Canadians Have Growing Concerns Over Mortgage Qualification

For many Canadians, buying a home can be a challenging and stressful experience. According to a recent survey from Zillow and Ipsos, 92% of Canadians see at least one barrier to homeownership, and two of the top concerns are related to the mortgage process.

Canadians report feeling pressured by stricter mortgage regulations that went into effect in 2018 and Zillow’s recent survey found that 56% of Canadians see qualifying for a mortgage as a barrier to homeownership, a six-point increase from 2018. This concern rises to 64% for consumers who recently purchased a home, likely linked to the mortgage regulation changes looming at the time of their home search. After mortgage qualification, the next top worry for buyers is whether they can afford the mortgage payment: More than half (54%) report this as a barrier.

New and stricter mortgage requirements took effect in January 2018 with the addition of a stress test, requiring borrowers to qualify under a higher rate. The rule only applies to newly originated mortgages and is designed to prevent borrowers from taking on more debt than they can handle if interest rates go up. Since its passing, buyers’ worries are growing according to the survey. Half of Canadians (51%) say they are concerned that stricter rules will prevent them from qualifying for a mortgage, up five points since 2018.

These mortgage regulations could impact a substantial portion of potential buyers, as the survey results show a large share of Canadian homeowners (80%) get mortgages. Younger home shoppers also feel the weight of the law. Sixty-nine percent of those 18-34 years old are concerned about qualifying for a mortgage under the stricter guidelines. This worry is also present for current renters who may be considering the purchase of their first home: 66% express concerns about mortgage qualification under stricter guidelines.

About the Study
These are some of the findings of an Ipsos poll conducted between September 24 and October 8, 2019, on behalf of Zillow. For this survey, a sample of 1,503 Canadians aged 18+ was interviewed online via the Ipsos I-Say panel. Quota sampling and weighting were employed to balance demographics to ensure that the sample’s composition reflects that of the adult population according to Census data and to provide results intended to approximate the sample universe. The precision of Ipsos online polls is measured using a credibility interval. In this case, the poll is accurate to within ±2.9 percentage points, 19 times out of 20, had all Canadian adults been polled. The credibility interval will be wider among subsets of the population. All sample surveys and polls may be subject to other sources of error, including, but not limited to coverage error, and measurement error.

About Zillow
Zillow® is transforming how people buy, sell, rent and finance homes by creating seamless real estate transactions for today’s on-demand consumer. Zillow is the leading real estate and rental marketplace and a trusted source for data, inspiration and knowledge among both consumers and real estate professionals.

Zillow’s proprietary data, technology and industry partnerships put Zillow at nearly every major point of the home shopping experience, helping consumers search for and get into their new home faster. Zillow now offers a fully integrated home shopping experience that includes access to for sale and rental listings, Zillow Offers®, which provides a new, hassle-free way to buy and sell eligible homes directly through Zillow; and Zillow Home Loans, Zillow’s affiliated lender that provides an easy way to receive mortgage pre-approvals and financing. Zillow Premier Agent instantly connects buyers and sellers with its network of real estate professionals to help guide them through the home shopping process. For renters, Zillow’s innovations are streamlining the way people search, tour, apply and pay rent for leased properties.

In addition to Zillow.com, Zillow operates the most popular suite of mobile real estate apps, with more than two dozen apps across all major platforms. Launched in 2006, Zillow is owned and operated by Zillow Group, Inc. (NASDAQ: Z and ZG) and headquartered in Seattle.
Zillow and Zillow Offers are registered trademarks of Zillow, Inc.

SOURCE Zillow

Canadians can expect a vibrant spring real estate market and home prices rising

Royal LePage recommends a regional approach to mortgage stress test if the federal government goes ahead with changes in 2020

  • Home prices increase 2.2 percent in Q4 as buyers continue to move off the sidelines
  • Greater Toronto Area home prices heat up as demand outstrips supply
  • Greater Montreal Area sees the strongest appreciation rate in almost a decade
  • For what is believed to be the last time this business cycle, Greater Vancouver home prices decline year-over-year — and stabilize on a quarterly basis

According to the Royal LePage House Price Survey released today, the aggregate1 price of a home in Canada increased by 2.2 percent year-over-year to $648,544 in the fourth quarter of 2019. Similar to the third quarter, potential buyers are continuing to come back to the real estate market. In the first half of 2019, buyers had remained largely at the sidelines waiting to gauge the potential impact of the federal mortgage stress test.

