HOUSING STARTS DECLINE IN AUGUST BUT SALES ARE UP

Housing starts in Canada were trending at 180,291 units in August compared to 193,021 in July, according to the Canada Mortgage and Housing Corporation. 

"The trend in total housing starts continued to be relatively stable for a sixth consecutive month, remaining within a narrow range of roughly 182,000 to 188,000 units since March, 2013," Mathieu Laberge, deputy chief economist, said in a CMHC statement.

The standalone monthly seasonally adjusted annual rate (SAAR) for urban starts decreased by 5.8% in August to 163,102 units, mostly because of declines in multiple starts. They were down 8.4% to 104,704 units in August. The single urban starts registered only a slight decline of 0.9% to 58,398 units.

The seasonally adjusted annual rate of urban starts increased in Ontario, the province with more than a third of the population, and held steady in Atlantic Canada. They decreased in the other regions - the Prairie Provinces, British Columbia and Quebec.

On Monday this week, Statistics Canada reported an increase of 4.1% to C$2.2 billion for single-family dwellings in building permits issued in July by municipalities, and a 4.2% increase to C$1.9 billion for multi-family dwellings, over those issued in June. These increases occurred in six of the 10 provinces. They did not offset the 12.8% plunge recorded in June, Statistics Canada said.

Also in recent days, regional real estate boards reported increases in sales of existing homes, propelled by fears of higher mortgage interest rates coming, according to analysts and real estate agents. They ranged from 52% higher in Greater Vancouver, year-over-year, and 21% in Toronto and ranged from +30% to roughly +10% in other major urban centers.

Toronto real estate in January 2012

     Canadian housing starts unexpectedly retreated in the first month of 2012 as a result of considerable decline in urban single units and slowdown in multiples. The seasonally adjusted annual rate of starts decline 1 percent to 197,900 units in January from 199,900 units a month earlier, Canada Mortgage and Housing Corp. reported today. From a year earlier, Canadian dwelling starts increased 18.3 percent in January 2012 compared to a gain of 20.6 percent in December 2011.

       The pace of housing starts slowed slightly in January but remained robust during an unseasonably warm winter, according to data from Canada Mortgage and Housing Corp. Strong homebuilding activity will likely to be a boon to the Canadian economy in the short term, but could also signal overbuilding that could wreak havoc in the longer term, economists warned Wednesday.

     The seasonally adjusted annual start rate — which smooths monthly variations — was 197,900 units in January, down from 199,900 units in December, the CMHC reported. "While housing continues to surprise on the upside, we caution that this pace of homebuilding is unsustainable," said TD economist Diana Petramala.

     January's one per cent decline was mainly because of sharp decreases in Quebec and Atlantic Canada — regions that posted big gains in the month before. Builders have been able to continue construction during the winter season, which has been noticeably warmer and largely snow-free in many parts of the country.

      Low borrowing rates — tied to persistent economic uncertainty — appear unlikely to rise any time soon, which has propped up demand for homes. At the same time, home prices have risen sharply as buyers rush in to take advantage of those low mortgage rates and compete for homes, making ownership less affordable for some. Senior government officials have issued repeated warnings about the implications of taking on too much debt when mortgage rates inevitably rise.

      Still, the January report was good news for Canada's economy because the housing sector makes up a sizable portion of GDP and an influx of building has contributed to a run up in construction jobs in the latest jobs report.

      Based on the high level of building permits approved in December, construction could trend even higher in the months ahead, said David Madani of Capital Economics. "The large amount of work under construction is broadly consistent with the elevated level of construction employment as a share of total employment. This is a stark reminder of just how important strong housing investment is for the broader economy."

      The report is a good indication that housing activity will continue to support GDP growth in the first quarter of 2012, said TD economist Diana Petramala. However, overall weakness in the job market since July —the unemployment rate now sits at 7.6 per cent —could put a damper on demand later this year and the market appears to be "slightly overbuilt and overpriced," she warned.

      In line with a recent trend, January's strength was concentrated in the multi-unit, or condo sector, which has been identified as most at risk of a downturn because of a potential glut of supply that could outpace demand. Multi-unit starts increased 0.4 per cent, while single family home starts fell 7.8 per cent — their lowest level since May.

      Housing construction is outpacing the levels demanded by demographic fundamentals such as the level of new household formation — especially in the condo market. "The result has been a large over hang of newly built and unoccupied multiple units, putting significant downside risk to home building once interest rates begin to rise," Petramala said.

      Madani also said he remains concerned about overbuilding and the "rising likelihood of a housing slump down the road." Given that developers usually begin construction with only about 60 to 70 per cent of units sold, the recent strength in multi-unit starts suggests there could be a glut of newly completed, unoccupied condo units, he said. "This is just one sign of a housing investment boom that has gone too far."

