Posts Tagged ‘average’

Posted by Moishe Alexander

According to the results of the Rental Market Survey conducted by CMHC in October, the market remained tight in the Québec CMA, as the vacancy rate stayed at 0.6 per cent. As well, the availability rate, which measures the percentage of units up for rent, was also low (1 per cent). This indicator revealed that a small proportion of tenants intend to put an end to their leases. The percentages of vacant units and available units on the market were therefore low. Demand for apartments has been strong, and supply has increased only slightly in recent years. The economic conditions prevailing in the area have contributed to maintaining demand for rental housing, with the low unemployment rate and solid job market having stimulated the formation of young households and the migration of workers to the CMA. In addition, youth employment rose this year. It should be noted that young households with a primary maintainer aged under 25 years are most often (9 times out of 10) renters.

The Québec CMA has the tightest rental market in the province. And, the Québec area, along with the Regina CMA, also had the tightest rental market conditions in the country. Across the province of Quebec, conditions remained stable in the Gatineau, Montréal and Saguenay areas, as well, while they eased in Sherbrooke and Trois-Rivières. Vigorous demand Since the beginning of the decade, the rental market has been tight in the CMA. It should be pointed out that employment has grown and that the unemployment rate reached an all-time low in 2008 (4.5 per cent). During the first half of 2009, the labour market resisted the global recessionary climate, as employment increased in the first two quarters. However, a decline was noted in the third quarter. In the end, the number of jobs should remain stable in 2009 and rise slightly in 2010 (+0.5 per cent). This contrasts with the conditions observed in the other urban centres across the province, where decreases in employment have been noted since the beginning of the year.

The economic conditions therefore remained favourable in the area, as net migration rose to 4,350 people in 2007/2008, for a gain of 6 per cent over the year before. According to the available data, net migration will be high in the area for the current decade, reaching a total of about 40,000 people, compared to just 20,000 during the 1990s. The large number of new residents is significantly fuelling demand for rental housing. In fact, interregional migration is considerable and mainly composed of young people aged from 15 to 24 years (66 per cent). The international migration component has also increased in recent years, but the area is still losing some residents to other Canadian provinces.

Construction stimulated by market conditions In 2007 and 2008, traditional rental housing construction was less significant than in previous years. This situation, combined with a steady demand, contributed to maintaining the tight conditions observed on the market in the area. Between 2008 and 2009, 459 traditional rental housing were completed, which reflects a small increase in supply, considering the size of the Québec area market and the strong demand. This year, however, construction was more vigorous. In all, 924 traditional apartments were started from January to October 2009, compared to 423 during the same period in 2008.

Market very tight for larger units The larger the unit size, the tighter the market conditions as, in October, the vacancy rate was 0.1 per cent for three-bedroom apartments, compared to 1.6 per cent for bachelor units. The availability rate was also lower for larger apartments (0.5 per cent). As well, the supply of such units was more limited, accounting for an estimated 14 per cent of the universe1. with 10,400 three-bedroom apartments out of a total of 71,900 units. Two-bedroom apartments, for their part, made up 51 per cent of the survey universe.

Conditions tight in all market zones The conditions prevailing in the nine market zones in the CMA reflected a strong demand in all sectors. However, the rental market in the Haute-Ville zone has eased slightly since last year, as the vacancy rate there rose from 0.7 per cent to 1.4 per cent. And, the availability rate in this zone reached 2.2 per cent this pas October–the highest in the area. The estimated change in the average rent could explain this easing of the market in the Haute-Ville zone, as rents there rose by 4.5 per cent over 2008, for the strongest increase among all market zones in the Quebec area. In addition, this zone has the highest rents, with the average rent for two- bedroom apartments having reached $881 per month this past October, or 30 per cent more than the average for the CMA ($676 per month).

It should be noted that the western part of the South Shore (Charny, Saint-Romuald, Saint-Jean- Chrysostome) had a vacancy rate of 0 per cent this past October, compared to 0.2 per cent the year before, while the eastern part of the South Shore (Lévis, Pintendre) saw its market conditions ease this year (with a vacancy rate of 0.9 per cent, up from 0.4 per cent).

Posted by Moishe Alexander

The slackness in the resale market has directly impacted the new home market as has the slowing economy. Single-detached starts will fall to 160 units in 2009 and 170 in 2010, as the market comes more into line with long term demographic requirements. CMHC expects 30 row, condominium and apartment starts in 2009 and another 55 in 2010. Relatively tight rental market conditions and reasonable take up of condominium units will result in some of this activity over the next 18 months.

