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.

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.

Total housing starts are on pace to decline 52 per cent in 2009, reaching 5,550 units. This would represent the lowest level of activity since 1991. A bulk of the reduction in total housing starts is stemming from the multi-family market, where inventory levels remain elevated. As economic and housing market conditions improve, home builders are forecast to increase production by 21 per cent to 6,700 units in 2010.

Single-detached starts have rapidly improved since the beginning of the year when builders cut production in response to lower sales and rising inventory. After the first half of the year, starts were down 33 per cent, though solid gains since June have lessened the decline. Despite the increased starts activity in recent months, this resurgence will not offset the lower production earlier in the year. Single-detached starts in 2009 are on pace to decline four per cent to 4,200 units compared with 4,387 units in 2008. As inventories have declined and sales have increased, new construction of homes is expected to pick-up throughout the forecast period. Single-detached builders are anticipated to increase production by 17 per cent in 2010, with 4,900 units breaking ground.

Lower mortgage rates and builder incentives have supported new home sales, and there has been less competition from the resale market. The inventory of complete and unabsorbed units also peaked at the beginning of 2009 and has since been on the decline. Total supply, which is units in inventory and those under construction, has been reduced to a level not experienced since 2001. With a low level of supply and improved demand, building intentions and construction activity is on the rise. In June, July, and August, building permits were up on average by 59 per cent over the same period in 2008. Single starts in the third quarter have increased 45 per cent above the previous year, following 10 consecutive quarters of year-over-year declines. More spec homes are also breaking ground. At the beginning of 2009, less than five per cent of homes under construction were spec units. In August, however, spec homes under

year when builders cut production in response to lower sales and rising inventory. After the first half of the year, starts were down 33 per cent, though solid gains since June have lessened the decline. Despite the increased starts activity in recent months, this resurgence will not offset the lower production earlier in the year. Single-detached starts in 2009 are on pace to decline four per cent to 4,200 units compared with 4,387 units in 2008. As inventories have declined and sales have increased, new construction of homes is expected to pick-up throughout the forecast period. Single-detached builders are anticipated to increase production by 17 per cent in 2010, with 4,900 units breaking ground. Lower mortgage rates and builder incentives have supported new home sales, and there has been less competition from the resale market. The inventory of complete and unabsorbed units also peaked at the beginning of 2009 and has since been on the decline. Total supply, which is units in inventory and those under construction, has been reduced to a level not experienced since 2001. With a low level of supply and improved demand, building intentions and construction activity is on the rise. In June, July, and August, building permits were up on average by 59 per cent over the same period in 2008. Single starts in the third quarter have increased 45 per cent above the previous year, following 10 consecutive quarters of year-over-year declines. More spec homes are also breaking ground. At the beginning of 2009, less than five per cent of homes under construction were spec units. In August, however, spec homes under

The New Home Price Index (NHPI) has started to stabilize, after declining from its peak in the first quarter of 2008. In the first seven months of 2009, the NHPI was down on average of 7.7 per cent, compared to the same period a year earlier. A majority of the decline is attributed to the house component, as reduced construction activity has taken pressure off input costs such as labour and materials. Land costs are down slightly from a year ago, but for the most part lot prices have held firm. By the end of 2009, new home prices are anticipated to gain more ground and the NHPI will end the year down by an average of 6.9 per cent from the 2008 average level. In the face of higher starts, stability in new home prices is expected to improve into 2010 with the NHPI increasing two per cent. The monthly absorbed average price of a new home has declined since 2008 and appears to be leveling at around $535,000. The average price in August was $534,954 and in September was $537,225, down year-over-year by eight and ten per cent respectively. Readers should note that the absorbed price reflects units absorbed in a given month, which is not necessarily the month when the price was negotiated. The average absorbed price is forecast to fall from $581,800 in 2008 to $560,000 in 2009. With stronger demand conditions and more manageable inventory levels expected for the balance of 2009 and throughout 2010, the average absorbed price is anticipated to increase modestly. Despite the month-over-month gains projected for 2010, it will not be enough to push the yearly average above 2009 levels. In 2010, the average absorbed price will decline 1.4 per cent to $552,000.