      While January's figures reflect that construction is settling into a healthy pace, there were some specific regional and sectoral trends that underlie the data, BMO economist Robert Kavcic said. Most prominent of those trends is the booming Ontario market, where condo building has been strongest in the past few months, the level of multi-unit building is just slightly below the all-time high set in late 2008, he said.

      The CMHC data showed the seasonally adjusted annual rate of urban starts decreased by 2.8 per cent to 176,600 units in January, with single starts down by 7.8 per cent and multiple starts up 0.4 per cent.

Urban starts decreased by 35.4 per cent in Atlantic Canada and by 34.4 per cent in Quebec on a seasonally adjusted annual rate. Those sharp declines followed particularly robust gains in those regions in December. From GlobalEdmonton.com

Toronto real estate. JULY RESALE MARKET

     Greater Toronto REALTORS® reported 7,922 transactions through the TorontoMLS® system in July 2011, representing a 23% increase over July 2010. Total sales through the first seven months of this year amounted to 55,863 – down by 1.3% compared to the same period in 2010. After adjusting for seasonal fluctuations, the July figure continued to point to an annual sales result close to 90,000 – in line with results from the previous six months.
      “Strong home sales continued in July, with a substantial rebound over last summer’s slow-down brought about by higher mortgage rates, new lending guidelines and misconceptions about the HST. The greatest rebound was seen in the condominium apartment segment in the City of Toronto,” said Toronto Real Estate Board President Richard Silver. “If the current pace of sales holds up, we could see the second best year on record under the current TREB market area.”
      The average selling price in July was $459,122 – up by almost ten % compared to the July 2010 average of $418,675.
      “Tight market conditions have boosted the annual rate of price growth this year. However, the listings situation is starting to improve. A better supplied market later this year and into 2012 would lead to a more sustainable rate of price growth,” said Jason Mercer, TREB’s Senior Manager of Market Analysis.

       Competition from the resale market has impacted demand for new homes, comments the Canada Mortgage and Housing Corporation. With sales of newly built contemporary homes potentially suffering, the 0.3% reduction is hoped to increase interest from buyers and overseas investors.
       Despite worries that the US economic downturn may impact sales, however, there is still overall confidence in the Canadian housing market. A study from the Real Property Association of Canada, revealed yesterday in the Canadian Real Estate Magazine, has found that the country's property market is still growing, and has been for the last eight quarters.
       “The market is largely viewed as stable and attractive, which bodes well for future investment and development,” says the report.

Toronto real estate. TORONTO REAL ESTATE MARKET UPDATE

Record breaking warm temperatures in March helped bring out buyers during the first two weeks of the month.

The Toronto Real Estate Board reported 4,353 existing home sales, up 70 per cent from the same time last year, when the market was in recession.

But sales were also strong enough to break the mid-month peak set in March of 2006 by 16 per cent, according to the board.

“The spring-like weather in the first half of March brought the first green sprouts of the recurring spring market,” said board president Tom Lebour.

The average price for March mid-month transactions was $440,153, up 20 per cent over last year.

Some good news for buyers was that new listings improved by 34 per cent over last year.

“Look for double digit price increases to cease later in 2010, as new listings rebound from the low levels experienced in 2009,” said Jason Mercer, TREB’s senior manager of market analysis. “Increased listings will give buyers more choice, resulting in less upward pressure on home prices.”

If you want to know more about Toronto real estate, call sales representative and mortgage agent Alexandre (Alex) Malkhassiants, Right at Home Realty,  with all your questions: (416) 723-9383 (cell).

Toronto real estate. TORONTO REAL ESTATE MARKET CONTINUE TO SURPRISE

Perhaps it was those uncharacteristically high temperatures that had homebuyers out in droves in the first two weeks of November. Certainly, they had gotten over the doom and gloom of the first two weeks of last November.

According to the Toronto Real Estate Board, realtors reported 3,666 sales, a staggering 84% up on the same period last year. Prices year-over-year rose a more modest, but still impressive, 10% to hit an average of $415,066.

"Increased interest in ownership housing has been widespread throughout the GTA and across all housing types," notes TREB president Tom Lebour in a release. "However, it is important to point out that we are now making comparisons to the fall of 2008 when we experienced a marked decline in sales and average price."

The numbers for year-to-date sales also rose a healthy 11% compared with the same period in 2008, to reach 78,233. The average price for this period was $393,180 a 3% rise over the same period last year.

"Sales and average price in the GTA this winter will be well above levels reported throughout the fourth quarter of 2008 and the first quarter of 2009," notes Jason Mercer, TREB's senior manager of market analysis in a release.

Across Canada, sales had increased in the month of October. According to numbers from the Canadian Real Estate Association, home sales activity through the Multiple Listing Service was the highest ever for an October. The Canadian real estate boards reported 42,288 residential sales, a 41.5% hike over the same month last year. The year-to-date total rose to 401,124, a 1.6% increase on the same period last year.

