It comes as no surprise that the Canadian Mortgage and Housing Corporation (CMHC) predicts a continued slow-down in the real estate and building markets in Canada for the second quarter 2009.
Remember that recession thing that’s wreaking havoc across the globe?
Well, the CMHC recently released its outlook on the second quarter of 2009 (April-June) and, if you’re in the mood for positive thinking, things are forecasted to turn around … in 2010.
Housing starts in Q2 of 2009 are expected to be 141,500 nationwide, while they’ll see positive growth by this time next year, to the tune of an additional 8,800 housing starts (150,300).
But, if you’re in a pessimistic mood and wonder how far Canada’s mighty real estate market has fallen, you’ll note 2008’s second quarter housing starts were 217,600 (and 227,800 in 2007’s Q2!), which makes 2010’s forecasted rebound a little less exciting.
But remember, a ray of hope is sometimes all that’s needed in these doom-and-gloom times of new housing starts across Canada, so try to take the positive out of this one.
The decline in housing starts in 2009 can be directly tied to the economic downturn. The fact they’re being compared to near record numbers of 2007 and 2008 certainly doesn’t help with appearances either. But one look at the employment rates across Canada will explain why fewer people are putting shovels into the ground in every province in 2009. Although more housing starts are expected in 2010, CMHC forecasts more people will be looking for work in every province next year as well.
Unemployment rates across Canada
|Province||2007||2008||2009 (F)||2010 (F)|
(F) = Forecasted by CMHC
Unemployment figures from Statistics Canada
The next five years
The CMHC’s housing outlook also gave a five-year forecast (2009-2013) for each province’s housing start market, which generally reflects how the economy is expected to be performing during this period.
The long-term housing outlook for 2009-2013 in the country’s richest province is not promising. A five-year housing boom – due to skyrocketing energy prices – has left Alberta with unprecedented new development, but with the economic downturn and oil selling for a third of what it did at its peak, there is a much lower demand for new housing. CMHC says the worst year will be 2009 and investment in the oil sands should increase as the world’s financial stability improves, aiding the ailing housing market.
An expected influx of new residents to the western-most province will put B.C.’s housing market back on track after 2009. As more people turn to the beauty and diversity of B.C.’s landscape, the demand for ownership and rental housing will increase, and as available units become scarce, the real estate market will improve.
Manitoba is expected to be the most consistent performer from 2009-2013, because of its diversified economy and general openness to migrants under the Provincial Nominee Program. After 2009, housing starts are anticipated to climb because of the improving economy, lower new home inventories and tightening resale market conditions.
New Brunswick already has an economic plan in place, and it involves better connecting its cities, and the development of the energy sector around Saint John. The positive impact on the economy is expected by mid-2010, which will increase new housing construction in urban areas like Saint John, Fredricton and Moncton.
Newfoundland and Labrador
People may be able to stay on The Rock to make a good living over the next five years. After a decade of fleeing to the west for income, Newfoundland is focusing on energy and mining development to boost its economic output. There is also growing demand from seniors, a tighter rental market, a continuing shift towards medium-density housing, and government-assisted affordable housing initiatives, all of which will help keep the housing market flat from 2010 to 2013. On The Rock, even a flat market is a positive.
Nova Scotia is getting in on the offshore energy game. This investment in energy will stimulate the economy, while Halifax continues to prosper, with a positive economic outlook on the horizon. Housing starts are expected to improve by 2010 and continue afterward.
A large part of Ontario’s economy is dependent on the auto industry, which is struggling mightily. As unemployment continues to rise as the economy scuffles, housing demand is low for both new and existing homes. A flooded resale market also means lower prices for buyers. If the economy turns around as expected by 2012, Ontario’s housing market should thrive again.
Prince Edward Island
The economy will improve on PEI from 2009-2013, as tourism, agriculture and fisheries remain its most important sectors supporting growth. The population also continues to grow, because of the number of aging residents and the provincial immigration program. Housing starts are expected to rise moderately by 2013.
New home construction in Quebec will stay in line with household formation, as the economy is expected to grow moderately in the next five years. The real estate market will also shift from a sellers market to a more balanced level. Also, the decrease in the amount of people over 75, over the next few years, will also result in less retirement homes being built from now to 2013. New home building will decline, but still remain at relatively high levels when compared to recent history.
Saskatchewan’s growth will continue to be the strongest in Canada, as the resource sector continues to boom and investments in the province continue. Despite this, housing starts will slip below boom years of 2007 and 2008, but will stay above the number from five years previous. Builders will have to alter production to match heightened new home inventories, especially in the urban markets. Multi-family starts will be the majority of new builds, while low vacancy rates will result in increased rental units being built.
Forecasted new housing starts by province from 2009-2013
|Province||2008||2009 (F)||2010 (F)||2011 (F)||2012 (F)||2013 (F)|
(F) Forecasted by CMHC
For more visit the CMHC’s second quarter outlook .