Home Construction in Canada Booms

Canadian New Home Construction August 2016

New home construction activity in Canada continues to be one of the healthiest components of the national economy. Housing starts have defied predictions of a soft landing, and national housing starts throughout the first seven months of the year have trended around 200,000 annual units (chart 1).Canada National Housing Starts

The trend in building permits is only modestly lower at 190,000 units, pointing to continued strong activity over the remainder of the year. Housing starts are now expected to total approximately 195,000 units this year, very similar numbers to 2015.

British Columbia Leads

As with virtually all national economic indicators, there is a big and obvious regional divide in residential construction. British Columbia is the strongest province, with housing starts averaging a record-setting 44,000 annualized units this year, a 40% jump over 2015. While led by multi-unit construction (both condos and purpose-built rentals), single-family home construction also has picked up. B.C.’s residential construction boom extends beyond Vancouver and the Lower Mainland into other parts of the province, including Kelowna and Victoria. As of the date of this article, full impact of the new offshore resident tax, which was announced on July 25, has not yet been assessed.

Continued Strength in Ontario

Multi- and single-family construction also has picked up pace in Ontario this year. However, at an annualized 76,000 units year-to-date, the overall level of housing starts remains shy of a record. Activity remains extremely strong in Toronto, but a considerable amount of momentum has shifted to lower priced localities, including Hamilton, St. Catharines, Kitchener, Guelph, and London.

Alberta Home Construction Stabilizing

Construction activity in Alberta is showing early signs of stabilizing, although at levels well below historic averages. Provincial starts have totaled just 24,000 annualized units year-to-date, their lowest level since 2009, with notable pullbacks in both Calgary and Edmonton.

Activity in most other parts of the country remains relatively steady. There are signs of overbuilding in a few provincial markets, notably in Alberta, Saskatchewan and Newfoundland where home sales have slowed. For the most part, however, there is little evidence of any serious inventory problems.

Despite ongoing high levels of home construction activity, unsold housing inventory as a share of the adult population remains consistent with historical averages (chart 2).unsold Canada home constructionAbsorption rates of recently completed units remain healthy and stable. The continued strength in new and resale home prices is also indicating a lack of any glut in supply. Historic low borrowing costs, relatively healthy job market conditions and solid population gains
should continue to support housing demand and residential construction in B.C. and Ontario.

Builder Confidence

Builder confidence is being bolstered by strong resale and new home sales, tight supply and rising home prices. The average price of new single- and semi-detached homes has jumped 15% in Vancouver, and 8% in Toronto, over the past year. To the extent that tight supply is contributing to surging home prices in these two high-priced markets, the increase in new home construction is a welcome development. At the same time, rising unemployment,
inter-provincial population outflows, increased housing supply and a soft pricing environment weigh against a near-term recovery in Alberta, notwithstanding rebuilding activity related to the devastating May wildfires in the Fort McMurray area.

Canadian Housing Starts 2016

housing starts Canada 2016

with files from Scotiabank & CMHC

Real Estate Board 2016 Outlook

Real Estate Board 2016 Outlook

The Toronto Real Estate Board has published, for the first time, a comprehensive review of 2015 market activity, with an outlook for 2016, covering all aspects of the GTA (Greater Toronto Area) real estate market.

Watch John DiMichele, president of TREB, as he explains the inaugural Market Year in Review & Outlook report. There is a lot of data available in their publication, with forecasts for everything from suburban resale homes, to downtown condos. Two versions exist, one for realtors, and one for the public. Both were released on January 18, 2016.

Report Highlights

The report provides information on the following:

– after a record setting 2015, 2016 is predicted to be  a strong real estate market going forward

– house prices will continue to trend upward in 2016

– over 12% of the Greater Toronto Area population are planning on purchasing a home in the next 12 months

– a majority of buyers are planning on putting 10% per cent down or more on their purchase

– includes an extensive section on new home construction

– between 96,500 and 105, 000 home sales are expected to be reported through TREB’s MLS system in 2016.