As Figure 2 indicates, there has been improvement in household incomes in Thunder Bay and with required income being more or less flat, affordability has improved. Next year, with home prices and incomes rising modestly, homeownership should remain an affordable option and therefore demand should strengthen slightly.

After rising 4.3 per cent and 5.5 per cent respectively in 2007 and 2008, the New Home Price Index for Sudbury-Thunder Bay will rise in 2009 and 2010 but only modestly given the slowdown in demand.

Vacancy rates have come down steadily since 1998 in Thunder Bay while two bedroom rents are the lowest amongst other centres in Ontario. Lack of new supply and healthy demand due to strong enrolment numbers at Lakehead University and Confederation College contribute to the demand picture, not-to-mention in-migration from Northwestern Ontario from retirees and education and/or job seekers. CMHC expects the vacancy rate to fall again in 2009 to 1.6 per cent before increasing to 2.0 in 2010 as resale market activity picks up bringing households out of rental housing into homeownership. Rents should escalate in 2009 and 2010 given continued strong demand for rental accommodation.

Developers have plans for condominium in 2010 and beyond. A steady supply condominium units coming onto the market over the last twenty years has given Thunder Bay a nice mix of housing. This type and tenure of housing gives the city some allure, especially as empty nesters from the region look to retire to this city. Pricing will be very important as this product is primarily targeted at empty nesters who do not typically want to pay more for a condo than what they obtain from the sale of the family home or other homeownership unit.

After hitting a record high in 2008, Thunder Bay sales have fallen 18 per cent in 2009. July was the only month to register a year-over-year increase in sales. Sales will fall twenty per cent in 2009 and CMHC estimates a relatively small six per cent increase next year to 1,400 sales. Expect a gradually improving economy as low mortgage rates will positively impact the market next year.

The shortage of active listings in the Thunder Bay existing home market will exert pressure on prices. Although sales are still reasonably solid given last year’s all-time record in the Thunder Bay market, the sales to active listings ratio is unquestionably in a strong balanced to seller’s market position. The supply- demand relationship will cause price appreciation to continue barring some unforeseen economic shock. Watch for average prices to rise four per cent in 2009 and another four per cent in 2010.

Posted by Moishe Alexander

The new home market in the Greater Toronto Area (GTA) will see sales activity rise slightly this year in comparison to 2008. The low-rise housing segment will be credited for the increase in sales in 2009 while the high-rise sector will outperform in terms of sales growth next year. Total new home sales will reach 28,500 units this year and remain steady at 29,000 in 2010 — well below the annual average for the new millennium.

For the first time since 2006, low-rise homes will account for the majority of new home sales in the GTA in 2009 and 2010. New low rise home sales will rise by 37 percent this year to 17,000. Although this level is still well below the high reached in 2002, it represents a complete turnaround from last year when sales dropped by over 40 per cent. Low borrowing costs this year are a clear contributor to the rebound in low-rise sales, as is a lack of supply in the resale market. A rise in new listings in the resale market and a reduction in affordability next year will dampen demand for new single-detached homes in the second half of 2010. Total low-rise home sales will move lower in 2010 to 15,500 units — still above the 2008 level. Strong sales for singles in the first part of next year coupled with stable demand for less-expensive semi-detached and row houses throughout 2010 will provide some support for the low-rise segment.

A tougher selling environment for high-rise homes will lead to a sales decline of 23 percent this year to 11,500 units — the lowest level since 2003. More project launches, an improving employment situation for younger workers and a shift towards lower-priced housing types in the second half of next year will boost new high-rise sales in 2010 by 17 percent to 13,500 units. Construction delays and a heightened sense of uncertainty regarding new condominium projects this year has turned buyers away from pre- construction sales offices. At the same time, less project launches have created fewer new options for buyers. Faced with high levels of inventory relative to demand, developers have begun offering generous buyer incentives and reconfiguring remaining units to attract more sales centre traffic. Sales levels have responded and are now much higher than at the beginning of the year. Still, sales are down by over 40 percent in the year-to-date to August and even with further improvement will register an overall decline in 2009. However, current sales momentum will carry into 2010, leading to a much better performance for 2010.