Building permits, June 2020

The $687 million dollar Oakridge Centre mixed use redevelopment project in the city of Vancouver helped raise the total national value of building permits 6.2% to $8.1 billion in June, to a level comparable to pre-COVID levels. Overall, seven provinces reported gains for the month.

Residential permits rise
The total value of residential permits was up 7.0% to $5.3 billion, with gains posted in six provinces. British Columbia posted its third largest value on record for residential permits in June, up 20.4% to $1.3 billion due to large projects such as the Oakridge Centre redevelopment.

The value of permits for single-family homes increased 6.6% to $2.1 billion, driven by gains in Quebec (+14.6%) and Ontario (+7.2%). The value of permits issued for multi-family dwellings rose for the third consecutive month, up 7.3% to $3.2 billion, largely due to major projects in the census metropolitan area of Vancouver (+43.8%).

Institutional permits drive non-residential growth
The value of non-residential permits rose 4.6% to $2.7 billion in June. Institutional permits were up 47.7% to $841 million, driven by gains in British Columbia (+162.8%) and Ontario (+60.3%). In contrast, commercial (-9.1% to $1.3 billion) and industrial (-4.0% to $591 million) permits were down in June, following strong gains for both components in May.

Largest quarterly decline since the 2008 financial crisis
The second quarter of 2020 started with record declines in April, following the implementation of COVID-19-related measures by businesses and governments. The easing of those measures in May allowed construction intentions to bounce back and continue to advance in June. Despite the rebound seen in the last two months of the quarter, the value of building permits was down 12.8% compared with the first quarter, a fourth consecutive quarterly decline. The second quarter decrease was the largest reported since the fourth quarter of 2008, during the financial crisis.

Compared to the second quarter of 2019, the value of permits declined 17.4% nationally. Losses were reported across all provinces and territories except Newfoundland and Labrador, where quarterly gains in the institutional sector drove the increase in the total value of permits of 25.0%.

Source: Statistics Canada 

Canadian Housing Starts Increased in July

The trend in housing starts was 204,376 units in July 2020, up from 199,778 units in June 2020, according to Canada Mortgage and Housing Corporation (CMHC). This trend measure is a six-month moving average of the monthly seasonally adjusted annual rates (SAAR) of housing starts.

“The national trend in housing starts increased for a second month in July,” said Bob Dugan, CMHC’s chief economist. “Higher multi-family starts in major urban areas, including Toronto, Vancouver and oil-producing centres in the Prairies drove the national increase. Following declines in previous months from COVID-19 measures, higher activity in June and July leaves the trend in housing starts in line with the long-run average level of housing starts. We expect national starts to trend lower in the near term as a result of the negative impact of COVID-19 on economic and housing indicators.”

CMHC uses the trend measure as a complement to the monthly SAAR of housing starts to account for considerable swings in monthly estimates and obtain a more complete picture of Canada’s housing market. In some situations, analyzing only SAAR data can be misleading, as they are largely driven by the multi-unit segment of the market which can vary significantly from one month to the next.

The standalone monthly SAAR of housing starts for all areas in Canada was 245,604 units in July, an increase of 15.8% from 212,095 units in June. The SAAR of urban starts increased by 17.4% in July to 231,995 units. Multiple urban starts increased by 18.8% to 184,431 units in July while single-detached urban starts increased by 12.3% to 47,564 units. Rural starts were estimated at a seasonally adjusted annual rate of 13,609 units.

Source: CMHC

Supercharged Canadian Housing Market Roars Back to Life, After Lockdown Halted 70,000 Transactions

July is normally a quiet month for home buying, but not this year. COVID-19 lockdowns this spring potentially delayed up to 70,000 real estate transactions across Canada, RBC Economics estimates. Now those home buyers and sellers are catching up.

RBC says local real estate boards across the country reported “supercharged activity” in this normally sleepy month as provincial economies reopened and people adapted to buying and selling during a pandemic. The numbers back this up.

Home resales saw increases ranging from 12% year over year in Calgary to 46% in Montreal, with records set in some cities. “On a seasonally-adjusted basis (which will be officially published later this month), July activity could well be the strongest ever seen in Toronto and Montreal,” wrote RBC economist Robert Hogue in his report. RBC expects Ottawa, which has not yet released July figures, will show a similar result.

Not only are buyers back in the market, so are sellers. Hogue said new listings rose markedly in most markets in July. This rise though was not quite as high as in June and the tighter market pushed home prices higher. Here’s a closer look at some of the markets:

The GTA appears to be back in a sellers’ market. Home resales surged 29.5% in July from the year before, which Hogue says is quite possibly a record. Sales of single detached homes in the 905 area jumped 48%, suggesting that the pandemic may be driving more buyers to the suburbs. The rise in condo sales was more modest at 6.7%. Home prices were up 10% from the year before, signalling that supply is still not keeping up with demand.

Sales in this pricey West Coast city rose 22.3% year over year in July, returning the market to pre-COVID levels. Again detached homes (up 33%) saw a larger gain than condos, up 13%. New listings were up 29%, keeping the market roughly in balance. Home prices rose 4.5% from the year before.

Calgary wiped out its COVID-related losses in July with home resales rising almost 12% from the year before. Hogue said this market was soft before the pandemic so it’s not out of the woods yet. Home prices continue to fall but at slower pace, down 1.2% year over year, compared to a 2.8% decline in June.

RBC expects there is still pent-up demand in most markets and the surge in activity will continue into August and perhaps September. After that the outlook may dim. “We expect the phasing out of CERB and other financial support programs, high unemployment and lower in-migration to cool housing demand later this year,” Hogue said.

Source: Financial Post