due almost entirely to an increase in the trend for apartment starts. Notably, the trend measure for apartment starts reached its highest level in nearly two years due to October rental apartment construction. Supporting this increase has been growth in the population aged 65 and over, the fastest growing segment of the population, and a group with a relatively high propensity to rent. Toronto Total housing starts trended slightly lower in October due to lower multi-unit home starts. Strong pre-construction sales of condominium apartments over the past two years continue to break ground at a varying pace throughout this year. Pre-construction sales of single-detached homes trended higher towards the latter half of 2018 and these units have started to break ground over the past several months, thus reflected by their higher trending starts. Hamilton In Hamilton CMA, overall housing starts trended up due to greater activity in both single-detached and multi-unit homes. The increase in the latter was mostly the result of a higher number of apartment starts over the past six months. A shift in homeownership demand towards lower priced homes and persistently strong rental demand have both supported the high level of apartment construction in Hamilton. Gatineau In October 2019, housing starts in the Gatineau region reached their highest level in almost 50 years, reinforcing the significant growth observed since the beginning of the year. This significant gain is mainly attributable to the increase in housing starts destined for the rental market. The aging of the population and the low vacancy rate continue to stimulate rental housing starts in the Gatineau region. Sherbrooke Since the beginning of the year, residential construction activity has been particularly strong in the Sherbrooke CMA. From January to October 2019, housing starts recorded in the region increased by 44% over the same period last year. The increase in activity comes mainly from the rental segment, with the launch of traditional rental housing projects and residences for seniors. Overall, residential construction in the region continues to be supported by rising full-time employment, migration and an aging population. Prince Edward Island (PEI) PEI housing starts were 146% higher this October compared to October 2018. This is due to the ongoing surge in new apartment construction activity in response to the Island's near zero vacancy rate and affordable rental needs. So far this year, starts are 68% higher than 2018. This trend reflects primarily increased capital project spending and solid growth in population, income and employment. CMHC uses the trend measure as a complement to the monthly SAAR of housing starts to account for considerable swings in monthly estimates and obtain a more complete picture of Canada's housing market. In some situations, analyzing only SAAR data can be misleading, as they are largely driven by the multi-unit segment of the market which can vary significantly from one month to the next. The standalone monthly SAAR of housing starts for all areas in Canada was 201,973 units in October, down 8.7% from 221,135 units in September. The SAAR of urban starts decreased by 9.0% in October to 189,304 units. Multiple urban starts decreased by 12.5% to 139,518 units in October while single-detached urban starts increased by 2.4% to 49,786 units. Rural starts were estimated at a seasonally adjusted annual rate of 12,669 units.
Rebound continues as home sales jump across Canada amid affordability concerns(2019.10.16)
Canada’s home sales jumped 15.5 per cent in September compared with last year, with rising activity and record prices in Toronto and its surrounding suburbs adding to affordability concerns that have become a focus in the federal election campaign. Sales activity grew 21 per cent in the Toronto region and 45 per cent in the Vancouver area, underpinning the year-over-year increase to 41,819 home sales nationwide, according to a report from the Canadian Real Estate Association (CREA). It’s the seventh straight month that the country’s home sales have grown after hitting a six-year low in February, in part due to tougher mortgage requirements and a tax on foreign purchases of real estate in Vancouver and Toronto. As sales activity has increased across the country, so have prices. CREA’s composite benchmark home price, an industry representation of the typical home sold, which includes detached houses, townhouses and condos, climbed slightly more than 1 per cent to $629,200 in September, compared with last year. In the Toronto region, which includes the city and its outskirts, the benchmark home price was up 5 per cent to a record high of $806,700. In the Greater Vancouver Area, prices were down 7 per cent to $986,500, year over year, but were higher than in August, suggesting the market is rebounding from the B.C. government’s anti-speculation policies. High housing prices became an issue early in the campaign for next Monday’s federal election, with all major parties promising to improve affordability, particularly for first-time buyers. Nik Nanos, founder and chief data scientist of Nanos Research, said housing continues to be a major issue in the suburban Toronto and Vancouver areas. “Housing affordability is definitely on the radar for voters, especially in those two regions which are in play, and also just have a tougher housing market,” he said. Sales activity and prices are especially strong around Toronto, the CREA data indicate. In the Oakville-Milton area, the composite benchmark home price rose 4 per cent to $1,026,300 last month, the real estate association said. In the Hamilton-Burlington area, home prices rose 7 per cent to $620,700. In the Niagara region, home prices increased 8 per cent to $423,300. “We have a situation where those areas are becoming unaffordable,” said Benjamin Tal, deputy chief economist at CIBC. Even in Vancouver, Mr. Tal said: “The fact that prices went down [compared to 2018], doesn’t mean that it became affordable.” Home prices in the southwestern Toronto suburbs have reached a record high. The price of a detached house in the Hamilton-Burlington region reached $656,300 last month. In Niagara, the price was nearly $450,000. “If you have your heart set on buying a home, but you can’t afford or qualify for a mortgage financing in an area that you would most like to, you look at your second best. For that reason, people are driving further afield to places where they can qualify for financing,” CREA’s chief economist Gregory Klump said. Investors are also fleeing to the suburbs, and that interest is contributing to housing boom outside Toronto. “They are now moving funds into the St. Catharines and Niagara market,” said Brian Hogben, a mortgage broker who serves the Hamilton area. “The upswing potential is still quite large.” The federal Liberals have proposed expanding a first-time home buyer plan to make it easier for people to buy in the expensive cities of Victoria, Vancouver and Toronto. Currently, Ottawa provides an interest-free loan of up to 10 per cent of the down payment, with a cap on the price. The Conservatives and the New Democratic Party are proposing to extend the possible amortization period for an insured mortgage to 30 years from 25. The Conservatives have also proposed to change the test that requires borrowers to prove they could handle home loan payments at a higher rate. It is unclear how they would change the test, which reduced the size of mortgages buyers could get. Some critics have warned that measures to improve affordability such as lengthening the amortization period could push home prices higher and exacerbate the crisis. “Lowering monthly mortgage payments by stretching repayment over a longer time period looks great on the surface, yet a surge in new buyers could cause prices to escalate, erasing the enhanced purchasing power,” Phil Soper, president of realtor Royal LePage, said in a recent press release. In addition to Toronto and Vancouver, sales transactions were up in Calgary, Edmonton, Winnipeg, Ottawa and Montreal. (The Globe and Mail, Rachelle Younglai)