– indepth analysis of the overall competitiveness of the Greater Toronto Area, and also the Golden Horseshoe Area, are provided

You can access the full report in PDF format, by clicking here.

 

 

June Sales Remain Strong

Record June Sales and Higher Prices in Toronto

June sales set records Toronto real estate

Real estate agents in the Greater Toronto Area reported 11,992 firm sales through the Toronto Real Estate Board’s MLS system in June,
2015. The June sales numbers reported represent a new record for the month of June for any year, and an 18.4 per cent increase over results in June, 2014.
The Greater Toronto area continues its strong economic growth with several factors contributing to a robust market in the many diverse local economic, ethnic and cultural bases that exist here. The GTA continues to receive worldwide acclaim as one of the best places to live and do business. As the population continues to grow, many people are taking advantage of the options that exist for home ownership in the area.

Average Sale Price up 12.3%

June sales prices were up strongly on a year over year basis in June, for all categories of housing types. The TREB MLS Home Price Benchmark increased by 8.9% per cent compared to June 2014. The average sale price increased by 12.3% per cent over the same period to$639,184.
Higher priced homes have accounted for a greater share of the total transactions in 2015 compared to last year. This is one of the primary reasons why the average selling price has increased at a
higher yearly rate than the MLS Composite Benchmark.
New listings edged upward a bit during 2015, as homeowners took notice of the incredibly strong growth in real estate prices, and are beginning to take advantage of large equity increases in their homes. Nevertheless, the June sales show that the yearly rate of sales growth continues to far exceed the overall growth in listings, meaning that there is still an imbalance with many willing and able buyers in the market who will continue to have difficulties finding a home that suits their preferences. As long as this imbalance in supply and demand continues, house prices will continue to edge ever higher.

Real Estate Market – Toronto

Record Breaking Real Estate Market in May, 2015

real estate market new homes
real estate market new homes

Local Toronto area real estate market records were shattered when the Toronto Real Estate Board reported 11,706 sales in the month of May, 2015, for sales activity processed through the TREB MLS system. Total sales were up by 6.3%  percent compared with the 11,013 sales that were reported in May, 2014.

The Toronto real estate market as a whole showed sales increases for all types of residential housing. There was a decrease in sales of detached homes reported in the city of Toronto, but this was more as a result of a shortage of listings, than anything else.
The record number of transactions in May, combined with a shortage in the number of homes available for sale, resulted in large price increases in all areas of the market. The Home Price Index (HPI) Composite Benchmark, a key metric that the real estate board follows,  was up by 8.9% percent compared to May, 2014.

Real Estate Market Average Price Up 11%

The average selling price for all types of homes in May, 2015 showed an increase of 11% percent over the previous year, reaching $649,599. There was a shift to higher priced, higher end homes, which further boosted average selling price.
Extremely tight market conditions, with detached homes, semi-detached homes, and both freehold and condominium townhomes showing the highest demand, resulted in surging prices throughout the Greater Toronto Area. No matter what part of the Toronto area, listings remained in short supply, and in the suburbs such as Mississauga, Brampton, and Oakville, there were bidding wars on many listings.

We predict that this frenetic real estate market activity will continue throughout the rest of 2015, barring any unforeseen shocks to interest rates or the economy in general. With more buyers than sellers in every housing type and price point, it would take several months of increased listings and fewer sales, to create a more balanced real estate market. Until that time, it seems the only way for real estate is up.

Real Estate Sales for April 2015

Monthly Real Estate Sales for April 2015

record real estate sales in April 2015
Record Real Estate Sales in April 2015

The Toronto Real Estate Board reported 11,303 real estate sales in April 2015. This was the highest sales result on record for the month of April and represented a 17 per cent increase in comparison to April, 2014. While sales increased strongly on a year over year basis, new MLS listings were up over the same period by a more modest five per cent.

