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For the first time in nine months, none of the six metropolitan markets surveyed showed a monthly increase of as much as 1%. The rise was 0.9% in Vancouver, 0.7% in Toronto, 0.6% in Halifax, 0.4% in Montreal and 0.3% in Ottawa. In Calgary prices declined 0.5%. Prices are now down 9.7% from the previous peak in Calgary and 0.2% in Vancouver. The other four markets passed their pre-recession peaks between May and October last year. The index is now up 9.0% from its April 2009 bottom. This steep rise has been led by Vancouver (up 11.7% from May 2009) and Toronto (11.0% from April 2009). In other markets the increases have been more modest: Calgary 6.7% since June, Ottawa 6.5% since last April, Montreal 3.6% since February 2009, Halifax 1.5% since February 2009. The 12-month appreciation was 9.4% in Toronto, 8.9% in Vancouver, 8.1% in Ottawa, 5.3% in Montreal, 4.6% in Halifax and 1.9% in Calgary. Teranet – National Bank House Price Index™
The historical data of the Teranet – National Bank House Price Index™ is available at www.housepriceindex.ca.
The Teranet–National Bank House Price Index™ is estimated by tracking observed or registered home prices over time using data collected from public land registries. All dwellings that have been sold at least twice are considered in the calculation of the index. This is known as the repeat sales method; a complete description of the method is given at www.housepriceindex.ca
Teranet - National Bank House Price Index™ thanks the author for their special collaboration on this report. 1 Value of Dwelling for the Owner-occupied Non-farm, Non-reserve Private Dwellings of Canada. |
Wednesday, March 31, 2010
January 2010 Teranet House Price Index
Sunday, March 28, 2010
Danielle Park on Canadian Housing
Danielle Park gives an interview on howestreet.com on the Canadian housing market.
You can listen to the 16 minute interview here.
You can listen to the 16 minute interview here.
Wednesday, March 24, 2010
Population and housing stats, 1991-2009
Hi all, M- speaking.
I've just posted this as a comment on the Vancouvercondoinfo blog, but I figured I'd post it here as well, to ensure there's some rational discussion, and that it doesn't get lost among the flames. Looking at the stats below, what do you think? How does it play into prices, population, etc? Where's population going from here? Where are housing starts going from here?
BC Population Data from BCStats:
YEAR: Population: Households: Housing Starts:
1991:.... 3,373K ............ 1,280K ........... n/a
2001:... 4,076K ............ 1,593K ........... 275K (since 1991)
2006:... 4,243K ............ 1,677K ........... 152K (since 2001)
2009:... 4,455K ............ 1,778K ............ 90K (since 2006).
What are some numbers that we can extract from this bare data?
1991-2001:
Population rose by 70K per year, and 27K units were built per year, which implies 2.6 people per housing unit. A little more than Vancouver, but that's about the norm for the province. So we can conclude that population growth roughly matched the amount of construction. Household growth was a little higher than construction, but within a reasonable range.
2001-2006:
Population rose by 33K per year, and 30K of housing units were started each year. Huh, that implies 1.1 people per housing unit, which implies that there was lots of surplus housing constructed. Household formation suggests only 17K of households were "formed this year, which implies that *half* of the housing units built weren't occupied.
2006-2009:
Population rose by 70K per year (1990s growth levels!), and 30K of housing units were started each year. That's about 2.3 people per dwelling, which is about normal, if a touch on the low side. Household formation was 30K per year, which matches the level of construction, so that's about right.
Can we conclude anything from the above data? To me, it looks like construction matched population growth and household formation in the 1990s, suggesting that construction and growth were balanced. From 2001 to 2006, there was massive overconstruction going on (mainly due to low population growth). Since 2006, construction and population growth have been balanced.
Since 1991, unit construction has been fairly flat-- sure there have been some strong years and some weak years, but overall the rate of construction has been constant for each of the multi-year chunks that I've picked. The biggest aberration was in the 2001-2006 period, where population growth was abysmal, and so there was a lot more construction going on than we actually needed.