“We have successfully navigated the first significant national housing market correction since the Great Recession a decade ago,” said Phil Soper, president and CEO, Royal LePage. “While the drop in the number of properties bought and sold during the 2018-19 downturn was large, the value of homes in Canada held up remarkably well, with only minor, single-digit declines in the areas of Ontario and B.C. that had experienced the most aggressive price inflation in recent years, and of course those regions still suffering from a downturn in the oil and gas sector.

“The federal government has signalled that changes could come to the mortgage stress test mechanism in 2020,” said Soper. “The stress test pushed people out of real estate markets across Canada temporarily. For the most part, buyers have adjusted, yet it still represents a significant hurdle as families pursue the dream of owning their own home.”

Soper added that the impact of the regulations-driven drop in demand is felt very differently in different parts of the country.

“We believe policymakers have the necessary experience to modify the tool to meet the reality of today’s Canada – that we have very different and varied economies, and by extension housing policy needs, from region to region,” said Soper.

The Royal LePage National House Price Composite is compiled from proprietary property data in 64 of the nation’s largest real estate markets. When broken out by housing type, the median price of a two-storey home rose 2.3 percent year-over-year to $761,817, while the median price of a bungalow increased modestly by 0.7 percent to $537,622. Data analyzed contains both resale and new build transactions, provided by Royal LePage’s sister company, RPS Real Property Solutions.

Across Canada, condominiums remained the fastest appreciating housing type, with the median price rising 3.3 percent year-over-year to $487,525. Largely, condominium data is weighted towards the country’s largest urban centres where the majority of them are found. The median price of a condominium rose 7.8 percent year-over-year to $565,919 in the Greater Toronto Area and 4.4 percent year-over-year in the Greater Montreal Area to $338,148 during the fourth quarter. However, national price gains were offset by year-over-year declines in Greater Vancouver’s real estate market where the median price of a condominium decreased 3.4 percent to $645,607. Nationally, after significant price gains in recent years in the condominium segment, double-digit gains have become rarer as the price of a detached home is now more attractive as the gap between the two segments tightens, especially for millennials looking for more space for their growing families.

According to the Royal LePage Market Survey Forecast, released in December 2019, the aggregate price of a home in Canada is expected to increase by 3.2 percent year-over-year in 2020, rising to $669,800. The company’s 2020 forecast is dependent on consistent economic conditions, assuming no new housing policy changes. Royal LePage’s 2020 forecast includes regional aggregate and housing type forecasts.

MARKET SUMMARIES

Greater Toronto Area

Low supply, population growth and increased consumer confidence continued to fuel home prices in the Greater Toronto Area. In the fourth quarter, the aggregate price of a home in the region increased by 4.8 percent year-over-year, rising to $843,609. During the same period, the median price of a standard two-storey home and bungalow increased 4.4 and 2.4 percent to $982,944 and $806,977 while condominiums rose 7.8 percent to $565,919.

“The Greater Toronto Area is at a pivot point where we are seeing signs that prices could begin to rapidly increase,” said Kevin Somers, Chief Operating Officer, Royal LePage Real Estate Services Limited. “The region has a very low supply of listings while we are seeing more potential buyers trying to enter the market.”

Home price growth varied significantly across the region. While some areas showed stabilizing prices and healthy price growth, many regions, including the city centre, showed the potential for rapidly accelerating appreciation rates driven by high demand and low inventory. Significant price gains were seen in Pickering and Mississauga, where the aggregate price increased 9.7 percent and 7.9 percent year-over-year, respectively. The aggregate price of a home in the City of Toronto increased by 6.6 percent year-over-year.

The cities of Ajax and Oshawa were the only two areas to show a year-over-year decline in aggregate price. The aggregate price of a home in Ajax and Oshawa decreased by 1.2 percent and 1.8 percent to $661,049 and $524,423, respectively.

Greater Montreal Area

In the fourth quarter of 2019, the aggregate price of a home in the Greater Montreal Area increased 6.3 percent year-over-year to $433,993, the highest rate of appreciation since the fourth quarter of 2010. High demand coupled with low inventory fueled two-storey and bungalow home prices as their median prices rose 7.2 percent and 5.9 percent respectively to $548,374 and $336,981. The median price of a condominium in the region increased 4.4 percent year-over-year to $338,148, posting the lowest increase among the three property types surveyed in the fourth quarter.

