Ontario Lowers Projections for How Many New Homes Will Be Built
Ontario has lowered projections for the number of new homes to be built in the province over the next few years, putting the government further off the pace needed to meet its target.
Premier Doug Ford has pledged to get 1.5 million homes built over 10 years by 2031, but Ontario has not yet met any of its annual targets toward that goal. This year’s annual target is 125,000 homes, but the government’s fall economic statement shows it expects just 81,300, based on an average of private-sector forecasts. The strongest growth is expected in 2027, with an estimated 95,300 homes.
Finance Minister Peter Bethlenfalvy said he is still working toward the 1.5 million target and is setting the province up for long-term success. Liberal Leader Bonnie Crombie said there is “no conceivable way” the government can still meet its target. She pointed out that there are no incentives to build homes, and construction workers are leaving the province of Ontario and going to Alberta and B.C. because they are building homes there.
The government has established various funds worth several billion dollars to help spur home construction, including incentives for municipalities and money to get housing-enabling infrastructure such as water and wastewater lines built. The spring budget contained $1.6 billion in new money for housing-enabling infrastructure.
Municipalities have described a lack of new water lines and roads as a hurdle to building new housing, and they can use the funds for such projects. However, municipalities have complained about how their progress is being measured toward the Building Faster Fund, which gives extra funding to certain communities if they exceed or get close to targets the government has assigned.
Source: The Star
Canadian Home Sales Rose Modestly in September as Real Estate Association Predicts 2025 Rebound
Canada’s national real estate association predicts that 2025 will be the year buyers return to the market, with the Bank of Canada expected to continue cutting its benchmark interest rate.
This will make it easier for homebuyers to qualify for a mortgage, as the cost of a mortgage is still relatively prohibitive. The cheapest five-year fixed mortgage rate is now below 5%, which is lower than a year ago but still more than double the rate during the early years of the pandemic.
Private-sector economists agree that some buyers have decided to be patient and remain on the sidelines as they wait for better financing conditions. CREA predicts that there will be 499,800 home purchases next year, 6.6% higher than this year but still below the 10-year average. “Markets now expect the Bank of Canada to get back to a ‘neutral’ rate by sometime next spring or summer,” the CREA report said.
In addition to lower borrowing costs, the federal government’s easier mortgage rules are due to go into effect mid-December. These new rules will allow first-time homebuyers to stretch out their mortgage payments over a longer period of time and permit buyers to make smaller down payments on homes that cost as much as $1.5-million.
With more buyers expected to enter the market, competition for homes will increase and lead to higher prices. CREA forecasts that the average home price across the country will reach $713,375 next year, an increase of 4.4%. Last month, the average home price in Canada was $669,630, 3% higher than in August and 2.1% higher year-over-year.
“The beginning of September saw a burst of new supply for buyers to choose from before things generally quiet down for the winter,” James Mabey, CREA chair, said in the release.
Sales volumes rose 1.9% from August to September but remained below the 10-year average. CREA downgraded its housing market forecast for the remainder of the year, saying the Bank of Canada’s interest rate cuts haven’t spurred the gradual improvement it previously anticipated. The slowdown started shortly after the central bank started raising interest rates in March 2022, and sales have not really picked up, even though the bank is now cutting borrowing costs.
Source: Globe and Mail
Source: The Star
Source: CREA
Source: CREA
Annual Pace of Canadian Housing Starts in September up 5% from August, CMHC Says
Canada Mortgage and Housing Corp. reported a 5% increase in the annual pace of housing starts in September compared to August, with the seasonally adjusted annual rate of housing starts at 223,808 units.
“Growth in actual year-to-date housing starts has been driven by both higher multi-unit and single-detached units in Alberta, Quebec and the Atlantic provinces,” said deputy chief economist Kevin Hughes in a statement.
This increase was attributed to a 6% rise in urban centre starts to 210,002 units in September compared to 199,035 in August. The agency noted that actual housing starts in Canada’s urban centres have risen by 2% in the first three quarters of the year.
Montreal saw a 15% increase in actual year-to-date housing starts, attributed to recovery from historically low new home construction in 2023. The annual rate of rural starts was estimated at 13,806 units for September.
However, year-to-date starts in Ontario and British Columbia have decreased across all housing types. Vancouver saw a 19% decrease in actual starts compared to 2023, while Toronto’s year-to-date housing starts were down 20% from 2023.