Some questions:
Have the imbalances been wrung out of the system?
How will prices (rising/stable/falling) play into this?
Sources:
http://www.bcstats.gov.bc.ca/data/pop/pop/BCPop.asp
http://www.bcstats.gov.bc.ca/data/pop/pop/dynamic/Households/Query.asp?type=RD
http://www.bcstats.gov.bc.ca/data/dd/handout/HSTART.pdf
I've just posted this as a comment on the Vancouvercondoinfo blog, but I figured I'd post it here as well, to ensure there's some rational discussion, and that it doesn't get lost among the flames. Looking at the stats below, what do you think? How does it play into prices, population, etc? Where's population going from here? Where are housing starts going from here?
BC Population Data from BCStats:
YEAR: Population: Households: Housing Starts:
1991:.... 3,373K ............ 1,280K ........... n/a
2001:... 4,076K ............ 1,593K ........... 275K (since 1991)
2006:... 4,243K ............ 1,677K ........... 152K (since 2001)
2009:... 4,455K ............ 1,778K ............ 90K (since 2006).
What are some numbers that we can extract from this bare data?
1991-2001:
Population rose by 70K per year, and 27K units were built per year, which implies 2.6 people per housing unit. A little more than Vancouver, but that's about the norm for the province. So we can conclude that population growth roughly matched the amount of construction. Household growth was a little higher than construction, but within a reasonable range.
2001-2006:
Population rose by 33K per year, and 30K of housing units were started each year. Huh, that implies 1.1 people per housing unit, which implies that there was lots of surplus housing constructed. Household formation suggests only 17K of households were "formed this year, which implies that *half* of the housing units built weren't occupied.
2006-2009:
Population rose by 70K per year (1990s growth levels!), and 30K of housing units were started each year. That's about 2.3 people per dwelling, which is about normal, if a touch on the low side. Household formation was 30K per year, which matches the level of construction, so that's about right.
Can we conclude anything from the above data? To me, it looks like construction matched population growth and household formation in the 1990s, suggesting that construction and growth were balanced. From 2001 to 2006, there was massive overconstruction going on (mainly due to low population growth). Since 2006, construction and population growth have been balanced.
Since 1991, unit construction has been fairly flat-- sure there have been some strong years and some weak years, but overall the rate of construction has been constant for each of the multi-year chunks that I've picked. The biggest aberration was in the 2001-2006 period, where population growth was abysmal, and so there was a lot more construction going on than we actually needed.
Some questions:
Have the imbalances been wrung out of the system?
How will prices (rising/stable/falling) play into this?
Sources:
http://www.bcstats.gov.bc.ca/data/pop/pop/BCPop.asp
http://www.bcstats.gov.bc.ca/data/pop/pop/dynamic/Households/Query.asp?type=RD
http://www.bcstats.gov.bc.ca/data/dd/handout/HSTART.pdf
Rational Thought Not a Factor in Home Purchases
By The Canadian Press
Referencing RBC Study.
TORONTO - Recent first-time homebuyers say they felt pressure to enter the market as they contended with jitters about rising home prices and higher mortgage rates.
The Bank of Montreal says as many as one-third of respondents in a homebuyers survey believe their expectation that housing prices would increase, and interest rates would soar, left an impression on their decision to make a purchase in the short term.
"There's definitely a sense of urgency among home buyers," said Lynne Kilpatrick, senior vice-president of personal banking at BMO.
"While we encourage Canadians to pursue their home ownership dreams we recognize it's easy to get caught up in the emotions of the purchase and this can lead to stretching one's budget too thin."
The results come as Royal Bank released its own homeownership survey on Wednesday which showed that a majority of Canadians expect to see higher mortgage rates over the next year.
RBC's annual homeownership survey said 64 per cent of Canadians expect high rates, with about the same number of mortgage holders concerned about higher rates.
Economists expect the Bank of Canada to raise interest rates by between half a percentage point and a full point over several months beginning this summer to fight inflationary pressures in the economy.
