Housing Starts:
In recent months, housing starts have been supported by low interest rates and an improving employment situation. They are, however, expected to moderate through 2012. Housing starts are forecast to be 191,000 units for 2011 and 186,750 units for 2012.
Resales:
Sales of existing homes through the Multiple Listing Service are forecast to remain stable through to the end of 2011. MLS sales are expected to increase modestly in 2012. Overall, 450,100 sales are forecast in 2011, followed by a 1.9 percent increase to 458,500 in 2012.
Resale prices:
With balanced conditions expected in most markets, the average MLS price is also expected to remain fairly constant for the rest of 2011 and rise slightly in 2012. For this year, the average MLS price is forecast to be 363,900, while 2012 will see a modest increase to 368,200.
Provincial Spotlight
Ontario and Saskatchewan:
Overall housing starts will modestly increase in Canada in 2011, with the strongest growth in Ontario (11.5 percent) and Saskatchewan (8.3 percent)
Alberta and British Columbia:
With respect to 2012, total housing starts are expected to be moderate, but Alberta and British Columbia starts are expected to buck this trend and grow by 15.3 percent and 7.1 percent respectively.
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Trends at a Glance
Key Factors and their Effects on Housing Starts
Mortgage Rates:
Short term mortgage rates and variable mortgage rates are expected to remain at historically low levels. The outlook also assumes that mortgage rates will remain relatively flat until late in 2012. This will continue to support housing demand.
Employment
In the 12 months to September, employment has grown by 1.7% (+294,000), primarily in Ontario and Alberta. Over this period, full-time employment rose by 2.5% (+344,000), part-time work declined 1.5% (-50,000) and total actual hours worked increased 2.0%. This compositional change to full-time positions will continue to support Canada’s housing sector.
Income
Growth in incomes improved in 2010 because of the economic recovery and the resulting improvement in the labour market. Income will continue to grow at a slower pace in 2011 and 2012. Overall, however, growth in incomes will moderately be supportive of housing.
Net Migration
Better prospects for the Canadian economy relative to other economies is expected to attract more immigrants (net international migration) which, in turn, will push net migration up in 2012. This will have a positive impact on housing demand.
Natural Population
The low birth rate is the major factor in the slowing of growth in the natural population (births minus deaths). This will lessen the demand for additional housing stock in the medium and longer term.
Resale Market
Market conditions for most of 2011 and 2012 are expected to be in balanced market territory. In comparison to sellers’ market conditions, balanced market conditions typically lead to more moderate housing starts activity.
Vacancy Rates
Modest rental construction and strong rental demand due to high immigration will be partly offset by increased competition from the condo market. As a result, vacancy rates across Canada’s metropolitan centres will remain relatively stable this year and next.
By CMHC
