This weeks top stories include how housing starts in Canada fell again for the third consecutive month, how Scotiabank is stating that the Canadian housing market is in for a soft landing rather than a full out crash, how Toronto is leading the western world in condo development and how the U.S. Federal Reserve has stated that they will tie future interest rate decisions directly to the unemployment rate.
Canada Mortgage and Housing Corporation (CMHC), the government insurer of high ratio mortgages stated that the rate of housing starts has dropped in the month of November. This is the third consecutive monthly decline in a row which leads us to the theory that the pace of housing construction is on the decline.
CMHC stated that there were only 17,646 actual starts in the month of November, which is a seasonally adjusted annual rate of 196,125 units. This is down drastically from 203,487 starts in the month of October. The decrease is mainly due to less starts in the single detached and multi-unit housing sectors in Ontario and British Columbia. Atlantic Canada witnessed a 45.6% decline in starts due to a large decrease in the multi-unit housing construction in Halifax after higher than normal activity in the month of October.
Seasonally adjusted annual rates of urban starts were also down 4% to 174,323 units in the month of November. Urban single starts were down 5.4% to 58,606 units while urban multiple starts saw a decline of 3.2% to 115,717 units. The month of November’s seasonally adjusted annual rates of urban starts were also down 14.3% in Ontario and 16.5% in British Columbia but were up 15.4% in Quebec and 16.1% in the Prairies. What do you think of these numbers? Please comment below.
Scotiabank is noting that Canada’s housing market has made a soft landing as sales continue to move forward steadily and prices hold ground through the fall season. Scotiabank is anticipating a gradual decrease in pricing over the next few years instead of a housing market crash that the media is stating.
Adrienne Warren, Scotiabank’s senior economist stated, “Canada’s national housing market is shifting toward a more sustainable path, though significant differences in regional conditions continue. Housing demand is expected to be soft which could lower sales and home prices, especially in buyers’ markets such as Vancouver or where there is over supply such as the condominium market in Toronto. However, with the Canadian economy continuing to post healthy job growth, and sellers proving responsive to the underlying shift in market conditions, a sharp decline in prices nationally is unlikely.”
Sales were down across the map in the month of October roughly 10% from spring levels. Home sales in Alberta and Saskatchewan continued to rise this year as stronger economic and labour market performances did their part to assist. British Columbia is the other side of the leaf where sales were down 10% this year and home prices continue to decline. Canada’s housing market has continued to slow since spring of this year and no amount of low mortgage interest rates can continue to keep the housing market going strong. What do you think? Please comment below.
The world is taking notice of Toronto as the city continues to dominate condominium development in the Western Hemisphere. At the current pace, Toronto will have 44 highrises that surpass 150 meters, which is triple the 13 skyscrapers that we had in Toronto back in 2005. Toronto is now noted as spearheading countrywide interest in tall building development changing the look of Canada’s major urban centers.
The Council on Tall Buildings and Urban Habitat was noted as saying, “There’s no doubt that Canada is at the forefront of discussion around how to create more vibrant urban centers, increase density and build more sustainable cities. Tall buildings are a big part of that.” First Canadian Place remains the tallest building in Toronto at 298 meters but not far behind is the Trump International Tower and Hotel at 277 meters and Canderel’s condo project at Yonge and College at 277 meters, which will be the tallest residential building in Canada.
Riz Dhanji, vice president of sales and marketing for Canderel Residential group stated, “Ten years ago, the average highrise was 30 to 35 storeys. Today, 60 is becoming commonplace. Those heights are going to become the new norm as (building) sites become more scarce. We’re turning into a very exciting city. The tall buildings are bringing the density and the people into the downtown core and making us more of a walkable city, which is fantastic.” What do you think of his statement? Please comment below.
The U.S. Federal Reserve sent a message this week on Wednesday that it will continue to keep interest rates low to continue to boost the U.S. economy even if the job market continues to improve. The Feds plan to keep its key short-term rate near zero until after the employment rate drops below 6.5% as long as inflation does not exceed 2.5%.
Unemployment in the U.S. is currently at 7.7% and annual inflation is currently running at 2%. The Fed reiterated that it plans to keep low interest rates until at least the middle of 2015. The Fed will also continue to keep spending $85 billion a month to purchase bonds to lower long-term borrowing costs, which will stimulate economic growth for the economy. The Feds will also spend $45 billion a month on long-term Treasury purchases to replace the previous bond purchase program that was having the same effect and continue to keep purchasing $40 billion a month in mortgage bonds.
Steven Wood chief economist at Insight Economics was noted as saying, “The Fed has become more explicit and more transparent. This should provide the markets with much more clarity around monetary policy action in the upcoming year.” The policies goal is to help the economy move forward from what the Feds say is only growing at a modest pace. They will continue to stimulate the economy through these programs until unemployment reaches 6.5%. What do you think of the program? Please comment below.
Please note that I will not be providing any new news articles until the New Year. Merry Christmas, Happy Holidays have a great New Year’s and please be safe. The latest mortgage related news will return on January 18, 2013.
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