Renters had an easier time finding rental accommodation in Vancouver this fall, compared to last year. Higher rental apartment vacancy rates have meant that renters have more choice. Although higher than last year, Vancouver’s vacancy rate is still below the national average and among the lowest in the country.

A slowdown in employment sent Vancouver’s rental apartment vacancy rate higher in 2009. The vacancy rate increased to 2.1 per cent, after sitting below one per cent for three consecutive years. Unemployment in the Vancouver Census Metropolitan Area (CMA) for the first ten months of 2009 increased to seven per cent from 4.3 per cent for the same period last year. Although employment has been gradually improving since the spring of this year, it has only been in the last couple months that full-time employment has grown.

A shift to homeownership also contributed to higher rental vacancy rates in 2009. A combination of low mortgage rates and home prices off their peak value has meant that monthly mortgage payments are lower. As of September 2009, the average monthly mortgage payment for an apartment condominium was approximately ten per cent less than it was one year ago3. Although the average mortgage payment is still higher than the average monthly rental payment, some renters have chosen to take this opportunity to enter homeownership.
Virtually all communities in the Metro Vancouver area saw an increase in vacancies in 2009. The only exception to this was the University Endowment Lands (UEL). The vacancy rate in the UEL, along with several areas of Vancouver City and North Vancouver, remained tight, below one per cent in October 2009.Vancouver City, with its educational infrastructure and job opportunities in the business centre, and the lifestyle communities of West Vancouver and White Rock recorded vacancy rates just over one per cent.Vacancies increased in all other municipalities, with suburban communities north of the Fraser River near three per cent, and communities south of the Fraser, in the 4-6 per cent range.

The rental availability rate4 for private rental apartments moved higher in 2009. The availability rate increased to 2.8 per cent in October 2009, from 1.1 per cent a year earlier. The vacancy rate for investor-owned rental condominiums increased in 2009, but to a lesser extent than that for purpose-built rental units. The rental condominium vacancy rate moved up to 1.7 per cent from 0.6 per cent last fall. The stock of rental condominiums is generally newer and features more amenities than their purpose-built rental counterparts. These benefits shore up demand for rental condominiums.

The lives of 18 individuals changed for the better today with the official opening of the Stella Burry Community Services’ new and much-anticipated housing project in Rawlins Cross.

The Honourable Peter MacKay, Minister of National Defence and Minister for the Atlantic Gateway, on behalf of the Honourable Diane Finley, Minister of Human Resources and Skills Development Canada and Minister Responsible for Canada Mortgage and Housing Corporation (CMHC), made the announcement today.

“The Government of Canada is proud to invest in initiatives that directly help people in our community access safe and suitable housing,” said Minister MacKay. “This project will provide safe and supportive housing and help individuals build a stronger future for themselves.”

The project has received federal funding from various initiatives to off-set construction costs. Funding by the Government of Canada, through CMHC, includes $905,000 under the Canada – Newfoundland and Labrador Affordable Housing Initiative and $216,000 through the Residential Rehabilitation Assistance Program. Stella Burry Community Services also received $348,900 from the Government of Canada homelessness funding and $20,000 in Seed Funding from CMHC during the initial planning stages.

Also, the General Council of The United Church of Canada contributed $250,000 toward the completion of the project. Incorporated under The United Church of Canada, Stella Burry Community Services provides programs in the community that reflect the social justice philosophies of the United Church.

“This is such an exciting day for us,” said Jocelyn Greene, Executive Director of Stella Burry Community Services. “From the beginning, the community, the city, our staff, our board members, as well as our federal and provincial partners have all been tremendously supportive of the entire project. I know it is because people relate to the work that we, as an organization, do in this community. We all firmly believe that everyone deserves an affordable and safe place to call home; that everyone deserves opportunity and supports to be the best person that they can be. A project such as this would not be possible without that strong, unified support, for which we are incredibly grateful and blessed.”

“We are extremely proud of the work that is being carried out by Stella Burry Community Services, and are delighted to contribute to this wonderful project in St. John’s,” said Mardi Tindal, Moderator of The United Church of Canada. “The availability of affordable housing has been a persistent concern of The United Church of Canada and our record of advocacy on issues relating to housing and homelessness is well known. The leadership shown by Stella Burry Community Services to increase the availability of housing for low income individuals in the St. John’s region is to be commended as we celebrate the opening of this beautiful building today,” she added.

