Housing starts to fall slightly in 2008
Housing starts reached 228,343 units in 2007, an increase of 0.4% from 227,395 in 2006, according to Canada Mortgage and Housing Corporation‘s (CMHC) first quarter Housing Market Outlook, Canada Edition report. In 2008, residential construction will decline to about 211,700 units, given higher mortgage carrying costs. Nevertheless, Canada’s real estate market remains strong and 2008 will mark the seventh consecutive year in which housing starts exceed 200,000 units.
“Despite some global financial instability with regards to the U.S. housing market, Canada continues to experience robust employment levels, ongoing income gains and low mortgage rates,” said Bob Dugan, Chief Economist for CMHC. “This has strongly supported Canada’s housing markets. However, housing starts are expected to decrease in 2008 mainly due to recent increases in house prices, which will push mortgage carrying costs higher for home buyers.”
Existing home sales, as measured by the Multiple Listing Service (MLS), are poised to experience a very strong year with about 520,000 units in 2007, a 7.6% increase over 2006. In 2008 the level of MLS sales is expected to fall by 3.9% to 499,650 units, while 2009 will see an additional decrease to 488,300. Growth in the average MLS price has remained high at 10.6% in 2007, mainly because of continued strong price pressures in Canada’s western provinces. However, as most resale markets move toward more balanced conditions, growth in average MLS price is forecast to slow to 5.2% in 2008 and 3.8% in 2009.
The Ontario economy is expected to improve slightly during 2008 and this will help sustain housing demand across the province. New home construction activity will be moderate between now and the end of 2008. Housing starts are expected to move up from 68,123 units in 2007 to 69,150 units in 2008, while a more modest economy in 2009 will push starts down somewhat to 67,150 units. The average MLS price in Ontario will rise by 7.6% in 2007, while 2008 and 2009 should see increases of 6.2% and 2.9%, respectively.
As Canada’s national housing agency, Canada Mortgage and Housing Corporation (CMHC) draws on over 60 years of experience to help Canadians access a variety of quality, environmentally sustainable, and affordable homes – homes that will continue to create vibrant and healthy communities and cities across the country.
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