With many Canadians taking on larger and larger mortgage debt in expensive markets across the country, higher rates could create financial problems for some homeowners.
In the Royal Bank survey, three-quarters, or 73 per cent of homeowners, feel strongly that homebuyers need to think ahead to ensure they will still be able to make their mortgage payment if rates rise.
The bank says six-in-10 mortgage holders say they have taken advantage of current low interest rates to pay more principal on their loans.
Eighteen per cent of homeowners say they've made a lump sum payment on their mortgage and 16 per cent have doubled their payment to reduce their principal.
While 84 per cent of mortgage holders believe they are doing an excellent or good job of paying down their mortgage, 49 per cent say their mortgage is larger than they thought it would be at this stage in their life.
Marcia Moffat, RBC's head of home equity financing, says the best advice for homeowners is to review their mortgage holdings with a financial adviser to position themselves for any changes.
BMO's senior economist Sal Guatieri added that a cooler housing market is "just around the corner."
Referencing RBC Study.
TORONTO - Recent first-time homebuyers say they felt pressure to enter the market as they contended with jitters about rising home prices and higher mortgage rates.
The Bank of Montreal says as many as one-third of respondents in a homebuyers survey believe their expectation that housing prices would increase, and interest rates would soar, left an impression on their decision to make a purchase in the short term.
"There's definitely a sense of urgency among home buyers," said Lynne Kilpatrick, senior vice-president of personal banking at BMO.
"While we encourage Canadians to pursue their home ownership dreams we recognize it's easy to get caught up in the emotions of the purchase and this can lead to stretching one's budget too thin."
The results come as Royal Bank released its own homeownership survey on Wednesday which showed that a majority of Canadians expect to see higher mortgage rates over the next year.
RBC's annual homeownership survey said 64 per cent of Canadians expect high rates, with about the same number of mortgage holders concerned about higher rates.
Economists expect the Bank of Canada to raise interest rates by between half a percentage point and a full point over several months beginning this summer to fight inflationary pressures in the economy.
With many Canadians taking on larger and larger mortgage debt in expensive markets across the country, higher rates could create financial problems for some homeowners.
In the Royal Bank survey, three-quarters, or 73 per cent of homeowners, feel strongly that homebuyers need to think ahead to ensure they will still be able to make their mortgage payment if rates rise.
The bank says six-in-10 mortgage holders say they have taken advantage of current low interest rates to pay more principal on their loans.
Eighteen per cent of homeowners say they've made a lump sum payment on their mortgage and 16 per cent have doubled their payment to reduce their principal.
While 84 per cent of mortgage holders believe they are doing an excellent or good job of paying down their mortgage, 49 per cent say their mortgage is larger than they thought it would be at this stage in their life.
Marcia Moffat, RBC's head of home equity financing, says the best advice for homeowners is to review their mortgage holdings with a financial adviser to position themselves for any changes.
BMO's senior economist Sal Guatieri added that a cooler housing market is "just around the corner."
Sunday, March 21, 2010
Housing Bubble - - Yes or No
Canadian Housing Bubble by Alexandre Pestov at York University's Schulich School of Business.
Here is the abstract, click on the above link for the full meal deal.
The cause of the housing bubble associated with the sharp run-up and the subsequent drop in home prices in the US over the period of 1999-2008 has been the focus of significant research attention. Despite numerous similarities, the Canadian housing market escapes the same level of interest, mostly due to the seemingly stable housing prices.
This paper explores the subject of a possible housing bubble in Canada. It examines a diverse array of factors that may have contributed to the rise in house prices in Canada. The paper evaluates each factor individually and determines the health of the Canadian housing market using common valuation techniques.
Results suggest that economic fundamentals in Canada provide little explanation for the Canadian house price dynamics. Market fundamentals have become insignificant in affecting house prices, and the price-momentum conditions characteristic of a bubble now exist. The extreme decoupling of the market prices from the underlying fundamentals suggests an upcoming correction in housing prices in Canada.
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