Last fall, the Government of Canada committed more than $1.9 billion over the next five years to improve and build new affordable housing and to help the homeless. Canada’s Economic Action Plan builds on this with an additional one-time investment of more than $2 billion over two years in new and existing social housing and lending of up to another $2 billion to municipalities for housing-related infrastructure.

Provincially, the labour force and employment are expected to rise moderately in 2010, while in Halifax, growth is expected to be more significant. Halifax will continue to see steady growth in the economy and this will translate into improving conditions in the local housing market.

The local economy in Halifax continues to benefit from positive migration patterns. With more people moving to Halifax than moving away, the labour force has been growing. Almost every month of 2009 saw greater numbers of people looking for work in Halifax and by the summer months there were more people looking for work than ever before. Fortunately, most of these job seekers found employment which resulted in a record level of employment in Halifax. Employment was up by three to four per cent in 2009 compared to 2008. Employment may ease off of record highs during certain months in the forecast period, however overall employment is expected to continue to show positive growth in 2010.

Employment is being bolstered by the construction industry and the public sector. Large construction projects and large military contracts have contributed to strength in these industries. The largest employment sector in Halifax is the services sector which has seen slow but steady growth of approximately three per cent so far in 2009. The opening of some new or trendy retail stores has contributed to the growth in this sector. Areas experiencing weakness are the finance, trade and primary goods sectors which are struggling due to global economic issues and reduced demand for exports. Wages are also expected to continue to move upwards. As of August 2009, seasonally adjusted average weekly earnings have risen by over six per cent compared to the 2008 average. Average earnings now exceed $39,000 per year compared to just under $37,000 in 2008.

Record employment levels and wages  will be supportive of housing activity in Halifax for the remainder of 2009 and 2010. Continued in-migration and near historic low interest rates will also contribute to increased housing demand in the Halifax Regional Municipality (HRM). In the near-term, some lingering effects of the weakened economy will keep demand subdued. In the medium- term, however, expect to see demand and activity begin to increase again in 2010.

The Bank of Canada cut the Target for the Overnight Rate in the early months of 2009. The rate was 1.50 per cent at the start of 2009 and has since fallen to 0.25 per cent. The Bank has committed to keeping this rate at 0.25 per cent through the middle of 2010 unless inflationary pressures warrant an increase.

Mortgage rates have fallen over the course of 2009, but are now expected to remain relatively stable for the rest of the year. Posted mortgage rates will gradually increase through 2010, but will do so at a slow pace. For 2010, the one-year posted mortgage rate will be in the 3.50-4.25 per cent range, while three and five-year posted mortgage rates are forecast to be in the 4.50-6.00 per cent range

In-migration and low mortgage rates will lend
strength to the housing market this year and next. Residential construction is expected
to rebound in 2010 following declines in 2009, according to Canada Mortgage and
Housing Corporation’s (CMHC’s) Housing Market Outlook released today.
“Single starts in Charlottetown are expected to record an increase in 2010, while
multiple starts will slow slightly from the near record level of activity in 2009,” said Jason
Beaton, market analyst with CMHC in Prince Edward Island. Positive in-migration and
low interest rates will be supportive of housing demand in both 2009 and 2010. As a
result housing starts are expected to remain strong into 2010. Single-detached
construction will reach 275 units in 2010, while multiples construction will slow to 240
units.
Existing home sales are expected to decline this year before rebounding slightly in 2010.
Expect to see 550 units sell in 2009 and 575 units in 2010. The average price of an
existing home is expected to climb to $186,000 by the end of next year.
As Canada’s national housing agency, CMHC draws on more than 60 years of
experience to help Canadians access a variety of quality, environmentally sustainable
and affordable homes. CMHC also provides reliable, impartial and up-to-date housing
market reports, analysis and knowledge to support and assist consumers and the
housing industry in making vital decisions.

