Ottawa, ON, December 15, 2014 – The Canadian Real Estate Association (CREA) has updated its forecast for home sales activity via the Multiple Listing Service® (MLS®) Systems of Canadian real estate Boards and Associations for 2014 and 2015.
With mortgage rates remaining at historic lows since the summer, activity has remained stronger for longer than previously expected and has yet to show clear signs of fading.
As a result, the forecast for annual sales in 2014 and 2015 has been upwardly revised. Almost all of the upward revision to national activity in both years stems from the current strength and momentum of sales across most of British Columbia and much of Ontario, particularly in the Greater Golden Horseshoe region.
In British Columbia, historically low mortgage interest rates have helped fuel a broadly based increase in the number of homes changing hands this year, although activity has only recently risen above its 10-year average. In Ontario, strong demand has been met with a rise in listings, which in recent years had been in shorter supply. The recent momentum for sales in both cases has endured for longer than expected and has shown few signs of diminishing. These two provinces together account for more than half of national activity and are responsible for much of the upward revision to projected and forecast national sales.
Sales are now projected to reach 481,300 units in 2014, representing an annual increase of 5.1 per cent. While this places annual activity eight per cent below the record set in 2007, it marks the strongest annual sales since then.
It also places activity in 2014 slightly above, but still broadly in line with its 10-year average. Despite periods of monthly volatility since the recession of 2008-09, annual sales have held steady within a narrow range around its 10-year average. This stability contrasts sharply with the rapid growth in sales seen in the early 2000s prior to the recession.
British Columbia is projected to post the largest annual increase in activity (14.5 per cent) followed closely by Alberta (9.3 per cent). Demand in both of these provinces is currently running at multi-year highs. Annual activity in Ontario is also expected to come in 3.6 per cent above 2013 levels.
Sales in Saskatchewan (+1.8 per cent), Manitoba (+0.8 per cent), Quebec (-0.1 per cent), New Brunswick (-0.8 per cent), and Prince Edward Island (no change) are expected to hold near 2013 levels. Activity in Nova Scotia and in Newfoundland and Labrador is projected to decline this year by 3.9 per cent and 4.7 per cent respectively.
In 2015, Canadian exports, job growth and incomes are expected to improve with mortgage interest rates edging only slightly higher. These opposing factors should benefit sales activity in housing markets where demand has been softer and prices have remained more affordable. Sales in relatively less affordable housing markets are expected to be more sensitive to higher mortgage interest rates.
National activity is now forecast to reach 485,200 units in 2015, representing a year-over-year increase of 0.8 per cent. While sales nationally are still expected to peak this year and trend lower throughout 2015, they are not expected to return to weakened levels recorded in the first quarter of 2014.
Sales activity is forecast to grow fastest in Nova Scotia (+2.6 per cent), followed by New Brunswick (+2.9 per cent). Quebec (+1.2 per cent), Ontario (1.1 per cent), British Columbia (0.5 per cent), and Alberta (0.1 per cent) are forecast to see little change on an annual basis, reflecting a rising trend in 2014 mirrored by a softening trend in 2015.
There are a number of upside and downside risks to the forecast. In British Columbia and Ontario, activity is still expected to be held in check by eroding affordability for single family homes. However, with sales in British Columbia now only at average levels, they may climb further before rising interest rates begins to materially reduce affordability. Sales in Ontario may also remain stronger than expected should new listings continue to come onto the market at higher levels in places and in market segments where a lack of supply in recent years has led to pent-up demand.
Additionally, consumer confidence and job growth in the Prairies may come under downward pressure depending on how far oil and non-energy commodity prices decline and on how long they remain low.
Saskatchewan and Manitoba sales are forecast to post declines of seven-tenths of one per cent and nine-tenths of one per cent respectively in 2015. Both provinces are experiencing higher than normal levels of supply while sales have shown recent signs of moderating.
