Date Released: Nov 2, 2009
C a n a d a M o r t g a g e a n d H o u s i n g C o r p o r a t i o n
Fourth Quarter 2009
After a slow start in 2009, housing starts will become stronger by the end of 2009 and average 141,900 units. In 2010, starts will increase to approximately 164,900 units.
Sales of existing homes through the Multiple Listing Service® (MLS®) have become more robust since the start of 2009. The strong pace of resales reflects, in part, activity that was delayed in the previous two quarters of 2009 and is likely not to be sustained. MLS® resales will be about 441,300 units for 2009, up from 433,990 units in 2008. As far as 2010 is concerned, there will be approximately 445,150 units sold.
After a few years of strong gains, the average MLS® price moderated in 2008 to $303,607. Recently, however, average prices have recovered. The average MLS® price is expected to increase to $312,950 in 2009 and to $324,500 in 2010.
in Ontario will move lower to 47,400 units in 2009 while 2010 will see a strong improvement to 56,500 units. Multiple-family starts will decrease in 2009 to 26,500 units before reaching 32,900 units in 2010.
New home constructionOntario new home construction will trend higher and move closer to demographic demand by the 2011 to 2013 period. New home construction will reach 66,500 units by 2013, upfrom 47,400 units in 2009. A numbe rof factors will support housing starts. Firstly, an improving economic outlook will stimulate labour markets and add to demand for both resale and new housing. Young adults who are part of the “echo boom” generation will be growing in size and improved job prospects will encourage them to leave the parental home to form new households. Household formation will also be supported by stronger immigration. More recent immigrants who have settled in Canada have shown increasing propensities to purchase homes. Finally, unsold inventories of new homes have stabilized. Builders have avoided excess building. As a result, as demand improves, builders will need to satisfyincreasing sales through additional new home construction.
Ontario’s economy will gradually recover later this year and will grow by 2.2 per cent in 2010. Key to a sustainable Ontario economic recovery is improving US business and consumer spending and a pickup in provincial exports which comprise a sizable share (55%) of Ontario’s GDP.
Meanwhile, U.S. consumer rebate programs for housing and motor vehicles will help stabilize output in key Ontario forest product and auto sectors. While employment willmoderate in 2009, recent business outlook surveys indicate that employers expect a pickup in demand for their products. Overall, a gradual recovery in Ontario labour markets can be expected as companies look to replenish inventories through 2010. Stronger labour markets in 2010 will lend some support to Ontario economic growth
Single Detached Starts:
Single starts have begun to recover and will continue to trend higher until the mid point of 2010. Single starts will be 20,900 this year and 23,600 units next year, thanks to improving economic conditions and declining inventories. As home prices and mortgage carrying costs rise, demand for more expensive housing will moderate in the second half of 2010.
Multi-family home construction will grow to reach 26,500 units this year and 32,900 units for 2010. Construction will be boosted by semi-detached and townhome starts, which represent a more affordable option, particularly when home prices are rising. A backlog of apartment unit sales that have yet to commence construction, combined with low rental apartment vacancy rates, will also support the construction of multi-family units.
Ontario existing home sales have staged a strong come back since the early part of the 2009. Sales this year will reach 183,900 units and will be on par with activity in 2008. The strong pace seen in recent quarters reflects, in part, improved affordability conditions. Also, home purchases that were delayed during the onset of the global downturn last fall are now going forward. The level of sales will not likely be sustained and will move better in line with economic fundamentals. Home sales will stabilize and will reach 175,250 units in 2010.
After experiencing buyers market conditions in early 2009, Ontario resale markets have tightened and balanced market conditions will be restored. As a result, Ontario existing home MLS® prices will grow to $314,550 this year and to $326,800 next year.
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