Residential construction and existing home sales levels
in Halifax are expected to rebound in 2010 following declines in 2009, according to
Canada Mortgage and Housing Corporation’s (CMHC’s) Housing Market Outlook
released today.
“New home construction in Halifax will rebound by 16 per cent in 2010,” said Matthew
Gilmore, senior market analyst with CMHC’s Atlantic Business Centre. “Employment
and wage levels have hit new record highs in 2009 while interest rates have been
historically low. These factors will be supportive of growth in the industry in 2010,”
Gilmore said.
Apartment-style construction will outpace other styles with 800 units expected to start in
2010 – an increase of 33 per cent.
Existing home sales will rebound by over six per cent in 2010. The average price of an
existing home is expected to climb by 2.5 per cent reaching $243,500 next year.
As Canada’s national housing agency, CMHC draws on more than 60 years of
experience to help Canadians access a variety of quality, environmentally sustainable
and affordable homes. CMHC also provides reliable, impartial and up-to-date housing
market reports, analysis and knowledge to support and assist consumers and the
housing industry in making vital decisions.

The Capital Region will experiences increases in existing home sales, and significant residential construction in 2010. Employment growth, continued migration, and low mortgage rates will contribute to the stabilization of Greater Victoria housing demand. After a slow 2008 and first quarter of 2009, lower home prices and low mortgage interest rates contributed to a significant rebound in resales in mid-2009. Expect both resales and average home prices to experience small increases in 2010.

Housing starts will bounce up in 2010, following two years of reduced levels of residential construction activity. The mid-2009 surge in resale activity combined with less supply (fewer homes under construction, and fewer existing and new homes for sale) will boost the number of new homes breaking ground in Greater Victoria next year.

Modest growth in existing home sales is projected for 2010, following a slight rebound in 2009. The growth will result from a stabilizing economy and continued sales by those looking to take advantage of low interest rates and ample, but shrinking supply. The recent up tick in resale prices (after bottoming out in the first quarter of 2009) combined with the anticipation of higher mortgage rates next year have led some potential home buyers to believe that Victoria-area homes will become more expensive. The favourable buying conditions will elevate sales through the remainder of 2009 and into 2010.

After six years of above average resale activity across the Capital region, a significant lull in existing home sales was observed in 2008 and through the first quarter of 2009. Since then, resale conditions have rebounded strongly due to relatively low mortgage rates and a downward adjustment in resale prices observed between the first quarter of 2008 and 2009.

The improved affordability that has been observed across Greater Victoria is evidenced by the reduced average mortgage payment that is required to purchase a home. In inflation- adjusted terms, the monthly payment associated with purchasing a single- detached home in Victoria declined 17 per cent between the peak of unaffordability (Q2 2008) and the August 2009 level.2

Affordability became a major issue for potential homebuyers during the extended upswing in resale prices that took place between 2001 and 2008. Over this period, the average resale home price in Greater Victoria increased at an average rate of 12 per cent per year. The recent improvements in affordability have been a breath of fresh air for those who previously could not afford home ownership, or were waiting for a more opportune time to enter the home ownership market.

A return to more balanced resale market conditions will occur in 2010, as both resale demand and supply stabilize. The strong demand recorded this summer has reduced the number of active MLS® listings considerably since reaching a peak last fall. As resale market demand stabilizes in 2010, so too will the supply of existing homes in Greater Victoria.

The fluctuations in existing home sales observed over the past two years have impacted average resale prices across the Capital region. After an extended period of steady and significant price gains, the average resale price declined 12 per cent from peak to trough in response to weak resale demand. Since bottoming out, the average Greater Victoria resale price has been edging up and currently sits three per cent below the peak level. With resale market conditions stabilizing, this will translate into minor price appreciation next year.

Moishe Alexander’s Review:

New Home Market – High Rise Sales Will Dominate New Home Market

Toronto, Ontario - Credit Ian Muttoo, Flickr

New home sales in the Greater Toronto Area (GTA) will continue to moderate in 2009. Total new home sales will reach 22,500 in 2009 – down by 24 per cent compared to forecast sales in 2008. High rise sales have accounted for more than 50 per cent of the total share of sales since the end of 2007. This trend will continue and the share of high-rise sales will increase in 2009. New home sales will trend lower as choice increases in the resale market. Softer local economic conditions and elevated home prices will push the demand for home ownership lower.

