StatsCan Building Permits, March 2024
Month over month, the total value of building permits in Canada decreased 11.7% to $10.5 billion in March. Construction intentions in the non-residential component declined 16.7% to $4.0 billion, while the residential sector decreased by 8.3% to $6.5 billion. Declines were observed in all components except for the commercial component.
Monthly declines in industrial construction intentions push down the non-residential sector
Non-residential construction intentions decreased 16.7% to $4.0 billion in March, with reductions in the industrial (-46.1%; -$629.8 million) and institutional (-22.2%; -$293.1 million) components. The large decline in the industrial component was due to the lack of major industrial permits issued in March compared with February, which was the second-highest monthly level recorded.
The commercial component tempered the declines in the non-residential sector by growing 5.8% to $2.2 billion in March.
Ontario drives monthly downturn in residential sector
The value of residential building permits decreased 8.3% to $6.5 billion in March. Ontario (-13.7%; -$377.4 million) led the decline in value for both single-family and multi-family dwelling permits. Despite the overall decline, the residential sector grew in Quebec (+7.3%; +$90.1 million), Prince Edward Island (+70.4%; +$14.3 million), Saskatchewan (+10.3%; +$6.3 million), Newfoundland and Labrador (+7.7%; +$2.2 million) and Manitoba (+0.9%; +$1.4 million).
Across Canada, 16,800 new multi-unit dwellings and 4,200 new single-family homes were authorized in March. From April 2023 to March 2024, a total of 260,200 new units were authorized.
First quarter of 2024 rebounding, driven by growth in construction intentions in the commercial component
The total value of building permits in the first quarter of 2024 was $33.4 billion, a 3.7% increase from the previous quarter ($32.2 billion). This represents a partial rebound from the fourth quarter of 2023, which was the lowest quarterly total value since the third quarter of 2021 ($30.5 billion). The growth was driven by British Columbia (+20.1%; +$988.4 million), which posted significant gains in the commercial and industrial non-residential components, and in the multi-unit residential component. Despite quarterly gains, construction intentions in the first quarter of 2024 remained lower than the average quarterly levels of the previous two years.
Construction intentions in the non-residential sector increased 6.9% to $13.0 billion in the first quarter, led by the commercial component (+22.3% to $6.6 billion), which posted the highest level of the previous four quarters. Growth was driven by permits for office buildings. Overall, nine provinces and territories reported increases in commercial construction intentions, led by Ontario (+34.8%; +$710.1 million), Quebec (+31.2%; +$296.6 million) and British Columbia (+32.4%; +$269.3 million).
The value of residential building permits edged up 1.8% in the first quarter. Growth in the multi-unit component (+7.9%; +$919.5 million) was partially offset by declines in the single-family homes component (-6.6%; -$565.6 million).
Source:
StatsCan
Canadian Home Sales Dip in April from Prior Month as Spring Listings Perk Up, CREA Says
The number of homes changing hands in April fell from the previous month despite an influx of new listings hitting the market.
The Canadian Real Estate Association (CREA) reported a 1.7% decrease in home sales in April on a month-over-month basis, while newly listed properties available for sale rose 2.8 per cent. The average price of a home sold in April was $703,446, down 1.8% from April 2023.
However, home sales rose 10.1% compared to the previous year, primarily due to the early Easter long weekend, which occurred on March 29 and March 31 this year compared to April 7 and 9, last year.
Slower sales amid more new listings resulted in a 6.5% jump in inventory levels since the COVID-19 pandemic, with 4.2 months of inventory at the end of April, compared to 3.9 months at the end of March. It was also one of the largest month-over-month gains on record, second only to those seen during the sharp market slowdown of early 2022.
The Canada Mortgage and Housing Corp. also released its latest data on housing starts for April, showing the annual pace of starts edged down 1 per cent compared with March.
The overall drop came as the annual pace of starts in urban centres essentially flatlined in April. The national housing agency said last year’s challenging borrowing conditions contributed to the downward trend.
Sources:
The Globe & Mail
The Toronto Star
Financial Post
CREA
Annual Pace of Housing Starts in Canada Edged Down 1% in April from March
The total monthly seasonally adjusted annual rate (SAAR) of housing starts for all areas in Canada decreased 1% in April (240,229 units) compared to March (242,267), according to Canada Mortgage and Housing Corporation (CMHC). The six-month trend in housing starts decreased 2.2% from 243,907 units in March to 238,585 units in April.
The overall drop came as the annual pace of starts in urban centres essentially flatlined in April month-over-month at 220,123.
The pace of multi-unit urban starts in April fell one per cent to 178,462, while single-detached urban starts rose two per cent to 41,661 units. The annual pace of rural starts was estimated at 20,106 units.
CMHC chief economist Bob Dugan attributed the decrease in housing starts to a decrease in multi-unit starts, especially in Ontario.
“The multi-unit volatility observed in Toronto, Vancouver, and Montreal in recent months is unsurprising as we continue to see last year’s challenging borrowing conditions reflected in multi-unit housing starts numbers,” he said in a press release.
“We expect to see continued downward pressure in these large centres.”
All three of those major cities saw declines in Housing starts due to decreases in both multi-unit and single-detached starts. Starts were down 38 per cent in Toronto, 30 per cent in Vancouver and three per cent in Montreal compared with April 2023.
CMHC said the six-month moving average of the monthly seasonally adjusted annual rate was 238,585 units in April, down 2.2 per cent from 243,907 units in March.
