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Barrie CMA

Comments: 0January 4th, 2010 by admin

Posted by Moshe Alexander

The Barrie CMA rental market experienced softer conditions in 2009. The average vacancy rate for purpose- built rental apartments rose up by 0.3 percentage points this year to 3.8 percent. Several factors contributed to easing demand, including a rebound in homeownership demand and high youth unemployment. Continued moderate migration into Barrie supported demand.

Supply, also, was virtually unchanged, increasing by only 15 units. There were no new purpose-built apartments, but the number of units in the existing universe increased for a variety of reasons.

With a softer rental market the growth in average monthly rent for a two-bedroom unit slowed significantly from last year and came in at 1.2 per cent, well the below the maximum rent increase stipulated by the province.

The economic adjustment has affected employment prospects in Barrie for all age cohorts, but in particular the youngest age cohort of 15-24. This group makes up a significant proportion of Barrie’s labour force, given the region’s overall young population and is also a key source of rental demand. The proportion of the labour force in Barrie made up by the 15-24 year-old age group this year has averaged close to 20 per cent. Both full-time employment and part-time employment for this age group have been trending down. With a slowly recovering economy, young people who had been renting returned to the parental home or doubled up with other youth, while those currently living with parents are staying at home until the economy recovers further.

The rate of migration into Barrie has slowed. Nevertheless migration into Barrie from within Ontario is higher than it is in most other Ontario centres. Moveover, slightly fewer people are moving away from Barrie to other parts of the country. Immigration and births added to the slower, but still significant, population growth rate. A growing and relatively young population continues to support rental demand.

With mortgage carrying costs down due to record-low mortgage rates, first-time buyers have exited rental into homeownership thereby increasing the overall vacancy rate.

The decline in mortgage rates in 2009 put mortgage carrying costs back to where they were in 2006. These payments hit a low in the second quarter, which coincided with an improvement in the employment prospects for the 25-44 year old age group. This is the same age group from which many first-time buyers are drawn, so the surge in existing home sales beginning in the second quarter likely included many purchases by people who were renting at the time.

Renters who move into homeownership usually have relatively high incomes compared to other renters and often occupy the larger, more expensive rental accommodation before their move. Given the significance of the secondary rental market in Barrie, in particular, the number of rented single-detached homes, a number of first-time buyers would be coming from the secondary rental market. As a result, the movement to home ownership in Barrie resulted in a relatively small increase in the primary rental market vacancy rate since some the impact was absorbed in the secondary rental market.

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Posted in CMHC, Canada

HOUSING MARKET OUTLOOK Saskatoon

Comments: 0November 5th, 2009 by admin

Posted by Moishe Alexander

The CMHC forecast calls for 900 single-detached starts in 2009 followed by 1,000 in 2010. The 2009 production will be the lowest number of single starts since 2005 when there were 751 foundations poured. The decline in single-detached starts in 2009 compared to 2008 is due to a number of factors, including managing a build-up in the supply of new housing units, consumer resistance to price escalation, and heightened competition from resale housing. Reduced in-migration and a moderating economy in 2009 have also played a role in this market adjustment.

At mid-year, single-detached starts were 65 per cent below the historically high 2008 figure for the same period. The slowdown in new construction has allowed the inventory of complete and unabsorbed units to decline and a stronger second half of production is expected. At the end of August, single-detached starts had recorded two consecutive months of year-over-year increases. Though there has been a recent uptick in starts activity, CMHC expects builders will limit production to prevent a rise in inventory.

In terms of total supply, there were more than 800 single-detached units under construction or completed but unoccupied at the end of August. While this is the third highest supply on record for the month of August, total supply has been in decline, on a year-over-year basis, since December 2008.

The bulk of single units in supply are those in various stages of construction. The units under construction have been declining on a year-over-year basis since October 2008. The decline in the units under construction figure is due to slower starts since June 2008. As stated, only recently have starts increased on a year-over-year basis.

The number of single units that are completed and unoccupied now lies at 142 units, up from 115 one year earlier. Though higher than last year at this time, the completed and unoccupied count has seen monthly declines since December 2008 when inventory peaked at 244 units. Competition from the resale market may be having an impact on new single absorption. Industry sources state that investors who purchased new homes in the previous two years are now creating competition for homebuilders by listing their homes on the resale market at competitive prices.

To the end of August, there have been 757 single absorptions in 2009 compared to 819 at this time in 2008. Average absorption now stands at 95 units monthly compared to the 110 units absorbed monthly in 2008.

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Posted in CMHC, Canada, New Home Starts, Newfoundland, affordable housing

NEW HOME MARKET

Comments: 0November 5th, 2009 by admin

Posted by Moishe Alexander

Following a 56 per cent decline in 2008, total housing starts across the Edmonton Census Metropolitan Area (CMA) are on pace to decrease by another 24 per cent this year to 5,000 units. This will represent the lowest level of activity for the region’s home builders since 1997. While single- detached construction has staged a modest recovery since the summer, a continued downturn in the multi- family sector will hold down this year’s numbers. In 2010, a sustained improvement in single starts combined with a moderate rebound in multiples will boost total starts by 29 per cent to 6,450 units. While representing a sizable gain over this year’s volumes, total starts next year remain a fraction of the 10,600+ units started on average during the 10 year period 1999-to-2008.

Single-detached starts increased by 14 per cent during the first nine months of 2009 but the improvements have come on gradually as the year has progressed. Activity levels were down by 39 per cent year-over-year at the end of the first quarter but have generally exceeded last year’s production since then. Price reductions, various incentives, and low mortgage rates have helped to bolster demand in 2009. This trend should continue for the balance of 2009, with annual production nearing the 3,200 unit mark. This will represent an increase of 22.5 per cent over 2008 but will still be well below activity levels reported over the past decade. Look for these gains to continue in 2010, with single starts of around 4,200 units. The tepid outlook for employment growth will temper the rate of increase going into 2010. Inventory levels, including show homes, peaked in August 2008 and have been trending downward throughout much of the past year. As shown in Figure 2, the show home component of inventory has started to move upward as builders ramp-up marketing efforts. The inventory of complete and unabsorbed spec homes, meanwhile, has trended to its lowest levels since September 2006.

Statistics Canada’s New House Price Index (NHPI) is forecasted by CMHC to decrease by 10.5 per cent this year before staging a two per cent improvement in 2010. These price changes have begun to show up in CMHC’s market absorption surveys but the overall average absorbed price has held up surprising well in 2009. To the end of August, the average absorbed price increased this year nine per cent to $545,327. While units priced under $400,000 and over $600,000 have gained market share this year, mid-range product selling between $400-600,000 lost ground compared with last year.

CMHC forecasts an average absorbed single-detached price this year of close to $535,000, for a 4.5 per cent gain over 2008. The expected median value will be much lower as the impact of high-priced homes is less using this measure. In 2010, the absorbed average price will soften due to the lagged effect of when homes are priced (often before construction begins) and when they are captured in our survey (which is at completion). The pressure for higher negotiated selling prices will come from builders who had trimmed their margins over the past year in order to clear their unsold inventory. With better economic times ahead, land and labour costs as well as material prices such as lumber and concrete are expected to increase.

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Posted in CMHC, Canada, Ontario, affordable housing, moishe alexander

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