Consequently, existing home sales will drop off as a share of listings. This means that an increasing share of homebuyers will meet their housing needs through the purchase of an existing home. Reduced preconstruction sales centre traffic will be the result. The low-rise housing sector will experience moderating sales much more so than the high-rise sector. The average price of a new condominium apartment is much lower than the average prices for most low-rise home types. This will be one issue prompting an increasing share of new homebuyers to purchase a condominium apartment. Changing demographics in the GTA also explain the heightened interest in the high-rise market. The average household size is shrinking with an increase in lone-parent and childless family households. These categories of homebuyers tend to live in smaller housing types like condominium apartments. The luxury high-rise market is also a growing niche that is catering to an increasing number of ageing baby boomers and empty nesters. Many of these more aged households will be wealthy from home equity growth and other sources. Many baby boomers will be looking for a large and often luxurious home without the outdoor maintenance that is often required in a low-rise setting. Strong immigration into the GTA has also played a role in increased demand for condominium apartments. This housing type has been an entry point into homeownership for many newcomers because of the lower average price point, which favours first-time buyers. Immigration will continue to be the dominant source of population growth in the GTA moving forward.

Starts to Edge Down

Lower new home sales over the past year and forecast for 2009 will translate into fewer new home starts. Following a healthy increase for 2008, total housing starts will edge lower by 21 per cent to 34,250 in 2009. Similar to the new home sales outlook, low-rise home starts will decline at a greater rate than apartment starts. In this way, the share of apartment starts will continue to trend higher, with 59 per cent of total new home construction being accounted for by high-rise units. The great majority of these apartments (approximately 95 per cent) will be condominiums for home ownership. During the last two years, preconstruction sales of condominium apartments have hit record levels resulting in a back-log of units yet to start construction. While some of this back-log has unwound this year, units sold at the pre-construction stage up to two years ago will continue to start in 2009. Add to this the fact that 2008 pre-construction sales have been high historically, I makes sense that the share of apartment construction will continue to increase. In order to see condominium apartment developments move from the pre-construction to construction stage, developers must be able to source labour, materials and equipment to allow construction to commence and continue without interruption. In many cases, because of the high number of apartments currently under construction, some developments must reach the completion stage before work can begin on new projects. Condominium apartment completions have begun to trend higher and will grow at a stronger rate in 2009. For this reason, condominium apartment construction will remain at high levels through the end of next year.

The Condominium Investment Question

When discussing record and near record levels of condominium apartment sales, starts and completions, inevitably the topic of conversation turns to investors. The concern is investors with a short time horizon. These individuals purchase at the pre-construction stage of development with the intention of selling shortly after the completion and registration of the project under a condominium corporation. If many investors were to flood the market with listings all at once, average condominium apartment prices could be forced downward as buyers benefited from increased negotiating power in an over-supplied market. While it is not known for certain what percentage of units currently under construction are held by investors, discussions with industry stakeholders suggest an investor held concentration of approximately one-third. As completions have trended upwards after reaching a low point in 2007, an increase in listings has also taken place. This will continue through 2009. The question is whether or not an increased number of investor-held units reaching the marketplace will cause prices to fall, buyers’ equity to erode and ultimately pre-construction purchasers to “walk away” from their deposits. There certainly will be more choice through the end of 2009, but resale market conditions are sufficiently tight, especially in the central GTA, that a buyer’s market situation is not expected to develop. Instead, price growth will move closer to the rate of inflation for the GTA as a whole and slightly above inflation in central Toronto. Beyond 2010, the number of investor-held units reaching the market place will likely flatten out and then decline as the number of units sold and under construction trend lower. Moreover, as price growth moves closer to inflation, there will be fewer investors operating at the pre-construction stage of development as the potential return on investment becomes less attractive in the short term.

