CMHC is predicting a 20% decline from last year to 60,000 Units. However, the historical average is 62,000. Fewer full time jobs in 2009. Forecast of unemployment in the 8% range however in the last housing recession was over 11%. Rates heading still lower whereas in the last downturn the rates were up. No interest rate hikes soon as well as lots of money being pushed into the economy. Long term mortgage rate history is just above the lows of the 1950’s.
If you have a job and income it is a great time to spend and to buy. A slowing economy has tightened the credit market.
Arrears as a share of the of the total number of mortgages: In Canada it is under .3 of 1%. The US is twenty times higher. Exposure to sub-prime mortgages is under 5%, in the US, it is 35%.
We do have a Buyers Market in Toronto. In the GTA the sales to new listings ratio favours the buyers. Look to an average of 100 days on the market on average. Prices are coming down. Sellers have to be more competitive. Downward pressure on Condo prices. Toronto has not been as volatile leeding up to this cycle. With all the activity the prices rose on average 5% per year in Toronto whereas other centres like Calgary showed over 10% per year increases.
New Home Market:
They are trending lower as well as new home construction. Sales of new Condos will be dropping.
Condominium Apartment Market:
About 30% of total purchases are investors. Long term investors represent about 19% of this 30%. CMHC figures show more owner occupied units than in the last downturn. There is a very low vancay rate of those condominiums. Growing trend on youth to the newer condo properties rather than purpose built rentals. They like the amenties.
As unit completion goes up so will listings and prices will decline in the Condo market. App. 17,000 units. In a good market that would have accounted for a one year absorbtion rate which in this market becomes a 2 year absorbtion rate.
We are coming to the end of a housing cycle and supply needs to be absorbed before the market will head back up, however the indicators seem to show that it will be a short-lived Downturn. Let’s hope!!
More information can be found on the CMHC web site…