CMHC said the six-month moving average of the seasonally adjusted annual rate of housing starts was 243,759 units in September, down from 246,972 in August.
Source: Globe and Mail
Source: The Star
Source: CMHC
Is the New Canadian Home Buyer More Likely to Be a Solo Buyer?
Yuliya Belik, a 30-year-old finance professional at a clothing retailer, is part of a growing group of Canadians tackling home ownership on their own. A survey released in July by real estate search portal Point2 revealed that 42% of prospective first-time home buyers were considering applying for a mortgage alone. The share of potential solo buyers was highest among respondents aged 45 to 54 at 47%, 55 to 64 at 52%, and over 65 at 45%. It was still sizeable, at 38%, among those aged 18 to 34.
The trend tracks with Canada’s demographic shift, with single-person households becoming the predominant household type for the first time in the country’s history in 2016. As of 2021, single-person households made up 29% of all households, driven by a combination of older Canadians living alone and a growth in mid-life single-person households. With the average home price in Canada sitting at just over $649,000 in August, buying on a single income is incredibly difficult for everyone except the highest earners.
Ron Butler, a Toronto-based mortgage broker with Butler Mortgage Inc., says that for the first 15 years of his career he almost never worked with solo buyers. That’s since changed, which he attributes largely to young Canadians with real estate FOMO (fear of missing out). He says that many people get the feeling that “I gotta do something.” If it’s possible, it becomes compelling.
Very few young solo buyers Mr. Butler works with are making a purchase without some parental help, and most who are buying in Toronto are limited to condos rather than townhouses or detached homes. Solo buyers with incomes of around $140,000 or more and some family help could manage to land a condo-townhouse in a less central neighbourhood.
Source: Globe and Mail
Bank of Canada Rate Cut Unlikely to Move the Needle on Housing Market, Says Poll
The Bank of Canada has cut its benchmark interest rate again, but this is not enough to entice buyers back to Canada’s housing market, which has been holding out for lower rates. A survey conducted for mortgage comparison site Everyrate.ca in late September found that 74% of Canadians who are considering buying or refinancing need policy rates to drop below 3% before they act.
Nationally, home sales increased slightly in September, but new listings grew faster, leaving a surplus of properties on the market. Most of Canada’s big banks don’t expect the rate to fall below 3% until the first quarter of 2025 or later, with the Bank of Nova Scotia forecasting a 3% rate at the end of next year.
Source: Financial Post
High Housing Costs Are the Top Economic Concern for Business Owners
Canadian business leaders are increasingly concerned about high housing costs, despite recent price drops in many locations, according to Modus Research Inc.’s latest release.
Nearly 92% of business owners surveyed said the cost of housing has had the most negative impact on the Canadian economy, with factors including household debt, current interest rates, and inflation. Housing costs have a significant impact on how businesses handle employees and costs, with 37% increasing pay or benefits to assist employees with housing costs.
The current housing situation has also increased the number of businesses relying on contract workers and hiring employees from outside their geographical region. Six in 10 business leaders said increased prices within their business are a direct impact of housing costs, indicating that housing costs are driving inflation beyond just the cost of housing.
Half of the business leaders surveyed also said housing costs make it difficult to recruit qualified employees, while more than a third said it has made it difficult to retain employees.
More than half of the companies surveyed have provided greater flexibility for their employees to work from home, driven by convenience and cost savings for employees.
The most pressing issue that needs to be addressed is that different levels of government must address the cost issue, with the federal government’s initiative on funding co-operative housing being the most significant.
Source: Financal Post
Fewer Young Canadians Own Homes but Majority Planning to Buy Within Five Years
A new report by Scotiabank reveals that while fewer young Canadians own a home compared to three years ago, a majority of millennials and Gen Z adults plan to purchase one within the next five years.
The 2024 housing poll shows that the number of Canadians aged 18-34 owning a home has declined to 26% from 47% in 2021. However, 58% of non-homeowners aged 18-43 in Canada are still determined to purchase a home within the next five years.
The survey also highlights a “confidence gap” among young Canadians, with 63% of Gen Z and 54% of millennials expressing a need for clearer information and support from financial institutions. Over half of these Canadians believe the current economic environment is negatively impacting their finances, causing them to delay their home-buying plans.
Source: The Star
Source: Globe and Mail