“The fourth quarter is historically the least active, but demand remained intact until the end of the year in the Greater Montreal Area,” explained Dominic St-Pierre, vice-president and general manager of Royal LePage for the Quebec region. “This increased competition has not only reduced inventory, but it has also changed seller behaviour. Sellers are more likely to wait until they find their next home before listing their current home. At this point, the seller is experiencing the same frustration as the buyer with little selection to choose from and escalating prices. This exacerbates the inventory problem.”

St-Pierre added that the upward trend in price appreciation over the past three years in the region stems from the continued good economic performance driving growth in demand across all buyer segments.

“We are currently in a ‘perfect storm’ for an exceptionally competitive spring market: interest rates are low; employment rates are healthy; listing inventory is limited; and, all buyer segments are active, including first-time buyers, baby boomers, newcomers and foreign buyers,” said St-Pierre.

Greater Vancouver

While Greater Vancouver continued to show a year-over-year decline in home prices, the fourth quarter showed signs of a market-moving towards recovery. The aggregate price of a home in Greater Vancouver decreased 4.8 percent year-over-year to $1,107,719 in the fourth quarter of 2019. In comparison, in the third quarter of 2019, the aggregate price of a home in the region had decreased by 5.2 percent compared to the same period in the previous year.

Broken out by housing type, the median price of a standard two-storey home and bungalow in Greater Vancouver decreased 4.7 percent (-4.2% in Q3) and 6.7 percent (-7.6% in Q3) year-over-year to $1,443,918 and $1,195,003, respectively, while the median price of a condominium in the region decreased 3.4 percent (-5.9% in Q3) year-over-year to $645,607.

“Sales volume is up and inventory is decreasing. This is a good sign of a recovery on the horizon,” said Randy Ryalls, general manager, Royal LePage Sterling Realty. “We’re likely to see some moderate price growth after last year’s decline in prices. The window of opportunity for buyers to get a deal is closing quickly for most typical buyers. There remain some excellent opportunities in the luxury market.”

Ryalls added that Greater Vancouver’s real estate market was fairly balanced in the fourth quarter.

“Sellers were able to purchase a new home and then sell their current property in a pretty short window,” said Ryalls. “It was a healthy market for both buyers and sellers.”

Ottawa

Low inventory and a tight rental market continue to put upward pressure on Ottawa home prices. The aggregate price of a home in Ottawa had a healthy year-over-year increase of 5.3 percent in the fourth quarter of 2019, rising to $493,947. The median price of a two-storey home increased 4.4 percent year-over-year to $521,524 while the median price of a bungalow saw a strong increase, rising 10.1 percent year-over-year to $501,195. During the same quarter, the median price of a condominium saw an increase of 2.1 percent year-over-year to $329,828.

Ottawa’s real estate market saw healthy sales activity through December,” said Kent Browne, broker and owner, Royal LePage TEAM Realty. “If demand continues to outstrip supply, we expect to see further price growth this spring.”

Browne added that Ottawa’s strong local economy, supported by good employment, entices Canadians from other regions looking to move.

Calgary

While the recovery of Calgary’s real estate market has been slow, quarter-over-quarter price trends have been encouraging for homeowners. The aggregate home price in Calgary decreased by 2.3 percent year-over-year to $469,916 in the fourth quarter of 2019. However, in the last six months of 2019, the aggregate price of a home in Calgary increased by 2.1 percent, from $460,089 in the second quarter of 2019.

Broken out by housing type, the median price of a two-storey home decreased 1.0 percent year-over-year to $514,139, while the median price of a bungalow decreased 4.1 percent year-over-year to $488,521. Meanwhile, the median price of a condominium decreased by 6.9 percent year-over-year to $265,488.

“Sales have improved and inventory has gone down in both detached houses and townhomes. Buyers are taking advantage of reduced prices, primarily in the single-family home segment,” said Corinne Lyall, broker and owner, Royal LePage Benchmark. “There is still a surplus of condos available offering an excellent choice for buyers looking at turnkey properties with little maintenance.”

Edmonton

Home prices in Edmonton were relatively flat in the fourth quarter. The aggregate price of a home in Edmonton decreased by 0.7 percent year-over-year to $379,426. Broken out by housing type, the median price of a standard two-storey home increased 1.2 percent year-over-year to $435,426 and the median price of a condominium remained relatively flat, increasing 0.3 percent to $230,969. During the same period, the median price of a bungalow decreased by 5.1 percent year-over-year to $361,943.