Total housing starts in New Brunswick are expected to see a
moderate rebound to 3,525 units in 2010 following a decline to 3,400 units in 2009, according to
Canada Mortgage and Housing Corporation’s (CMHC) Housing Market Outlook released today.
“Following an expected reduction in MLS® sales and residential construction throughout 2009, a
moderate increase in activity is expected next year in New Brunswick,” said Claude Gautreau,
CMHC’s senior market analyst for New Brunswick. Although housing activity has diminished in
2009, economic fundamentals in the province remain strong, highlighted by historically high
employment levels. These conditions are expected to persist over the forecast period.
In New Brunswick’s three large urban areas – Saint John, Moncton and Fredericton – residential
starts will trail last year’s pace to the end of the year, followed by a moderate rebound in 2010.
The existing home market is expected to follow the same general trend with stronger price
growth next year and increased sales.
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 Government of Canada is helping make affordable housing available in Saskatchewan and across Canada for those who need it most,” said Maurice Vellacott, Member of Parliament for Saskatoon – Wanuskewin, 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). “Through this investment we are stimulating the local economy and creating jobs. We are also making an important difference in the lives of individuals and families in Saskatoon who are working towards building a stronger and better future for themselves.”

“As our population ages, there is a growing need for quality, affordable housing that will allow seniors to continue to live in their communities with dignity and independence,” said MLA Joceline Schriemer, MLA for Saskatoon – Sutherland, on behalf of the Honourable Donna Harpauer, Minister of Social Services and Minister Responsible for Saskatchewan Housing Corporation. “Projects such as Bethany Manor help meet that need, as well as contribute to healthy communities and healthy neighbourhoods.”

“Bethany Manor means so much to the seniors in Saskatoon,” said Mayor Donald Atchison. “It provides affordable housing to a very important target population as identified in the Saskatoon Community Plan on Homelessness and Housing. We are all partners in keeping our seniors safe, secure, and active in our community.”

Located at 210 Pinehouse Drive in the Lawson Heights area of Saskatoon, Bethany Manor consists of 56 one- and two-bedroom life-lease and affordable rental housing units for low and moderate-income seniors in a supportive setting. The project was undertaken by Saskatoon Mennonite Care Services Inc., a community-based non-profit corporation established in Saskatoon in 1981.

The building’s innovative geothermal heating and cooling system, worth approximately $1.1 million is expected to save approximately $100,000 a year in utility and operational costs. The environmental impact in terms of greenhouse gas will mean a reduction of almost 3 million kilograms of carbon dioxide annually.

The total cost of the project is approximately $7.7 million. Of that amount, $2.8 million in funding was provided to assist in the construction by the federal, provincial and municipal governments: $1.4 million from Canada Mortgage and Housing Corporation; $1.1 million from Saskatchewan Housing Corporation, and $280,000 from the City of Saskatoon. The funding balance consists of land, equity, in-kind contributions, equity from occupants and mortgage financing.

In 2008, the Government of Canada committed more than $1.9 billion over 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, plus up to $2 billion in loans to municipalities for housing-related infrastructure.

Edmonton, Alberta - Credits PinkMoose, Flickr

The Edmonton Alberta Housing Market in new home sales is taking a huge downturn from the record levels 2008 by 56%. However, the housing market in Edmonton will start to recover in the latter part of 2009. The Canada Mortgage and Housing report that was released in the fourth quarter of 2008, shows a graph of the housing starts both ups and down in the Edmonton Alberta market.

SINGLE-DETACHED CONSTRUCTION TO IMPROVE IN 2009

The Canada Mortgage Housing Corporation reported that housing starts will dip 66% in 2009. This reduction in housing starts will also cause for new housing starts to drop from 3000 units to approximately 2600 units in 2009 in the Edmonton Alberta market.

With the demand that was previously high, the average time to build a detached home has increased over the past 7 years in Edmonton, from 6 months to just over 13 months. The average price for a new detached home in Edmonton Alberta has increased from $418,954.00 to $498,961.00, in 2009, which is an increase of 19% over the same period last year.

MULTIPLE DWELLING STARTS EASE IN 2009 OVER INVENTORY CONCERNS

The Edmonton Alberta real estate market after four years of double-digit price growth, like other housing markets in Canada, experienced extreme growth in 2007. However, there was a 23% decline in housing sales in the latter part of 2008. However, it is predicted in 2009 by Canada Mortgage and Housing Corporation that the sales will stabilize but still there will be a 32% reduction in sales, as compared to 2006 and 2007.

