Archive for November 5th, 2009

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HOUSING MARKET OUTLOOK London

Comments: 0November 5th, 2009 by admin

Posted by Moishe Alexander

With some 1,850 new homes expected to be started in both 2009 and 2010, new home construction is expected to remain relatively stable. This is mostly due to a weak rebound of single-detached home construction,which is expected to increase by only 50 units from the 2009 level.

The weak rebound in single-detached home construction is mostly due to competition from the resale market, especially from the nearly new category (homes of 1-5 year vintage). Strong growth in new single-detached home construction before 2006 created a large stock, and some of them are being offered for sale in the resale market. These homes are very popular among doctors, nurses or other health care or natural sciences related professionals. During the past few years, they tended to purchase new from builders because the resale market was tight. However, with a larger offering of nearly new homes on the market, they tend to find what they want in the resale market. With listings of resale homes expected to remain high, these professionals will tend to purchase from resale than directly from builders.

There are reports that some builders may be building up inventories in order to better compete with the resale market, by being able to have homes ready for customers to move into as soon as the transaction closes. However, at the end of September, the level of completed and unabsorbed homes dropped to 99 units, down from nearly 200 units earlier this year.

Apartment construction will be relatively strong in 2009 and 2010. Overall apartment starts will reach 850 units in 2009, and 800 units in 2010.Many of them will continue to be in the high-end rental category. Empty nesters and retirees who like the convenience of an apartment lifestyle are the key customer group for these apartments.

Condominium apartments are also becoming a factor in the London housing market. The popularity of high-end rental apartments among empty nesters and retirees has resulted in some showing interest in ownership. Developers are beginning to build high rise condominiums to satisfy this demand.

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Posted in CMHC, Canada, affordable housing, moishe alexander

HOUSING MARKET OUTLOOK Kingston CMA

Comments: 0November 5th, 2009 by admin

Posted by Moishe Alexander

After two years of sharp declines, and coming off from a decade of annual housing starts largely above demographic needs, new housing construction is set to stabilize in 2009. Amid emerging positive signs in both the economic and financial fronts, total residential construction in the Kingston Census Metropolitan Area (CMA) will rise by 5.2 per cent this year, with 707 new starts.

In addition to the boost to homeownership demand due to low interest rates, the prospects for increased spill-over demand from a recovering resale market will likely result in a faster year-over-year pace of starts during the first half of 2010. As a result, total starts next year will reach 690 units for a slight 2.4 per cent decrease, thus stabilizing construction activity at a pace more in line with household formation.

Coming off from a historically challenging economic environment, the short-term forecast for Kingston’s residential construction industry remains for the most part optimistic. The substantial monetary easing and fiscal stimulus measures in Canada’s Economic Action Plan will improve economic fundamentals. This will renew household’s appetite for big-ticket items in the face of low interest rates.

While spill-over demand from the resale into the new home market typically takes time to fully materialize, Kingston’s new home market looks ripe for a modest recovery. First, new listings for resale have declined substantially from last year, thus lowering supply competition. Second, the level of unabsorbed new home inventories has returned below the long-term average. Finally, the year- to-date pipeline of properties under construction is substantially lower than for the same period last year, which means that there are resources available for future projects.

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Posted in CMHC, Canada, Ontario

HOUSING MARKET OUTLOOK Ottawa

Comments: 0November 5th, 2009 by admin

Posted by Moishe Alexander

After near record years in new home construction, 2009 residential new home construction will grow below demographic needs in Ottawa Census Metropolitan Area. Total housing starts will close this year at 5,125 units or 27 per cent lower than in 2008 and well below the ten year average for the region. Tight credit conditions for high density development will delay construction in the Capital, particularly for condo apartments. However, increasing strength is expected next year as construction responds to growing demand for housing. In 2010 foundations will rise, growing slightly above population needs with 5,900 new units. Spill-over demand coming from the existing home market combined with low levels of construction this year and declining new home inventories will set the foundations for a strong rebound in New Home construction in the coming year.

Although total starts are expected to soften in 2009, single-detached homes will be declining the least. Single- detached starts will remain at close to 40 per cent of total construction or 2,250 units. The lowest interest rate seen in almost 60 years coupled with more affordable dwellings in Ottawa’s outskirts will result in decreasing monthly mortgage payments.
Single-detached new construction will pick up slightly through 2010. The Monetary and Fiscal stimulus coming from Canada’s Economic Action Plan will further boost the purchase of big ticketed items in the Capital City. Ottawa’s home market continues to be strong, as single-detached starts remain a good barometer of the strength of the new residential construction market.

The average price for new single- detached homes in 2009 will post a similar level of growth to last year and will stand at around $418,400 for a 2.3 per cent increase. Although the underlying increase in price in 2010 will be flat, a greater proportion of more expensive homes will drive the average price higher by 5.7 per cent.

Semi-detached and townhomes will provide an alternative to the single- detached home dwellings when their price increases in 2010. As a result, expect semi-detached and townhomes sales to increase by 10 and 11 per cent next year respectively.

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Posted in CMHC, Canada, affordable housing

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