“Homebuyers in Edmonton have adjusted to the mortgage stress test and sellers are making appropriate compromises,” said Tom Shearer, broker and owner, Royal LePage Noralta Real Estate. “Sellers are optimistic when meeting buyers that they are ready to make a purchase.”

Shearer added that he expects to see moderate growth in home sales this spring but price growth will be modest in 2020.

Halifax

The aggregate price of a home in Halifax remained relatively flat in the fourth quarter of 2019, decreasing 0.6 percent year-over-year to $318,768. The median price of a two-storey home increased by 0.4 percent year-over-year to $336,353. The median price of a bungalow was flat with a decrease of 0.2 percent year-over-year to $267,036, while the median price of a condominium saw a decrease of 3.7 percent year-over-year to $319,897.

“Momentum and consumer confidence is building in Halifax,” said Matt Honsberger, broker and owner, Royal LePage Atlantic. “Rental inventory is tight, and inventory among homes listed for sale is a little over half of what it would have been last year. That’s the formula for price growth in the spring when demand escalates.”

Winnipeg

Winnipeg’s home prices saw strong gains in the fourth quarter. The aggregate home price in the region rose 7.4 percent year-over-year to $321,346. During the same period, the median price of a bungalow rose 5.3 percent year-over-year and the median price of a condominium rose 1.1 percent year-over-year to $306,293 and $232,875, respectively. The median price of a standard two-storey home increased 10.2 percent year-over-year to $353,536.

“Sales are up across the detached home market, and sales of homes above $800,000 have been especially brisk,” said Michael Froese, managing partner, Royal LePage Prime Real Estate. “While demand has been strong, there is ample inventory, providing buyers with a choice and maintaining affordability.”

Regina

The aggregate home price in Regina decreased by 2.8 percent year-over-year to $314,937 in the fourth quarter. The median price of a two-storey home increased 1.2 percent and the median price of a bungalow decreased by 4.6 percent year-over-year, to $387,892 and $286,402, respectively. The median price of a condominium decreased by 15.0 percent year-over-year to $200,261.

“Resale two-storey homes were struggling to compete against new build homes in 2018 as builders reduced prices to encourage sales,” said Mike Duggleby, managing partner, Royal LePage Regina Realty. “Now that the oversupply of new build homes is under control, resale homes are beginning to regain some of those price concessions.”

For more regional analysis, visit Royal LePage’s media room to find city-specific releases. The media room also contains royalty-free assets, such as images and b-roll, that are free for media use.

Source: Royal LePage Real Estate Services

First National to Provide Mortgage Underwriting Processing Services to Manulife Bank

TORONTODec. 2, 2019 First National Financial Corporation today announced that First National Financial LP has entered into an agreement with Manulife Bank of Canada (“Manulife Bank”) to provide underwriting and fulfillment processing services for mortgages originated by Manulife Bank through the residential mortgage broker channel in Ontario and Atlantic Canada.

Under the strategic agreement, First National will employ a customized software solution based on its industry-leading MERLIN technology to accept mortgage applications from the Manulife Bank mortgage broker channel and underwrite these mortgages in accordance with Manulife Bank’s credit policies, compliance standards, and controls. Manulife Bank will fund all the mortgages underwritten under the agreement and retain full responsibility for underwriting guidelines, mortgage servicing, and the client relationship. The underwriting and fulfillment services provided by First National will enable Manulife Bank to further enhance its already strong presence in the mortgage broker channel.

“This is an important agreement that leverages the distinct capabilities and strengths of both parties,” said Stephen Smith, Chairman and Chief Executive Officer of First National. “For First National, it represents the next step in the expansion of our underwriting and fulfillment services.”

First National will provide these services from its offices in Toronto. “The mortgage broker distribution channel accounts for about $90 billion of new mortgage originations each year,” said Scott McKenzie, Senior Vice President, Residential Mortgages. “This agreement further validates the channel’s relevance where First National will continue to be a lender in its own right.”

“We are very pleased to be chosen for this mandate,” said Jason Ellis, President, and Chief Operating Officer, “It’s a clear endorsement of our industry-leading technology and expertise in the independent mortgage broker channel by one of Canada’s premier financial institutions.”