The average sale price in October was $341,079, a 20.7% rise on last year.

"Low interest rates and upbeat consumer confidence continue to release the pent-up demand that built late last year and earlier this year," notes CREA president Dale Ripplinger in a release. "The release of that pent-up demand has boosted national sales activity to new heights and is drawing down inventories."

The marked rise in resale housing demand has continued to reduce inventories of unsold homes. In October, MLS had 194,994 homes listed for sale, down 20.8% on the same month last year.

New homes in the GTA's 905 region have also skyrocketed, with home builders showing a 173% increase in low-rise sales for the month, compared with October 2008.

Activity may have been on the rise in Canada, but south of the border where tentative signs of recovery had been evident, October housing starts and building permit numbers came as a rather nasty shock.

Builders' sentiment also remained rather gloomy. The National Association of Home Builders/Wells Fargo Housing Market Index showing builder confidence in the market for newly built, single-family homes remained unchanged at the low level of 17 in November.

Residential housing starts for last month, released by the U.S. Department of Housing, plunged an unexpected 10.6% from September, coming in at a seasonally adjusted annual rate of 529,000. That's 30.7% down on the October 2008 rate. The rate for single-family housing starts in October was 476,000, a 6.8% decrease from September. Multiple family units also fell 15.2% month-over- month in October to reach 89,000 units. These numbers bring construction to the lowest level since April.

Building permits in October, required long before construction begins, were also down. Overall permits fell 4% from September to a seasonally adjusted annual rate of 552,000. This is 24.3% down from October last year. The single- family permits component inched down 0.2% month-over-month to reach a rate of 451,000 in October. However, permits for multiple units were up 6% month-over- month to 123,000.

Analysts found some positives.

"There will still be people buying homes, either for the first time or moving up, thanks to the extended and expanded government tax credit," notes Jennifer Lee, economist, manager at BMO Capital Markets. "But in the meantime, it will take a while before residential construction begins to contribute meaningfully to growth."

If you want to know more about Toronto real estate, call sales representative and mortgage agent Alexandre (Alex) Malkhassiants, Right at Home realty,  with all your questions: (416) 723-9383 (cell).

Canada housing sales hit record in July

July housing sales across the country were the best on record for the month and the largest year-over year increase in two years, said the Canadian Real Estate Association.

The Ottawa-based group, which represents about 100 boards across the country, said there were 50,270 units sold via the multiple listing service last month. That's an 18.2 per cent jump from a year ago. It also marked the first time sales had topped 50,000 in July.

 "The difference in the resale housing market now, compared to the beginning of the year, is night and day and nowhere is this more evident than in the west," said Dale Ripplinger, president of CREA. "Homebuyers recognize that interest rates and prices have bottomed out, and are taking advantage of excellent affordability before prices and interest rates move higher."

A five-year fixed-rate mortgage, the most popular product among consumers, is still available for under four per cent at some financial institutions. Variable rate mortgages, tied to prime, remain in the three per cent range and are not expected to rise until June. The Bank of Canada has pledged not to change its lending rate until then — but it is not an ironclad guarantee.

The low rates seem to have worked and have the housing market even hotter than it was in 2007, a record year. July sales in 2009 were 3.9 per cent above the previous July high set in 2007.

It has been a stunning reversal for a real estate market that had almost ground to a halt over the winter. MLS sales on a seasonally adjusted basis have risen for six straight months and are up 61.2 per cent off the decade-low set in January. Sales are only off 1.4 per cent from the May, 2007 peak.

The strength in the market is being felt right across the country. Vancouver sales last were up 90 per cent from a year ago to lead the pack. Toronto sales climbed 28 per cent from a year ago and Edmonton sales rose 28 per cent during the same period.

With demand strong in the country's highest-priced markets, it is skewing average price but in the opposite way from what was happening when the market was slumping. The average price of a home sold on MLS last month rose 7.6 per cent from a year ago to $326,832.

Part of the pressure on prices is coming from a dearth of supply. New listings in July were down 13 per cent from a year ago to 73,444. It marked the seventh monthly year-over-year decline in new listings.

The overall supply of homes for sale on the MLS was down to 219,982 at the end of July, a 12.5 per cent decrease from 2008. Based on present activity, there is only 4.4 months of housing inventory in the mark. That's a sharp contrast to the 12.8 months of inventory available in January.

"Home sales through the MLS systems in July provide clear evidence that sentiment about making major purchases continues to improve," said Gregory Klump, chief economist with CREA. "Activity may level out over the rest of the year as home prices and mortgage lending interest rates creep higher. The number of new listings coming onto the market is down from last year and the rebound in sales activity is paring inventories, so the number months of inventory is on the wane. These trends are supporting average prices."

vancouversun.com