CMHC Reports Annual Pace of Housing Starts Slowed in January

Canada Mortgage and Housing Corp. says the annual pace of housing starts in January slowed compared with December. The national housing agency says the seasonally adjusted annual rate of housing starts fell to 230,754 units in January compared with 238,405 in the final month of 2021.

The drop came as the annual pace of urban starts fell 5% to 204,428 units in January. The annual rate of urban starts of apartments, condos and other types of multiple-unit housing projects fell 9% to 144,332, while single-detached urban starts rose 7% to 60,096. CMHC estimated rural starts at a seasonally adjusted annual rate of 26,326 units.

The six-month moving average of the monthly seasonally adjusted annual rates of housing starts was 254,133 in January, down from 261,352 in December. “On a trend and monthly SAAR basis, the level of housing starts activity in Canada remains historically high; however, the six-month trend in housing starts was lower from December to January,” said Bob Dugan, CMHC’s Chief Economist. “For SAAR housing starts in Canada’s urban areas, single-detached starts were higher, while multi-family starts declined in January. Among Montreal, Toronto and Vancouver, Montreal was the only market to post growth in total SAAR starts in January, due to higher single-detached and multi-family starts.”

Source: The Star
Source: Financial Post
Source: CMHC

Strong Sales and Limited Supply Continue to Spur Big Price Gains to Start 2022

Home sales fell in January from January 2021, but still posted their second-best showing for the month as the average price climbed to a new record, the Canadian Real Estate Association said. Sales totalled 33,166 in January, down 10.7% from 37,137 in January 2021. Here are the highlights from the CREA report:

  • National home sales edged up 1% on a month-over-month basis in January.
  • Actual (not seasonally adjusted) monthly activity came in 10.7% below the record January in 2021.
  • The number of newly listed properties dropped 11% from December 2021 to January 2022.
  • The MLS® Home Price Index (HPI) rose a record 2.9% month-over-month and was up a record 28% year-over-year.
  • The actual (not seasonally adjusted) national average sale price posted a 21% year-over-year gain in January.

“The reality is that people weren’t ready to sell and there was very little supply on the market,” said Davelle Morrison, a Toronto broker with Bosley Real Estate Ltd. Realtors and economists attributed the second-best showing to high demand for homes from millennials anxious to buy their first property before prices climb any further, newcomers entering the country after immigration ground to a halt during the pandemic and investors keen to take advantage of lower interest rates. “It’s tough for supply to keep up with such a supercharged demand backdrop,” said Rishi Sondhi, an economist with TD Economics.

His remarks came as CREA noted a lack of new listings, which fell 11% to 61,602 in January from 69,196 in December. But Robert Kavcic, senior economist at BMO Capital Markets, argued that the past year has seen new listings become available at a normal rate and the boom in demand is what’s really making the market balance and inventory look “extraordinarily tight.”

“When listings are being vaporized in days by multiple offers, it’s a demand issue,” he wrote in a note to investors. “Expectations of price growth could even be holding back listings as well as boosting demand.”

Several real estate boards are predicting smaller, but continued year-over-year price increases in 2022 as extremely low interest rates experienced during the COVID-19 pandemic are poised for a hike. “Affordability is clearly worsening quickly, which should make it tougher for first-time homebuyers to jump into the market,” said Sondhi.

The market has tipped in favour of sellers. CREA found that in January a record 85% of local markets were seller’s markets, while it categorized 15% of other regions as “balanced.”

Those conditions combined with the lack of new listings pushed prices up once again. The national average home price was a record $748,450 in January, up 21% from $618,587 a year earlier.

Excluding Greater Vancouver and the Greater Toronto, two of Canada’s most active and expensive housing markets, cuts almost $160,000 from the national average price, CREA said. The seasonally-adjusted average home price in both regions was more than $1.2 million and rose 1.8% in Greater Vancouver and 5.7% in Greater Toronto from December.

“People can’t afford it in the GTA,” said Morrison, noting that she’s seen people head to New Brunswick or even the outskirts of the GTA, where housing is cheaper. “As the expression goes, they’re going to drive until they buy.”

Claire Fan, an economist with RBC Economics, noted price gains were led by major markets like Toronto and Montreal, which both saw prices rise by 3.5% from December. “Growth has been slower in the Prairie provinces, but even there the majority of markets have sellers in the driver’s seat,” she wrote in a note to investors.

But Fan has some hope that the market will become less frenzied. She believes deteriorating affordability, rising borrowing costs and increasing housing supply will gradually cool demand and restore some balance.

Kavcic agreed. “We have a fundamentally-strong housing market that has been allowed to overheat by too-loose policy,” he wrote. “It’s going to take higher interest rates to alter the market psychology, cool excess demand and price growth. That day is fast approaching.”

Source: CREA
Source: Global News

Canadian Home Price Gains Accelerate Again in January, Climbing 1.3%

Canadian home price gains accelerated again in January, climbing 1.3% from December, on rises in nine of the 11 major markets, data showed. The Teranet-National Bank Composite House Price Index, which tracks repeat sales of single-family homes in major Canadian markets, had climbed 0.8% in December from November.

January’s jump was driven by Hamilton, Ontario, and Toronto, up 2.1% and 1.9% respectively on the month. On an annual basis, the index rose by 16.6%, up from 15.5% in December. Halifax, Nova Scotia led the way with a 31.7% year-over-year gain, while Hamilton registered a 25.5% gain. All 11 major cities posted gains on the year.

Source: Globe and Mail