Housing Starts to Slip Across the Country

Friday, August 15, 2008 09:46 AM

Prince George, B.C. - Canada Mortgage and Housing is predicting new home construction will start to slow this year although the numbers will still be considered high when compared to historical numbers.

Higher mortgage carrying costs will be a catalyst for the decrease in residential construction to 215,475 units in 2008, from 228,343 in 2007. As a result, seven of the 10 provinces will register a lower number of housing starts in 2008 than in 2007.

“Strong economic fundamentals such as continuing high employment levels, rising incomes and low mortgage rates will provide a solid foundation for healthy housing markets this year,” said Bob Dugan, Chief Economist for CMHC. “Increased competition from the existing home market, coupled with the elimination of the pent-up demand that built up during the 1990s, will exert downward pressure on housing starts, which will decline to 194,000 units in 2009 from 215,000 in 2008.”

Existing home sales, as measured by the Multiple Listing Service (MLS^®)¹, are expected to fall by 11.9 per cent in 2008 to 458,300 units. In 2009, the trend will continue with a decrease to 446,600 units (-2.6 per cent). Despite a slowdown of MLS^® sales, demand remains strong by historical standards. For 2008 and 2009, MLS^® price growth will remain above inflation. Prices will reach $317,450 (+3.3 per cent) in 2008 and $327,000 (+3.0 per cent) in 2009.

At the provincial level, despite British Columbia's growing population and job numbers, a well-supplied resale home market will lower new construction. Home starts will move back toward their long-term average by 2009. A tight labour market and robust income growth will partially offset the dampening effect of rising mortgage carrying costs on the demand for new and existing homes. As well, an increase in the number of existing homes for sale will offer more choice to home shoppers and reduce new home demand. Housing starts will decline to 35,800 units in 2008 and 31,500 in 2009 from 39,195 units in 2007. The average MLS^® price in British Columbia will grow by 7.6 per cent in 2008 and 3.3 per cent in 2009.

National Housing Outlook

Key Housing Market Indicators

	2007Actual	2008Forecasts	2009Forecasts
Total housing starts (units)	228,343	215,475	194,100
Total single-detached houses	118,917	97,925	93,225
Total multiple housing units	109,426	117,550	100,875
Total MLS^® sales²	520,192	458,300	446,600
Average MLS^® selling price ($)	307,306	317,450	327,000

Provincial Housing Outlook

Total Housing Starts

	2007Actual	2008Forecasts	2009Forecasts
Newfoundland and Labrador	2,649	2,825	2,825
Prince Edward Island	750	700	650
Nova Scotia	4,750	4,475	4,200
New Brunswick	4,242	4,200	3,875
Quebec	48,553	46,600	45,750
Ontario	68,123	76,025	65,000
Manitoba	5,738	5,400	5,550
Saskatchewan	6,007	6,700	5,750
Alberta	48,336	32,750	29,000
British Columbia	39,195	35,800	31,500

SOURCE: CMHC Housing Market Outlook, Canada Edition, Third Quarter 2008.

2 The term MLS^® stands for Multiple Listing Service and is a registered trademark of the Canadian Real Estate Association (CREA). Data are for 10 provinces.

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Posted on Friday, August 15, 2008 09:46 AM in News by 250 News

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Comments

Posted by: metalman on August 15 2008 2:01 PM

I have not noticed my house starting to slip, but I sure as heck am going to check it when I get home tonight late as usual.
metalman.

Posted by: Old Hippy on August 15 2008 11:29 PM

When the value of my property falls does my city tax bill that increased $600+ this year go down next year? I have flash backs and dream in tecnicolour also. I have a feeling that the mill rate will be re-adjusted next year to maintan or increase property taxes. i have a list of who I'm not voting for come November.

Posted by: MrPG on August 16 2008 12:36 PM

As noted, the City will always adjust mill rates to get what they need out of property taxes, no matter how far the assessment values fall here.

I highly doubt that it matters who gets voted in, the City will always make sure it gets what it needs out of residents in terms of property taxes.

Posted by: charles on August 16 2008 2:20 PM

It looks like the long awaited "correction" in the Canadian housing market is finally here. It's going to be interesting to see how far down home prices actually go. My guess is the extent of the fall we are about to see in home prices is going to surprise an awful lot of people. Too many people are conditioned that "home prices only go up", and they have adjusted their spending habits accordingly.

The following paragraphs are from an August 14, 2008 article in The (Saskatoon) StarPhoenix.

TORONTO - The Canadian housing market got another dose of bad news with new statistics showing home prices are falling fast, led by a pullback in Alberta.

The Canada Real Estate Association says the average price of a home sold in Canada's top 25 markets last month was $327,020, a 3.6 per cent decline from a year ago. It's the second year-over year drop after the June numbers fell 0.4 per cent."

"There were few exceptions to the trend in the major markets, which saw July sales dip 11 per cent from a year earlier. At the same time new listings rose 11.3 per cent.

Greater Vancouver sales continue to drop, with the number of units changing hands in July at 2,284, a 43.5 per cent drop from a year ago. New listings jumped 22.6 per cent in July from a year ago. The result was Vancouver home prices actually fell 0.7 per cent in July from a year earlier, though it is still the most expensive market in the country with an average price of $575,730."

If anyone wishes to read the entire article, the following is the link to it.

http://www.canada.com/saskatoonstarphoenix/story.html?id=0012866d-3439-4634-98dc-670656bf2371

If anyone wishes to see a chart of the price of existing homes in the United States over the last 10 years, the following is the link to it. This chart is a real eye opener.

http://www2.standardandpoors.com/spf/pdf/index/CSHomePrice_Release_072943.pdf

Bohemian. Thank you for posting the link to Garth Turner's web site greaterfool.ca, on this site a couple of months ago. It really is a good source of information as to what is going on in the Canadian housing market.

Posted by: dogs on August 16 2008 8:04 PM

I remember 1981/82 in PG houses continued to fall for a long time- with no recovery in the Forestry Industry until at least 2010 and many are now saying 2013 PG better hold on.