The national average price has evolved largely as expected since the spring, resulting in little change to CREA’s previous two forecasts.
The national average home price is now projected to rise by six per cent to $405,500 in 2014, with similar percentage price gains in British Columbia, Alberta, and Ontario. Saskatchewan and Manitoba are expected to post increases of close to three per cent. Newfoundland and Labrador and Prince Edward Island are forecast to see average home prices rise by a little over one per cent this year, while Quebec is forecast to see an increase of slightly below one per cent. Prices are forecast to recede by about half a per cent in New Brunswick and Nova Scotia.
The national average price is forecast to edge higher by 0.9 per cent in 2015 to $409,300. Alberta and Manitoba are forecast to post average price gains of almost two per cent in 2015, followed closely by Ontario at 1.3 per cent. Average prices in other provinces are forecast to remain stable, edging up by less than one percentage point.
Pace of housing starts slows in October, says Canada Mortgage and Housing Corp. This article appeared on CTV.ca on November 10th, 2014 and was written by The Canadian Press.
OTTAWA — The pace of new home starts in Canada slowed in October due to less construction of multiple-unit homes including condominiums, Canada Mortgage and Housing Corp. says.
The agency estimated Monday the standalone monthly seasonally adjusted annual rate was 183,604 units in October, down from 197,355 the previous month.
Economists had expected a rate of 200,000, according to Thomson Reuters.
The decrease in October brought the six-month moving average down to 195,707 homes as of October, compared with 197,763 in September.
“The decrease in the trend reflects a decline, in October, of starts of multi-unit dwellings, including condominiums,” CMHC chief economist Bob Dugan said in a statement.
“Given the elevated level of condominium units under construction, our expectation is that condominium starts will continue to trend lower over the coming months.”
CMHC says the pace of urban housing starts in October decreased across the country, with declines led by British Columbia and followed by Quebec, Atlantic Canada, the Prairies and Ontario.
The overall drop in the pace of new home construction came as the rate of urban starts slowed to 164,683 in October, down from 177,053 in September.
The drop was due to a slower pace of multiple-unit urban starts which fell to 98,673 compared with 114,539 in September. The rate of single-detached urban starts segment increased to 66,010 from 62,514.
Rural starts recorded a seasonally adjusted annual rate of 18,921 in October.
TD Bank economist Brian DePratto noted that while the October results fell short of expectations, the trend over the last six months has still outperformed the bank’s expectations and has remained well above the 180,000 level needed to keep up with underlying population growth.
“In addition, the decline was led entirely by multiple-unit starts, which can be quite volatile,” DePratto wrote in a note to clients.
“With multi-unit construction growing as a share of overall new homebuilding (it now accounts for 60% of construction), monthly swings have become more volatile, and so longer-term trends provide a more appropriate gauge of the health of Canada’s construction industry.”
Property Sales in Canada Set to Rise by Almost 4% This Year. This article appeared on Propertywire.com on November 10th, 2014.
Residential property sales in Canada are forecast to increase by 3.8% this year compared to 2013, according to revised figures from the Canadian Real Estate Association (CREA).
The data reflects stronger than expected sales in recent months. Even so, sales activity is expected to peak in the third quarter as the impact of a deferred spring dissipates and continuing home price increases erode housing affordability.
This would place activity in 2014 slightly above but still broadly in line with its 10 year average. Despite periods of monthly volatility since the recession of 2008/2009, annual activity has remained stable within a fairly narrow range around its 10 year average. This stability contrasts sharply to the rapid growth in sales in the early 2000s prior to the recession.
British Columbia is forecast to post the largest year on year increase in activity at 11.9% followed closely by Alberta at 7.7%. Demand in both of these provinces is currently running at multi year highs.
Activity in Saskatchewan, Manitoba, Ontario, Quebec and New Brunswick is expected to come in roughly in line with 2013 levels, with sales increases ranging between 1% and 2% in the first three provinces and edging lower by about 1% lower sales in the latter two provinces. Sales in Nova Scotia and in Newfoundland and Labrador are projected to be down this year by 3.9% and 5.2% respectively.