ECONOMY SOLID REGIONAL ECONOMIC FUNDEMENTALS

The economic and employment outlook for growth in the Edmonton Alberta area is predicted to reduce in 2009, and is projected to reduce more substantially then any other province as a whole by the Canada Mortgage and Housing Corporation, in their fourth quarter report in 2008.

However, the capital region, located in the central part of the province, and all other surrounding neighborhoods will generate substantial economic and employment growth throughout all of 2009. In fact, Canada Mortgage and Housing Corporation predicts that area employment in Edmonton Alberta will grow by 2.4% in 2009, with new jobs being added in the high-tech, trade, healthcare, personal and other service related industry sectors.

Edmonton Alberta is one of the few regions that is still experiencing a shortage of workers, and is attempting to implement policies to encourage migration.

MORTGAGE RATES

Canada Mortgage and Housing Corporation predict that interest rates will decline by a further 25-50 basis points from their current levels in 2009. However, due to the cost of borrowing to the Canadian banks from the markets, the mortgage interest rate will marginally increase in the latter half of 2009, but not significantly enough to negatively affect the housing market in Edmonton Alberta.

You can find the entire report in PDF format through the following link:
http://www.cmhc-schl.gc.ca/odpub/esub/64343/64343_2008_B02.pdf

Calgary Alberta - credit Kevin Saff / Flickr

The Calgary Alberta Housing Market in new home sales is taking a huge downturn from the record levels 2008 by 45%. However, the housing market in Calgary will start to recover in the latter part of 2009. The Canada Mortgage and Housing report that was released in the fourth quarter of 2008, shows a graph of the housing starts both ups and down in the Calgary Alberta market.

SINGLE-DETACHED CONSTRUCTION TO IMPROVE IN 2009

The Canada Mortgage Housing Corporation reported that housing starts will dip 22% in 2009. This reduction in housing starts will also cause the lot prices for new housing starts to drop from 777 units to approximately 4500 units in 2009 in the Calgary Alberta market.

With the demand that was previously high, the average time to build a detached home has increased over the past 8 years in Calgary, from 7 months to just over 11 months. The average price for a new detached home in Calgary Alberta has fallen from $575,000.00 to $564,000.00 in 2009, which is a reduction of 4.8%.

RESALE MARKET PRICES TO ADJUST TO CHANGING SUPPLY AND DEMAND CONDITIONS FOR RESALE HOMES AS THE MARKET IS STABILIZING

The Calgary Alberta real estate market after four years of double-digit price growth, like other housing markets in Canada, experience extreme growth in 2007. However, there was a 45% decline in housing sales in the latter part of 2008. However, it is predicted in 2009 by Canada Mortgage and Housing Corporation that the sales will stabilize but still there will be a 22% reduction in sales, as compared to 2006 and 2007.

ECONOMY SOLID REGIONAL ECONOMIC FUNDEMENTALS

The economic and employment outlook for growth in the Calgary Alberta area is predicted to reduce in 2009, and is projected to reduce more substantially then any other province as a whole by the Canada Mortgage and Housing Corporation, in their fourth quarter report in 2008.

However, the capital region, located in the central part of the province, and all other surrounding neighborhoods will generate substantial economic and employment growth throughout all of 2009. In fact, Canada Mortgage and Housing Corporation predicts that area employment in Calgary Alberta will grow by 1.2% in 2009, with new jobs being added in the high-tech, trade, healthcare, personal and other service related industry sectors.

Calgary Alberta is one of the few regions that is still experiencing a shortage of workers, and is attempting to implement policies to encourage migration.

MORTGAGE RATES

Canada Mortgage and Housing Corporation predict that interest rates will decline by a further 25-50 basis points from their current levels in 2009. However, due to the cost of borrowing to the Canadian banks from the markets, the mortgage interest rate will marginally increase in the latter half of 2009, but not significantly enough to negatively affect the housing market in Calgary Alberta.

You can find the entire report in PDF format through the following link:
http://www.cmhc-schl.gc.ca/odpub/esub/64339/64339_2008_B02.pdf