Manulife Bank offers everything from everyday banking accounts to mortgages, deposits, and loans. Manulife Bank has proven that banking can be done differently and has been doing it for more than 25 years. On a mission to make lives better and decisions easier, this new agreement gives Manulife Bank greater flexibility to expand the availability of Manulife One to more Canadians.

First National will commence the underwriting and fulfillment processing services beginning in December 2019.

About First National Financial Corporation
First National Financial Corporation is the parent company of First National Financial LP, a Canadian-based originator, underwriter and servicer of predominantly prime residential (single-family and multi-unit) and commercial mortgages. With over $110 billion in mortgages under administration, First National is Canada’s largest non-bank originator and underwriter of mortgages and is among the top three in market share in the mortgage broker distribution channel.  For more information, please visit www.firstnational.ca.

SOURCE First National Financial Corporation

More Foreign Buyers in Montréal’s Real Estate Market

According to the Québec Federation of Real Estate Boards (QFREB), yesterday’s announcement by the Ontario government of a 15 per cent tax on property purchases by foreigners in Ontario could increase the presence of foreign buyers in the Montréal real estate market. However, the QFREB does not expect any major short-term impacts.

The proportion of foreign buyers in Montréal is estimated at only 1.5 per cent by the Canada Mortgage and Housing Corporation (CMHC). Although this figure is possibly underestimated, the proportion is nevertheless quite low. In comparison, the government of British Columbia estimates that the proportion of foreign buyers in the Vancouver area is 9.7 per cent, while the Toronto Real Estate Board estimates this proportion to be 4.9 per cent in the Toronto area.

In Montréal, the presence of foreign buyers would be limited mainly to certain central neighbourhoods for single-family homes and to the downtown area for condominiums. “Activity by foreign buyers in the Montréal area could have an upward impact on property prices in some central neighbourhoods, as this is where they tend to concentrate their purchases,” explained Paul Cardinal, Manager of the QFREB’s Market Analysis Department. “However, the impact would be limited given that Montréal’s real estate market conditions are very different than those observed recently in Toronto and Vancouver,” he added.

Far from overheating

The residential real estate market in the Montréal Census Metropolitan Area (CMA) has experienced very moderate price increases in recent years. The median price of single-family homes rose from $279,000 to $295,000 between 2013 and 2016, a 6 per cent increase over three years. The median price of condominiums also increased by 6 per cent over the same period ($227,000 to $240,000 between 2013 and 2016).

In addition, conditions in the Montréal real estate market remain relatively balanced: the single-family segment is slightly in favour of sellers, the plex market is balanced, while the condominium segment still shows a slight oversupply. As for the rental market, the Montréal vacancy rate is 3.9 per cent (source: CMHC), which is much higher than Toronto (1.3 per cent) and Vancouver (0.7 per cent).

“We are far from a housing shortage, whether it be the resale, new construction or rental markets. In this context, it is difficult to envisage a surge in prices like Toronto,” added Mr. Cardinal.

A popular real estate market

However, more and more foreign buyers are turning to Montréal, which has resulted in a significant increase in net migration and in the number of non-permanent residents in 2016. Several factors explain this attraction, in particular, the marked improvement in the economic and employment situation. Over the past twelve months, 81,500 new jobs were created throughout the CMA and the unemployment rate declined to only 6.6 per cent in the first quarter of the year.

Also, Quacquarelli Symonds named Montréal the best student city in the world in 2017, surpassing Paris for the first time in five years. Finally, it is important to note that property prices are among the lowest in North America.

About the Ontario 15 per cent non-resident tax

The Ontario government announced on April 20 a series of measures designed to slow down the meteoric rise of property prices in Toronto and its surrounding areas. One of the main measures introduced is the imposition of a 15 per cent tax on non-resident home purchases, as was the case for the City of Vancouver which introduced a similar tax in August.

About the Québec Federation of Real Estate Boards

The Québec Federation of Real Estate Boards (QFREB) is a non-profit organization representing the province’s 12 real estate boards and their nearly 13,000 member real estate brokers. Its mission is to support Québec’s real estate boards in order to defend, protect and promote the interests of real estate brokers through the provision of services in the areas of professional practices, public affairs and market analysis. The QFREB is guided by a collaboration-oriented approach as well as resource sharing.