Existing Home Market – Existing Home Sales Off the Peak

Over the next two years, the number of home sales under the MLS® system in the GTA will trend lower off the 2007 record high. Sales will moderate due to softer economic conditions domestically and elevated home prices. In 2008, home sales will be down to 82,000 units, moderating by 14 percent from a year ago. In 2009, sales will edge lower by 8.5 per cent to 75,000. Slower growth in jobs and earnings will especially impact would-be first time buyers, who are generally more sensitive to changes in economic conditions and who face a wider gap between ownership and rental costs. In addition to the labour market situation, a long phase of home price growth well above the general rate of inflation and household incomes has ultimately moderated demand for homeownership. Slower price growth over the next year will help this situation somewhat, but on net will still result in an increased number of buyers putting their home buying decision on hold. While home sales will be off record levels, continued steady net-migration and low borrowing rates will keep home buying activity in the GTA in line with the average over the past ten years.

More Supply, Moderate Price Growth

New listings will continue to grow to reach a record-high level in 2008. The trend will flatten out in 2009. At a maturing stage of the housing cycle, when the rate of price increase usually slows, an increasing number of homeowners list their homes for sale to realize the equity gains accumulated during the expansion phase of the price cycle. The trend in listings growth will eventually slow and then change direction, however, as fewer home owners are able to sell their homes for the anticipated values for their properties. This will begin to happen toward the end of 2009. The relationship between sales and new listings speaks to the level of choice in the existing home market. With sales lower this year and the level of new listings continuing to grow, buyers have had more homes to choose from. This increased choice has meant that offers below the asking price have been more common. As a result, annual price growth in the GTA has moderated. In 2009, the level of new listings is expected to level off and start declining toward the end of the year. While the sales-to-new listings ratio will continue to decline, it will do so at a diminishing rate. The resale market will remain balanced, with prices growing in line with inflation. The average home price in 2008 will be up 2.6 per cent to $387,000. By the end of 2009, the average price of home will reach $394,000 – up 1.8 per cent. While positive, these forecast growth rates are much more moderate than what was experienced on average over the past ten years, including the seven per cent growth rate experienced in 2007. Not all housing types will experience the same moderation in price growth over the next year. Condominium apartments in the central Toronto area are a good example of this. The central Toronto area remains a tighter market than the region as a whole. While condo buyers in the central area have experienced more choice this year, seller’s market conditions still persist. As choice continues to increase in 2009, price growth will moderate, but will still remain above the average for the GTA as a whole.

The First Time Buyers Niche Gets Smaller

Over the long term, first-time buyers will remain the most important factor driving sustained demand for home ownership in the GTA. As immigration into Canada and the GTA increases over the next two decades, many of these households will be pointed in very short order towards the purchase of a new home. In the short-term, however, the level of first-time buying activity is subject to the economic cycle. The number of households purchasing their first home will be trending lower in 2009. Softer labour market conditions along with elevated home prices will affect the ability of some first-time buyers to make a home purchase. Based on CMHC’s Renovation and Home Purchase Survey, the percent- age of intended home purchases accounted for by first-time buyers declined to 40 per cent for 2008 compared to 47 per cent in 2007. This share will decline further in 2009.

Economic Trends – Toronto Will Continue to Create Jobs

Employers in the GTA have persevered in 2008. The rate of job growth will be 1.8 per cent in 2008 – above the average for Ontario. In 2009, job growth will remain positive, but the rate of growth will moderate to one per cent. Job growth will come from the service sector. As labour market conditions in the GTA remain tight through the end of 2009, wages and salaries will continue to grow slightly above the rate of inflation. With the unemployment rate hovering around seven per cent, many employers in the service sector will be offering wages above the rate of inflation.

Mortgage Rates

Mortgage rates are expected to be relatively stable throughout the last quarter of this year, remaining within 25-50 basis points of their current levels. Posted mortgage rates will decrease slightly in the first half of 2009 as the cost of credit to financial institutions eases. Rising bond yields, however, will nudge mortgage rates marginally higher in the latter half 2009. For the last quarter of 2008 and in 2009, the one year posted mortgage rate will be in the 6.00-6.75 per cent range, while three and five year posted mortgage rates are forecast to be in the 6.50- 7.25 per cent range.

You can find the entire report in PDF format through the following link:
http://www.cmhc-schl.gc.ca/odpub/esub/64319/64319_2008_B02.pdf