Real Estate Market Bouncing Back to Health With the Help of Low Mortgage Rates
October 1, 2009 at 9:29 amThe Canadian housing market has been making a steady comeback over the past few months and the August CMHC monthly housing statistics prove that housing starts are making a sharper jump than expected in the real estate market. In addition, low mortgage rates are still the norm. So with the Canadian housing market gaining ground as it recovers from the economic downturn of months past, now may be an excellent time to buy, build or sell.
Economists had predicted housing starts to increase to approximately 139,000, but with home starts in August jumping more than 12% compared to July, CMHC is confident in the housing market’s economic forecast. Construction companies are benefiting from the rise in house starts as well, as they began work on 14,177 new homes in August for a seasonal adjusted annual rate of 150,400.
According to the CMHC, the seasonally adjusted annual rate of urban starts rose in August by 14% to 131,800 units. Multiple-unit construction rose 23.8% to 77,600 units, and the single-unit sector gained 2.5% to 54,200 units.
Seasonally adjusted annual rates (SAAR) of urban starts increased for many provinces. Here are some housing market highlights over the last month. Urban construction was up:
While an overall increase could be found throughout the country, rural starts were unchanged in August at 18,600 units.
Why the increase in housing starts? Aside from the Canadian housing market showing signs of recovery from the economic downturn, the housing start increase is driven by unit sales and attractive existing home prices. Below is a table detailing the increase in housing starts from across the country between August 2008 and August 2009.
|
Housing Starts, Actual and seasonal adjusted annual rate (SAAR)* |
||||
|
|
Actual |
SAAR |
||
|
August |
August |
July |
August |
|
|
|
Final |
Preliminary |
Final |
Preliminary |
|
Canada, all areas |
19,626 |
14,177 |
134,200 |
150,400 |
|
Canada, rural areas |
2,819 |
1,990 |
18,600 |
18,600 |
|
Canada, urban centres |
16,807 |
12,187 |
115,600 |
131,800 |
|
Canada, singles, urban centres |
7,063 |
5,211 |
52,900 |
54,200 |
|
Canada, multiples, urban centres |
9,744 |
6,976 |
62,700 |
77,600 |
|
|
|
|
|
|
|
Atlantic region, urban centres |
879 |
835 |
7,300 |
8,000 |
|
Quebec, urban centres |
3,082 |
3,409 |
40,000 |
41,000 |
|
Ontario, urban centres |
8,026 |
4,172 |
36,900 |
42,000 |
|
Prairie region, urban centres |
2,380 |
2,271 |
20,500 |
23,800 |
|
British Columbia, urban centres |
2,440 |
1,500 |
10,900 |
17,000 |
*Information taken from CMHC
In addition to the rise in house starts, sale prices of newly completed and unabsorbed single-detached and semi-detached dwellings have been showing promise for the remainder of 2009 and into 2010.
Resale activity is also up in August from this time last year, especially in Canada’s large metropolis centres. According to the CMHC and multiple listing service (MLS), resale activity rose:
A dramatic 62% increase of overall new home sales in August indicates Canada’s climb out of recession but we are still behind the mark compared to where we were in 2008. As Kelvin Mangaroo, founder of RateSupermarket.ca states, “Regardless of where we were a couple of years ago, the surge in home starts and new home sales indicates a confidence in the real estate market that we have not seen over the last few months. With the increased number of searches we’ve seen done on RateSupermarket.ca, it appears that home buyers are taking note of the deals being offered and the low mortgage rates available, and are looking to take advantage now.”
While housing sales and starts seem to be up in major metropolis cities across Canada, the housing market is still recovering from the economic activity seen over the past 10 months. Even when the labour market officially stabilizes across the country, it will take time for that to result in a consistent increase in spending levels.
Caroline
PR@RateSupermarket.ca
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October 28th, 2009 at 4:24 pm
[...] adjusted rates of housing starts reached 150,100 units in September compared to 157,300 units in August. But this downshift is attributed to a volatile multiple starts segment and won’t have an impact [...]