 

SOURCE Québec Federation of Real Estate Boards

For further information: Jacynthe Alain, Assistant Manager–Communications and Public Relations, Québec Federation of Real Estate Boards, 514-647-8249, jacynthe.alain@fciq.ca

RELATED LINKS
http://www.fciq.ca

Government takes action to create new rental housing

Government of Canada takes historic action to create new rental housing

By investing in the construction of more than 10,000 new rental housing units, the Government is taking action to improve the lives of hard working Canadians. It will allow more middle-class Canadians to spend more time with their children by living closer to public transit, schools and services.

The Honourable Jean-Yves Duclos, Minister of Families, Children and Social Development and Minister Responsible for the Canada Mortgage and Housing Corporation, was in Montreal today to announce the launch of the Rental Construction Financing initiative.

The Rental Construction Financing initiative will provide $2.5 billion in low-cost loans to support the construction of new rental housing, relieving pressure in rental markets that are experiencing low vacancy rates and high rents.

The initiative will complement commitments made in Budget 2017, which will invest more than $11.2 billion over 11 years for initiatives designed to build, renew and repair Canada’s stock of affordable housing. These significant investments are made as part of a new National Housing Strategy that will be launched later this year and help ensure that Canadians have housing that meets their needs.

Quote:

“Canada’s middle class will benefit from the construction of new rental housing. Through these significant investments, our Government is taking action to increase the supply of new rental developments, providing housing options that are closer to public transit, schools and services for hard-working Canadian families.”
— Jean-Yves Duclos, Minister of Families, Children and Social Development and Minister Responsible for Canada Mortgage and Housing Corporation

Quick facts:

  • The rental market is an important housing option for approximately 30% of Canadians.
  • The Rental Construction Financing initiative was announced as part of Budget 2016 and is expected to fund the construction of more than 10,000 new rental housing units in Canada.
  • Starting in 2017, the initiative will provide up to $625 million in loans each year for four years to encourage the development of new rental housing by municipalities, non-profit organizations and housing developers.
  • Combined with Budget 2017’s new direct lending initiative for the renewal of affordable housing, it is expected that the amount of capital available for lending at low cost will be more than $10 billion over 11 years.
  • CMHC also announced new mortgage insurance measures to support affordable rental housing projects.

Associated links:

  • CMHC has been helping Canadians meet their housing needs for more than 70 years. As Canada’s authority on housing, CMHC contributes to the stability of the housing market and financial system, provides support for Canadians in housing need, and offers unbiased housing research and advice to Canadian governments, consumers and the housing industry. Prudent risk management, strong corporate governance and transparency are cornerstones of CMHC’s operations. For more information, please call 1-800-668-2642 or follow us on Twitter, YouTube, LinkedIn and Facebook.
  • For more information on the Rental Construction Financing initiative, please visit cmhc.ca/financinginitiative

Backgrounder

The rental market is particularly important to many segments of the population including middle class families, young adults, seniors and new immigrants to Canada.

CMHC’s Seed Funding and Affordable Rental Innovation Fund are complementary initiatives that may be combined with the Rental Construction Financing initiative and with CMHC’s multi-unit mortgage loan insurance. These initiatives support the supply of affordable and innovative rental housing without reliance on ongoing operating subsidies.

Rental Construction Financing

To be eligible, borrowers must demonstrate that their projects are financially viable without ongoing operating subsidies. The financing initiative will prioritize projects that demonstrate greater social outcomes and may offer a loan for up to 100% of the cost of these projects. Borrowers must meet minimum requirements for affordability, energy efficiency and accessibility.

Applications will also be scored on additional social outcomes such as proximity to public transit and partnerships with other government organizations.

Lower-cost loans will be provided for terms of up to 10 years, providing cost predictability during the earliest and most challenging phases of development. Loans approved through the financing initiative will include CMHC mortgage loan insurance, providing access to preferred interest rates and simplifying loan renewal throughout the life of the mortgage.

Source: CMHC

Canadian housing starts trend upwards in March

Canadian housing starts

Housing starts are trending higher at 211,342 units in March 2017, compared to 205,521 units in February 2017, 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.

“March housing starts were at their highest level since September 2007, pushing the trend in housing starts upward for a third consecutive month,” said Bob Dugan, CMHC’s Chief Economist. “Stronger residential construction at the national level is reflected by a rising trend in single-detached and multi-unit starts in Ontario and continued growth of new rental apartments in Québec.”

