Canadian Funding Corp Reviews CMHC Affordable Housing Reports

Good National news from the Canadian Real Estate Association, says Moishe Alexander, CFC CEO:

OTTAWA – June 15th, 2009 – National resale housing market activity returned to pre-recession levels in May 2009. The rebound in activity is being led by an increase in transactions in some of the most expensive markets in the country, which is skewing the national average price upward. According to statistics released by The Canadian Real Estate Association (CREA), actual (not seasonally adjusted) home sales via the Multiple Listing Service® (MLS®) of Canadian real estate boards totaled 49,521 units in May 2009. This is less than one per cent below activity in the same month one year ago. Year-over-year declines have been shrinking since the beginning of the year.
The seasonal increase in activity continues to be stronger than normal. As a result, seasonally adjusted home sales rose eight per cent to 37,649 units in May compared to April. This marks the fourth consecutive monthly increase in seasonally adjusted activity. Seasonally adjusted activity in May was 43 per cent above where it stood in January 2009.
Seasonally adjusted sales were up on a monthly basis in about 70 per cent of local markets. Monthly activity gains in Toronto (nine per cent), Calgary (25 per cent), Montreal (10 per cent), Vancouver (eight per cent), and Edmonton (12 per cent) contributed most to the overall increase in monthly activity.
The national MLS® residential average sale price in May 2009 reached the highest monthly level on record. At $319,757, it was up fourth tenths of a percentage point from the previous record set in May 2008. Over the past four months, the national MLS® residential average price has recovered 16.4 per cent from the low in January. The average price for MLS® home sales climbed to new heights nationally, and in Saskatchewan, Ontario, Quebec, New Brunswick, and Nova Scotia. New records were posted in only 15 per cent of local markets in May, none of which are among the most active or expensive. The strong rebound in sales activity, not price, in Canada’s most expensive markets is driving up average prices nationally and in some provinces, just as a sharp decline in activity in these markets pushed average prices lower in late 2008.
The supply of homes coming onto the MLS® market continued to decelerate in May. Seasonally adjusted MLS® residential new listings edged lower by eight tenths of a percentage point to 65,070 units, the lowest level since December 2005. Seasonally adjusted new residential listings in May were 19 per cent below the peak reached one year ago.
With the number of sales rising strongly and new listings trending downward, the balance between supply and demand is firming up in British Columbia, Alberta, Saskatchewan, Ontario, and Quebec. This resulted in national sales activity as a percentage of new listings reaching the highest point since December 2007. Residential dollar volume for MLS® sales climbed 10 per cent from the previous month to reach $11.4 billion in May. This is more than 50 per cent above the low of $7.5 billion reported last January.
“Sales activity is now closer to the pre-recession peak than it is to the recent low point reached last January,” says Regina Broker Dale Ripplinger, President of The Canadian Real Estate Association. “Strengthening consumer confidence, low interest rates, and improved affordability are drawing buyers to the housing market across Canada,” he added.
“Fueled by a string of monthly increases in activity, the number of transactions in May reached the highest point since July 2008,” said CREA Chief Economist Gregory Klump. “Inventory levels are still high in many markets, but fewer new listings and rising sales activity suggests that the selection of homes available for sale may shrink as the year progresses. The supply of homes up for sale needs to be drawn down further before average price increases become more widespread among local markets.”
PLEASE NOTE: The information contained in this news release combines both major market and national MLS® sales information from the previous month. The Canadian Real Estate Association has previously released these separately.
CREA cautions that average price information can be useful in establishing trends over time, but does not indicate actual prices in centres comprised of widely divergent neighborhoods or account for price differential between geographic areas. Statistical information contained in this report includes all housing types.
MLS® is a co-operative marketing system used only by Canada’s real estate Boards to ensure maximum exposure of properties listed for sale.
The Canadian Real Estate Association (CREA) is one of Canada’s largest single-industry trade associations, representing more than 96,000 REALTORS® working through more than 100 real estate Boards and Associations. Further information can be found at www.crea.ca.
Click here for full report

http://torontoism.com/2009/06/15/national-resale-housing-continues-to-rise-in-may/

Though Nova Scotia’s March real estate sales activity was down 15 per cent from the same period last year, it was still the highest level of housing sales activity in the province in five months, as reported by the Nova Scotia Association of Realtors. The provincial Association also reports that year-over-year declines in activity continue to get smaller. In January 2009, the year-over-year decline was 32 per cent.