Mortgage interest rates are expected to edge higher as Canadian exports, business investment, job growth, and incomes improve. These opposing factors should benefit housing markets where demand has been softer but prices have remained more affordable.
Sales in relatively less affordable housing markets are likely to be more sensitive to higher fixed mortgage rates, the CREA report also says.
National activity is now forecast to reach 473,100 units in 2015, representing a decline of four tenths of 1%. Sales activity is forecast to grow fastest in Nova Scotia at 3.3%, followed by Quebec with growth of 1.3% and New Brunswick at 1.3%. Alberta is the only other province forecast to post higher sales next year with growth of 1%.
In other provinces, activity is forecast to decline in the range of between 1% and 2%. In British Columbia and Ontario, this trend reflects eroding affordability for single family homes, the report says.
The national average price has evolved largely as expected since the spring, resulting in little change to CREA’s previous forecast so it is projected to rise by 5.9% to $405,000 in 2014, with similar price gains in British Columbia, Alberta, and Ontario. Increases of just below 3% are forecast for Saskatchewan, Manitoba and Prince Edward Island. Newfoundland and Labrador is forecast to see average home price rise by about 1% this year, while Quebec is forecast to see an increase half that size.
Prices are forecast to be flat in New Brunswick and recede by almost 2% in Nova Scotia. The national average price is forecast to edge up a further 0.7% in 2015 to $407,900. Alberta and Manitoba are forecast to post average price gains of almost 2% in 2015, followed closely by Ontario at 1.3%. Average prices in other provinces are forecast to remain stable, edging up by less than 1%.
Looking at the year so far, the CREA report says that the deferral of sales and listings during an extraordinarily bleak winter delayed the start to the spring home buying season. This deferral boosted activity in May and June as properties were snapped up after finally hitting the market, particularly in markets with a shortage of listings.
Although this boost was and still is expected to be transitory, sales have yet to show signs of cooling as activity strengthened slightly further over the summer. The increase reflects continuing strength in home sales among large urban markets that initially drove the spring rebound together with gains in markets where activity had previously struggled to gain traction. Lowered mortgage interest rates supported this trend.
Canada Mortgage and Housing Corp. Expects Steady Housing Market in 2015. This article was written by the Canadian Press on October 30th, 2014.
OTTAWA – The Canada Mortgage and Housing Corp. says it expects housing starts in 2015 to be about the same as they were this year, and in line with economic and demographic trends.
The national housing agency says “some moderation is expected” in 2016.
The CMHC says that on an annual basis, it expects housing starts to range between 186,300 and 191,700 units in 2014, with a point forecast of 189,000 units.
Next year, the agency says it expects housing starts to range between 172,800 and 204,000 units, with a point forecast of 189,500 units.
In 2016, the CMHC says it expects housing starts to range between 168,000 and 205,800 units, with a point forecast of 187,100 units.
The agency says it expects Multiple Listings Service sales to range between 467,400 and 482,000 units in 2014, with a point forecast of 476,100 units.
Next year, it says it expects MLS sales to range between 457,300 and 507,300 units, with a point forecast to 482,500 units.
The CMHC says the average MLS price in 2014 is expected to be between $401,600 and $405,400, with a point forecast of $404,800.
Next year, the agency says it expects the average MLS price to be between $403,600 and $417,800, with a point forecast of $410,600, while in 2016 the average MLS price is forecast to be between $407,300 and $424,500, with a point forecast of $417,300.
OTTAWA — The pace of new home starts in Canada slowed in October due to less construction of multiple-unit homes including condominiums, Canada Mortgage and Housing Corp. says.
OTTAWA – The Canada Mortgage and Housing Corp. says it expects housing starts in 2015 to be about the same as they were this year, and in line with economic and demographic trends.