Housing starts monthly highlights

  • Vancouver housing starts trended lower for the fourth consecutive month but, remained above the five-year average. Actual housing starts reached the highest level on record for March since 1972, driven by new apartment construction. Starts activity in the Vancouver CMA is also picking up again after an unusually cold winter.
  • In Toronto, the total starts trend moved higher in March, supported by all housing types. While apartment starts registered the strongest trend increase in March, single-detached home construction has been trending higher since the end of last summer. Demand for new housing is growing as supply in the rental and resale markets is short, reflected by low rental apartment vacancy rates and declining active listings.
  • The decline in townhouse starts contributed to a downward trend in Hamilton CMA total housing starts, despite the strength in single-detached and semi-detached housing starts. Notwithstanding this month’s decline, strong demand from local residents and out-of-town buyers continued to support townhouse construction as this type of dwelling remains the most viable option for many first time home-buyers.
  • ‘Demand’ is the story in St. Catharines-Niagara. As buyers from Toronto and Hamilton seek the relatively affordable options, resale inventory is being squeezed and prices are soaring. This is prompting buyers to turn to the new housing market, where singles in land-abundant Niagara Falls remain a sought-after commodity.
  • Multi-unit residential construction in the Montréal area remained significant in March. In addition to several seniors’ residences, many rental apartments were started in all parts of the metropolitan area this past month, and new rental units reached a 25-year high. With the decrease in inventories of unsold condominium units, renewed growth was also noted in this segment, as many new projects got under way.
  • The pace of residential construction in the Québec area has slowed down since the beginning of the year. This decline has been mainly due to a decrease in activity in the purpose-built rental housing segment. It should be mentioned that starts of this type reached historically high levels in 2015 and 2016. Consequently, given the significant number of rental apartments currently under construction and the recent increase in the vacancy rate in the area, a downward adjustment was expected.
  • There is an upward momentum to residential construction in Charlottetown. Strong population growth coupled with a tight supply of both resale homes and rental units has led more home-buyers to look to the new home market. Singles starts over the first quarter of 2017 reached levels not recorded since 1987.

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 253,720 units in March, up from 214,253 units in February. The SAAR of urban starts increased by 20.2 per cent in March to 235,674 units. Multiple urban starts increased by 30.2 per cent to 160,989 units in March, while single-detached urban starts increased by 3.1 per cent, to 74,685 units.

Rural starts were estimated at a seasonally adjusted annual rate of 18,046 units.

Preliminary Housing Starts data is also available in English and French through our website and through CMHC’s Housing Market Information Portal. Our analysts are also available to provide further insight into their respective markets.

As Canada’s authority on housing, CMHC contributes to the stability of the housing market and financial system, provides support for Canadians in housing need, and offers objective housing research and information to Canadian governments, consumers and the housing industry.

Source: CMHC

CMHC to Introduce Changes to Multi-Unit Mortgage Loan Insurance to Better Support Rental Housing

The rental market is an important housing option for approximately 30% of Canadians. Effective May 15, CMHC will introduce enhancements to its multi-unit mortgage loan insurance that will address the rental needs of Canadians while supporting efforts to expand and preserve the supply of affordable rental housing.

“CMHC’s products and services facilitate access to housing for all Canadians, not just homebuyers” said Steve Mennill, Senior Vice-President, Insurance. “The enhancements to our multi-unit mortgage loan insurance products and policies are designed to expand our participation in key market segments while stimulating the creation and preservation of affordable rental housing.”

CMHC is Canada’s only mortgage loan insurer for multi-unit residential properties. CMHC also offers incentives, including access to higher loan-to-value ratios and reduced premiums, to support affordable rental housing projects.

As Canada’s authority on housing, CMHC contributes to the stability of the housing market and financial system, provides support for Canadians in housing need and offers objective housing research and information to Canadian governments, consumers and the housing industry.

 

BACKGROUNDER

  • Multi-unit mortgage loan insurance provides access to preferred mortgage rates helping to lower the cost of financing for the construction, purchase and refinancing of rental properties and facilitates renewals throughout the life of the mortgage.
  • As at September 30, 2016, CMHC multi-unit mortgage loan insurance accounted for approximately 12% of its overall insurance-in-force.
  • The changes apply to CMHC insured loans for 5 or more unit residential properties including standard apartments, student housing, single room occupancy (SRO) projects, retirement homes, and supportive housing projects.

