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Misreading Canada’s Housing Market: No ‘Significant Overbuilding’

November 19, 2014/0 Comments/in Market News/by TanTeam Editorial

Don’t fret, study says Amid the angst over Canada’s housing market, a new study suggests there’s no “significant overbuilding.” That’s because demand for housing isn’t being measured properly, today’s report from CIBC World Markets found. “Ask any real estate developer in any of Canada’s major cities about the risk of overbuilding, and the first line […]

October 2014 GTA REALTORS® Release Monthly Resale Housing Figures

November 5, 2014/0 Comments/in Market News/by TanTeam Editorial

TORONTO, November 5, 2014 — Toronto Real Estate Board President Paul Etherington announced that Greater Toronto Area REALTORS® reported 8,552 sales through the TorontoMLS system in October 2014. This result represented an increase of 7.7 per cent compared to October 2013. New listings were also up on a year-over-year basis, but by a lesser 3.4 […]

Misreading Canada’s Housing Market: No ‘Significant Overbuilding’

November 19, 2014/0 Comments/in Market News/by TanTeam Editorial

October 2014 GTA REALTORS® Release Monthly Resale Housing Figures

November 5, 2014/0 Comments/in Market News/by TanTeam Editorial

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Misreading Canada’s Housing Market: No ‘Significant Overbuilding’

November 19, 2014/0 Comments/in Market News/by TanTeam Editorial

Don’t fret, study says

Amid the angst over Canada’s housing market, a new study suggests there’s no “significant overbuilding.”

That’s because demand for housing isn’t being measured properly, today’s report from CIBC World Markets found.

“Ask any real estate developer in any of Canada’s major cities about the risk of overbuilding, and the first line of defence would be immigration and its critical role in supporting demand,” said economists Benjamin Tal and Nick Exarhos.

“It turns out that at least for now, this claim is more valid than widely believed,” they added.

“Not only has the rising share of young immigrants lifted demand for housing, but also official population projections understate the actual number of non-permanent residents in the country by close to 100,000.”

New immigrants, said Mr. Tal and Mr. Exarhos, now account for about 70 per cent of Canada’s population growth. And half of them are in the 25-44 age group, meaning they’re the most likely to start having kids, and thus driving the increase in new households.

“In fact, despite some concerns of overbuilding in the current housing boom, the ratio of housing starts to household formation is not far from its long-run average of 1.03,” the study said.

“The broadly in-line aggregate trend in Canada’s homebuilding means that the eventual wind-down in the current boom won’t have to be as dramatic as feared by some.”

The Bank of Canada and others have pointed to the hot markets of Alberta, Ontario and British Columbia.

But Toronto has cooled and Vancouver has been “broadly flat” for the past years, with construction starts driving higher only in Calgary.

The picture “might be even better than perceived,” the economists said, because non-permanent residents are students, temporary workers and refugees.

That group is growing rapidly but, apparently, isn’t being measured properly where household formation is concerned, and thus the “appropriate level” of homebuilding.

“Many researchers” are using the 2011 census as their base, but that, the economists said, gives a false picture of household formation.

Having said that, it’s going to slow.

“Still, our evidence that recent demographic demand for housing has been undercounted suggests that there has been no significant overbuilding,” Mr. Tal and Mr. Exarhos said, projecting that housing starts will average 190,000 annually for the next couple of years, or some 10,000 more than CIBC’s previous forecast.

Source: Michael Babad – The Globe and Mail

October 2014 GTA REALTORS® Release Monthly Resale Housing Figures

November 5, 2014/0 Comments/in Market News/by TanTeam Editorial

“Strong growth in sales was evident across all major home types during the first full month of fall. This suggests that there are a lot of households across the Greater Toronto Area who remain upbeat about the benefits of home ownership over the long term, whether we’re talking about first-time buyers or existing home owners looking to change their housing situation,” said Mr. Etherington.

The average selling price for October 2014 transactions was $587,505 – up 8.9 per cent compared to the average of $539,286 reported for October 2013. The MLS® HPI composite benchmark price was up by 8.3 per cent over the same period. Low-rise home types, including singles, semis and town houses, continued to be the driver of year-over-year growth in the average price and the MLS® HPI composite benchmark.

“While sales growth has tracked strongly so far this fall, many would-be home buyers have continued to have difficulties finding a home due to the constrained supply of listings in some parts of the Greater Toronto Area, particularly where low-rise home types are concerned. The resulting sellers’ market conditions are forecast to drive strong price growth through the remainder of 2014 and indeed into 2015 as well,” said Jason Mercer, TREB’s Director of Market Analysis.

Source: Toronto Real Estate Board