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Key Real Estate Market Factors
as they effect Canadian housing
Mortgage Rates
Mortgage rates have moved slightly higher over the past year. This rise, in conjunction with higher house prices, has and will continue to push mortgage carrying costs higher. As a result, this will ease housing demand, particularly for first-time buyers.
Employment
A record share of Canadians continue to be employed, moving the economy close to full-employment. Accordingly, job growth should slow to rates that are more in line with overall population growth. Job creation will continue to stimulate housing demand, but not as much as in the previous years.
Income
Rising incomes will continue because of tight labour markets and a strong demand for workers. This should partially offset the negative impact of higher mortgage carrying costs on home ownership demand.
Net Migration
Net migration is expected to remain strong in 2008. Ontario, Quebec, and British Columbia will continue to attract the bulk of the international immigrants. B.C., Alberta and Saskatchewan will attract a large number of inter-provincial migrants from the rest of Canada.
Demographics
Canada’s population is aging, and as a result, a smaller proportion of people are in their child bearing years and thus the birth rate is decreasing. High immigration levels will slow the average aging of the population, however, the rate of increase in the natural population (births - deaths) is slowing. This will eventually lessen the demand for additional housing stock in the longer term.
Consumer Confidence
Consumer confidence, as measured by the Conference Board of Canada, remains positive. Furthermore, strong consumer sentiment is expected to prevail throughout the forecast period. Confident consumers will continue to support demand for home ownership.
Market Inventories
Lower existing home sales, combined with a high level of new listings in 2008, will move the resale market towards more balanced territory. As a result, the rate of growth in the average MLS® price will moderate during 2008, especially in Canada’s western provinces.
Vacancy Rates
Modest rental construction and increased competition from the condo market will be offset by strong rental demand due to high immigration and a rising gap between the cost of homeownership and renting. As a result, vacancy rates across Canada’s metropolitan centres should remain relatively stable, but slightly higher in 2008.
For more information, see CMHC's latest Housing Market Outlook report »
May 4, 2008 in Canadian Market Forecast | Permalink
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Comments
For my friend Mike small correction about re-sales in Toronto Area in 2008:
January 2008 decrease 2.1%
February2008 decrease 11.2%
March 2008 decrease 22.2%
April 2008 decrease 7.3%
But the housing prizes are still increased about 10% from last year. 'It's a logic market' and wrong trend because is still sellers market,beleive me this trend will be two months more and it's over...
Posted by: Bob | May 5, 2008 2:24:31 PM
With the current trend of Re-sales in Toronto area in 2008 from January to April we have volume of sales same as 2003 or with the same trend we will have about 79 000 re-sales to the end of year.It will be the worst volume from 2003.Current inventory listing is up over 7% from last year,sales down more than 10%, but still prizes increased about 8%.About 12 years is sellers market in Toronto area to when? Will be forever?
Posted by: Mike | May 5, 2008 12:59:51 PM
Unbelievable!,Today Toronto Real Estate Board report that resale is down over 7% for period of April, in March down 22%,February down 11% and January down 2%,but Average Price increased about 8%. To when will be sellers market in Toronto Area,economy is in recesion in Ontario but they still increased Homes,property taxes,insurances,fuel etc.
Something is wrong or I am stupid?
Posted by: Mike | May 5, 2008 11:53:16 AM
West Toronto Homes,
If you really wish for something hard enough, do you think that will make it true?? I makes me laugh how everyone with a vested interest in rising prices and high sales volumes always spout this nonsense about how things are different here and how home prices only go up. Get it through your head that lower home prices are in the best interests of your clients, not higher ones. Lower prices means lower mortgage payments! Imagine that. Of course, realtors such as you get hurt by lower prices b/c you work off commissions. Do I smell a conflict of interest??
Read the latest statistics from StatsCan. After adjusting for inflation, incomes have risen only $53, yes only $53 for the average Canadian from 1980 to 2006. I wish people would stop suggesting that it is rising incomes are responsible for higher market prices and sales volumes. It's irrational exuberance, a ridiculous willingness to go into debt, exotic mortgage products, artificially low interest rates, massive inflation (the CPI is basically meaningless to an average household) that have caused this housing boom. People like you who stoke the fire with no data other than anecdotal quotes are irresponsible and in some cases downright responsible for the massive bust and economic problems that the future generations will be saddled with.
Get it through your head people...HIGH HOME PRICES ARE NOT GOOD. You can't get rich just buy mortgaging what is actually a depreciating asset and expect endless positive appreciation. It is just not logical. If you want to achieve wealth, instead of just buying a home, maybe people should think about education, working hard, and spending less. Why our society is obsessed with real estate price increases is surely going to be an interesting topic in the post-mortem study of the impending collapse.
Posted by: Toronto Bear | May 5, 2008 10:43:40 AM
A few weeks ago several articles made some remarks that the situation in Canada regarding the economy and housing is getting worse and that the US bad conditions can have bad effects on our market. I`m sure that in Canada despite of the market slowdown the situation is not getting worse. The condos are becoming more and more popular however at the expense of the detached houses especially in West Toronto area.
Posted by: West Toronto homes | May 5, 2008 7:00:06 AM