Effective May 15 2017, CMHC will be:

  • Extending its affordable housing flexibilities to existing rental properties, including Social Housing projects with up to 5 years remaining in the Operating Agreement, to support the preservation of existing affordable housing. Previously, affordable housing flexibilities were only available for new rental properties.
  • Expanding its definition of affordability to recognize federal, provincial, territorial or municipal housing objectives. The new affordability criteria also aligns with other CMHC initiatives and is intended to incent housing developers into the affordable rental housing market.
  • Introducing greater underwriting flexibilities to better support key multi-unit market segments that address the rental housing needs of Canadians including standard apartments, student housing, single room occupancy (SRO) projects, retirement homes, and supportive housing projects. Greater underwriting flexibility is provided surrounding non-residential space, furnished suites and bulk leases, amortization periods, off-campus student housing, second mortgages, non-recourse lending and personal guarantee requirements.
  • Introducing a revised premium schedule aligned with CMHC’s continued participation in market segments that address the rental needs of Canadians, and is reflective of the risks associated with those segments. The revised premium schedule also supports the expansion and preservation of affordable housing units. Premium surcharges will no longer be collected for construction advances, release of rental achievement holdback, student housing or retirement homes.
 Source: CMHC

CONTACT INFORMATION

Many Canadians Delay Home Purchase

Canadians cite belief that home prices may come down, lack of affordability and economic unpredictability as main reasons for delaying purchase

  • Over 80 per cent of Canadians feel that buying a home is a good or very good investment.
  • Only one-quarter of Canadians plan to purchase a home this year (down from 29 per cent in 2016); and highest among millennials (aged 18 – 34 years).
  • One in three Canadians would be concerned if their mortgage payment increased by more than 10 per cent.

The idea of a white picket fence may be antiquated, but the dream of home ownership is alive and well in Canada. But with the average Canadian home price topping out at over $500,000 (Canadian Real Estate Association) many Canadians are finding home ownership to be out of reach.

Despite this, according to the 2017 RBC Home Ownership Poll the majority of Canadians (82 per cent) believe that home ownership is a good investment…just not right now. The number of Canadians intending to buy a home within the next two years has decreased to 25 per cent, from 29 per cent in 2016. Millennials (aged 18 to 34), however appear to be feeling more optimistic than other age groups with two in five (39 per cent) saying they intend to buy a home in the next two years.

Why are Canadians delaying home buying?
Among Canadians who are delaying purchasing a home, the top three reasons cited include: belief that house prices may come down (58 per cent), uncertainty about the economy (51 per cent) and concerns about affordability (38 per cent).

“For many Canadians, buying a home is a financial and personal milestone – often the biggest investment one will make,” says Nicole Wells, Vice President, Home Equity Financing, Products and Segments, RBC. “In today’s market, the best advice is to start with understanding exactly how much you can afford and focus on your wants and needs ahead of starting the house hunt. This will help set expectations and get you started on finding the home that fits your budget and lifestyle. Knowledge and education are key.”

Ongoing cost of ownership
As home prices and carrying costs continue to climb, Canadians admit they are feeling the pressure. Fewer Canadians believe they are well positioned to weather a downturn in the market (65 per cent versus 73 per cent in 2016) or a potential increase in interest rates (57 per cent versus 63 per cent in 2016). Another one-third of Canadians (36 per cent) would be concerned if their mortgage payment went up by 10 per cent or more.

“The homeowner journey starts long before you get the keys, and continues well beyond the first mortgage payment. Create a budget by knowing what you can comfortably afford throughout the home ownership journey. From there, arm yourself with expert advice, the right tools and resources to stay informed today, tomorrow and well into the journey,” adds Wells.

Empowering consumers to make informed decisions
In the information age, consumers are not starved for resources – they are starved for time. Understanding what tools are available and using them can help get the home buying research started how they want, when they want. With tools available to help with everything from assessing affordability, to interest rate changes, determining the best type of mortgage for your situation and even finding the neighbourhood that matches your lifestyle, research and information are critical to good decision making when buying a home.

Regional expectations on price vary
When it comes to housing prices, expectations vary greatly from region to region. Residents in British Columbia and Ontario feel strongly that they are living in a sellers’ market where demand is exceeding the number of homes available. But that is where the comparisons stop. For the first time in three years, fewer residents of B.C. believe prices will go up by this time next year, showing a change in perception that may impact the trend of the market. Meanwhile, all other provinces show an increase in the number of people who feel that prices will go up.

Source: RBC