Despite the overall decline, TD economist Rishi Sondhi said starts “continue to run at a healthy level,” with government measures and rapidly rising rents supporting the construction of purpose-built rental units.
Sondhi said TD is forecasting housing starts will continue to decline through the remainder of this year, “reflecting more recent weakness in presale activity in key markets like Toronto, elevated construction costs, and high interest rates.”
Sources:
The Globe & Mail
The Toronto Star
CMHC
Would-Be Homebuyers Are in Limbo and Only the Bank of Canada Can Free Them
Buyers are sitting on their wallets and it looks like rate cuts are the only thing that will change that, according to mortgage strategist and interest rate analyst Robert McLister
72 per cent of prospective homebuyers have their fingers hovering over the “buy” button but won’t buy until rates come down, according to a BMO poll by Ipsos.
Buyers are holding off for two main reasons:
First, thanks to record unaffordability, people need lower rates to pass the government’s mortgage stress test. Lower mortgage rates help lower payments and therefore reduce the percentage of income devoted to payments. Every percentage drop in average rates beefs up buying power by over eight per cent. That adds over $50,000 into peoples’ maximum home-buying budgets based on Canada’s average home price.
Secondly, more buyers need to feel optimistic that a recession is not on the horizon and that inflation is under control. It’s also true for investors who believe they’ll buy cheaper if inflation returns, immigration gets cut back and new rental supply causes rents to dive. Rate cuts would go a long way toward offsetting those concerns.
Source:
Financial Post
Waiting for Warmth: Housing Sales Slump as Spring Blooms
The Canadian housing market tends to bloom in the spring, reaching its peak in late April and early May. This year, however, the housing market remained sluggish, awaiting an economic recovery. An anticipated interest rate cut in June could potentially provide the boost it needs.
The latest data released by the Canadian Real Estate Association (CREA) revealed a 1.7% decrease in home sales in April on a month-over-month basis. In fact, housing sales have been lower than the 10-year monthly moving average since the Bank of Canada initiated rate hikes in early 2022.
The decline in sales has coincided with a surprising rise in inventory. CREA reported an almost three per cent month-over-month increase in new listings across Canada, but the national average belies the major swings in individual markets, particularly Toronto, Canada’s largest, where there were 47.2 per cent more listings in April than in the same month last year.
The country has seen a record number of properties listed for sale, the highest since the COVID-19 pandemic, and slowing sales have put buyers in a favorable position. This market imbalance empowers buyers to negotiate more effectively, while forcing sellers to temper their expectations.
The Canadian housing market does reveal some promising trends. Canadian markets showed a 10.1% increase in sales compared to April 2023, and housing transactions have maintained an upward trajectory since early 2023, despite some fluctuations. This suggests a robust recovery is possible if interest rates remain supportive through the summer.
Pricing trends are more mixed. CREA’s Home Price Index Benchmark Price, which is a quality-adjusted estimate that accounts for changes in the structural types and sizes of homes sold over time. In April, the benchmark price for Canada remained flat month-over-month and declined by 0.6 per cent compared to the previous year.
Real estate markets in the Maritimes have seen significant price increases, with Moncton and Halifax experiencing 12.2% and 4.3% year-over-year increases respectively. Benchmark prices in Montreal and Quebec City rose 7.2% and 3.3% respectively, while Calgary and Edmonton experienced nearly 10% and 5.6% price increases respectively.
The housing market in Greater Toronto continues to show signs of weakness, with April prices down slightly from the previous year. Toronto has experienced huge price swings in recent years, rising sharply at the start of the pandemic and then declining in 2022 as interest rates started to climb. Toronto’s relatively high prices mean an upward trend is more contingent on a reduction in mortgage rates.
With favourable interest rate policies and a timely reduction in mortgage rates, we could see a boost in sales later this summer.
Source:
Financial Post
Record-Low Sales of New Homes Offers ‘Plenty of Opportunities’ for GTA Homebuyers
High interest rates and slow pre-construction sales have led to new home sales in the Greater Toronto Area hitting a record low, with sales plummeting 56% in April compared to last year and 65% below the 10-year average, according to the Building Industry and Land Development Association (BILD), based on Altus Group data.
“It’s concerning,” said Justin Sherwood, senior vice-president of communications and stakeholder relations at BILD. High interest rates and slow pre-construction sales, he said, have created a “critical situation for the future housing supply of the GTA and demands the attention of all levels of government to create the economic and investment climate to balance the market over the next several years.”
“Without action we are looking at an acute shortage of supply in two to three years,” Sherwood said.
The BILD is urging governments to increase density and speed up approvals.
“Without action we are looking at an acute shortage of supply in two to three years,” Sherwood said.
Until that happens, it’s a good time to buy for those who can bear the high interest rates.
“With months of inventory at nearly a 15-year high and prices down year-over-year,” said Edward Jegg, research manager with Altus Group, “there are plenty of opportunities for those looking to buy a new home ahead of what is anticipated to be an increased demand once interest rates soften and buyers currently sitting on the sidelines return to the market.”
Total new home remaining inventory stood at 20,092 units last month. This includes 16,478 condo units and 3,614 single-family homes. This is one of the highest inventory levels for new properties in the last decade.
The benchmark price for a new condo unit in April was $1,056,786 — down four per cent year-over-year.
The benchmark price for a new single-family home was $1,617,896 — nine per cent lower than April last year.
Source:
The Toronto Star