The value of all residential transactions recorded through the MLS system in Nova Scotia totaled $130.5 million in March 2009, a 16 per cent decrease from year-ago levels. The total value of all MLS sales activity in Nova Scotia was $137.4 million, a year-over-year decline of 17 per cent from March 2008.

“Despite the downturn, a number of buyers and sellers are taking advantage of the increased affordability the current market has to offer,” says Linda Smardon, president of the Nova Scotia Association. “Activity during the rest of the spring market will depend heavily on what happens with interest rates and the consumer response to the federal budget incentive programs,” she adds.

The average price for MLS home sales in Nova Scotia was down slightly in March 2009 compared to levels one year earlier. Edging down one per cent from March 2008, the provincial average price for home sales was $188,651. The national MLS residential average price in March 2009, by comparison, was down by eight per cent year-over-year. The MLS average price rose by 1.6 per cent in Halifax-Dartmouth to $229,548. The small decrease in provincial average price was in part the result of fewer sales in this region, where homes are priced higher than in other markets across the province. Sales activity was down by 19 per cent year-over-year in Halifax-Dartmouth, compared to the 15 per cent provincial decline. This resulted in fewer transactions at the higher end of the price spectrum being included in the calculation of the provincial average price.

The number of active listings continues to increase in Nova Scotia, but year-over-year gains are slowing as demand begins to recover and new listings trend lower.

“Home sellers are adjusting to the changes in the market and are working with their realtor to price homes realistically, and when that happens properties will sell. We anticipate a fairly strong April market,” Smardon says.

http://www.jeffreyteam.com/blog/other-real-estate/resale-housing-market-strong/

reviewed by Moishe Alexander, CFC CEO

Single starts activity moderates in 2009 but growth returns in 2010

Moishe Alexander, CEO, Canadian Funding Corporation reports that after the strongest two-year performance since the late 1970’s, Saskatoon single detached housing starts will decline to 600 units in 2009 and bounce back to 725 units in 2010. The 2009 singles forecast represents the lowest number of housing starts since 2001 when 542 single starts took place.

The moderation in activity compared to 2007 and 2008 is due to the effects of price escalation from previous years, heightened competition from resale housing, and a build up in the supply of new housing units. Reduced in-migration and lower employment gains in 2009 and 2010 will also play a role in this market adjustment.

Single-detached starts in the first three months of 2009 were below last year’s levels. To the end of March, there were 77 foundations poured compared to 284 in 2008, a decline of nearly 73 per cent. Single starts have shown year-over-year declines in activity since June 2008.

In terms of total supply, there were more than 800 single-detached units both under construction and completed and unoccupied at the end of the first quarter. Supply has been in decline, on a year-over-year basis, since December 2008 and on a month-over-month basis since June of last year. The bulk of single units in supply are those in various stages of construction. After peaking at close to 1,300 units in June 2008, the number of single units under construction has seen monthly declines. The combined effects of slower starts and increased absorptions have reduced the total supply on a month-over-month basis over the last nine months.

The number of single units that are completed and unoccupied now lies at close to 200 units, up from only 14 one year earlier. The number of completed and unoccupied single units is at a record high and builders will be restraining production until the excess inventories are absorbed.

Monthly single absorptions were achieving year-over-year gains starting in November 2008 but March 2009 brought slower absorptions compared to a very strong March 2008. Year-to-date, single absorptions now stand even with the first quarter of 2008.

At the present trended absorption rate of 110 to 115 units monthly, the supply of ownership (mainly single-detached) units at various stages of construction as well as those that are complete and unoccupied is sufficient to last seven to eight months. This is down from the 2008 first quarter figure of 11 to 12 months.

Starts in bedroom communities slower in 2009

Single starts in Saskatoon’s bedroom communities fell 62 per cent in the first quarter compared to the previous year. So far this year, these communities have captured 33.8 per cent of total single starts. At this time in 2008, 24.3 per cent of starts were outside the city limits. Over the last five years, bedroom communities have seen an average of 38 per cent of single starts fall within their boundaries. The share of units within the city has fluctuated over the last few years due to the availability and price of developed land within the city limits versus the bedroom communities.

Average price to decline in 2009 but return to growth in 2010

We forecast the average price of a new single-detached home will be $352,000 in 2009, a four per cent decline from the 2008 annual figure. The average new house price will ease due to the historically high number of units that are completed and unoccupied and competition from the resale market. Builders advise that in some new subdivisions, their newly completed homes are competing with homes sold to buyers in the previous year. As a result, builders will be offering incentives and price reductions in order to liquidate their excess inventory in 2009. Provided inventories sufficiently decline, the average price will then see an uptick of two per cent in 2010.