Record Real Estate Sales

The record results for real estate sales in April clearly illustrate that a burgeoning number of Toronto area families view home ownership as a priority, high quality long-term investment. This is evidenced by the strong sales growth experienced here in Toronto and the surrounding regions for all major types of housing. First time buyers and existing homeowners remain very active in today’s market.
The overall average selling price, which is a total combined number for all real estate sale for all types of homes reported sold by Toronto area real estate agents in April 2015, was up by 10 per cent year over year to $635,932. The MLS® Home Price Index (HPI) composite benchmark, which estimates the price of a benchmark home with the same attributes from one period to the next, was up by 8.4 per cent during the same timeframe. The fact that average price growth outpaced growth for the MLS® HPI Composite Benchmark, suggests that a greater share of higher priced homes changed hands this year compared to last.

Single Family Homes Strong

No matter which indicator used, price growth in the Greater Toronto Area was strongest for low-rise home types. However, the better supplied highrise condo segment remained healthy as well, with price growth above the rate of inflation. Demand for home ownership was extremely high compared with the number of homes available for sale in April.

Going Forward

The market is not expected to change much as we move through the balance of the year. Until there is a sustained period during which listings grow at a faster pace than sales, annual rates of housing price growth will remain robust.

TREB Releases mid-month Real Estate Statistics

MID-MONTH REAL ESTATE FIGURES RELEASED
TORONTO, May 19, 2015 – A 9.6 per cent year-over-year increase in home sales was reported by Greater Toronto Area realtors during the first 14 days of May. There were 5,655 sales reported in the first two weeks of May 2015 compared to 5,160 sales during the same period in May 2014. “It is clear that demand for ownership housing remains very strong in the GTA. So much so that, if the pace of sales experienced in the first half of this month is sustained in the second
half, we will see record home sales for the month of May.
The average selling price for transactions reported during the first 14 days of May was $652,782.00 for all home types combined – up by 10.7 per cent compared to the first two weeks of May 2014. The strongest price growth was experienced in the detached market segment, with the average price up by 13.8 per cent. “The low-rise market segments, including detached home sales, have been the driver of average price growth in the GTA this year. As market conditions have tightened, average price growth has remained very strong. However, while tighter market conditions have been a key
factor, so too has been a shift to higher priced homes. Detached sales growth in the City of Toronto, for example, has been strongest for high-end homes. The resulting change in the mix of homes sold has also been an important factor in pushing the average price higher,” said Jason Mercer, TREB’s Director of Market Analysis.

Toronto Real Estate Update for November

Toronto Real Estate Continues Upward Trend in November

A review of the Toronto real estate market shows that it continues its upward trend, with 6,519 residential transactions reported through the Toronto MLS system in November 2014. Results were up by 2.6% compared to November 2013 sales totals of 6,354 sales. From January through the end of November,  total sales reached 88,462 – an increase of 6.6% compared to the same period last year.

While sellers enjoyed year-over-year sales increases, the number of active listings continued to be smaller than expected, with available listings at November’s end down compared to last year.

The Toronto Real Estate Board (TREB) issued a statement that despite the constrained supply of homes for sale, buyers continue to purchase properties with enthusiasm. Home ownership remains an attractive option, as monthly mortgage payments are relatively affordable compared to market rental rates. This combined with the fact that Toronto real estate has proven to be an attractive  long-term investment.

Average selling price of $577,936 for November 2014 transactions versus November 2013 was up by 7.4%. The year-to-date average price was up by 8.4% to $567,198.

The strong price growth in Toronto real estate as seen throughout 2014 has been built on a solid foundation, with demand high relative to supply. The triple market drivers of 1.) continued low interest rates 2.) continued immigration into the Greater Toronto Area, and 3.) continuing good economy with ongoing job creation, continue to fuel the ongoing healthy local market. Ongoing competition between prospective buyers has created strong upward pressure on prices – and all these trends appear to be continuing. Unless there is a major shift in the ratio of  sales and listings in the Greater Toronto Area, which we do not foresee, rising prices are expected to continue into 2015. Even though prices are at historic highs, the pressure and desirability of home ownership seems to be unabated, and we think that is a good thing for the local Toronto real estate scene, and indeed for the whole Canadian economy.