The Canada Mortgage and Housing Corporation has released its latest data on home starts across the country, finding that the only slight decline from 182,971 units in April to 182,756 in May remains on average for the past six months.
“The trend in total housing starts was essentially unchanged in May as gains in the multiple starts segment partially offset the moderation in activity that was observed in previous months, especially in Atlantic Canada and Ontario,” said Mathieu Laberge, the deputy chief economist at the Canada Mortgage and Housing Corporation. “As a result, the trend in housing activity remains close to its historical average and is in-line with estimates of household formation.”
The housing starts information provided by the Canada Mortgage and Housing Corporation provides a more complete picture of the housing market in conjunction with other information from different local markets across the country.
Urban starts increased in Ontario and the Atlantic provinces, while they also decreased in Quebec and British Columbia.
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Building permit values up in Ontario
After two straight months of decline, the value of building permits in Canada increased to $5.7 billion in December of 2010 – mostly thanks to Ontario.
December Housing Starts from the Canada Mortgage and Housing Corporation. Click for full size.
According to Statistics Canada, much of the 2.4% increase in the value of building permits during December 2010 was driven by multi-family units (such as condominiums and multiple-unit town homes) in Ontario, which had the largest gain in the value of building permits across the country. Quebec had the lowest after a large increase in November.
Residential building permit values increased more than 21% to a total value of $3.8 billion, while non-residential building permits felt a sharp decline, resulting in the lowest numbers since about a year ago: a 22% fall to $1.9 billion. For the entire year, building permits across Canada increased in value by 19.8% to $73.1 billion.
More Toronto homes under construction in 2010
An increase in building permits issued indicates an increase in intentions or plans to build new homes, while housing starts would indicate the number of homes actually under construction. According to the Canada Mortgage and Housing Corporation, Toronto housing starts increased in 2010 by 13%.
For more information on 2010 new home construction in Toronto, see our Central Toronto Real Estate Blog posting here.
Is it wise to buy a home during the holiday season?
The Toronto real estate market tends to wind down naturally every year around this time. While most other markets are experiencing the majority of their sales for the year, fewer people are interested in buying homes because they’re busy, it’s cold and they’re on vacation.
However, that doesn’t mean that there aren’t any homes for sale from mid-November to the end of January. Toronto home buyers can take advantage of this in several different ways.
Reasons to buy a home during the holidays
Home buying and taxes
If you’re moving for work or school, or are moving closer to your job, you can also deduct your moving expenses and some other expenses relating to moving. First-time buyers can also be eligible for the First-Time Home Buyers’ Tax Credit for 2010 instead of waiting for next year.
As a buyer, during this time of year there are fewer other buyers looking at homes. The advantage here is two-fold: There is less competition, and because there is less competition sellers are more motivated to snag the buyers they do see. People with their home on the market over the holidays aren’t waiting until business gets back to usual, so they may need to sell their homes sooner. With fewer people coming to open houses and fewer offers, sellers may be ready to make a deal faster.
Lower Interest Rates
Interest rates have remained low for longer than expected, but there is always the inevitability of them rising in the new year. Take advantage of them now.
Toronto Housing Affordability Increases: Report
A new report released by the Royal Bank of Canada says that housing affordability in the GTA has improved after declining severely for four straight quarters.
The Royal Bank of Canada report said that it predicts the Bank of Canada will increase rates starting in the second quarter of 2011. Despite this, average household income is also expected to increase by the same time.
Low mortgage rates to thank for increased affordability in Toronto
Low mortgage rates have led to the Toronto market’s “soft landing” after the huge increase in home sales seen earlier this year because of the impending Harmonized Sales Tax and changes in mortgage lending rules, making them stricter.
“Although triggering a fair amount of anxiety while it unfolded, the Toronto area market’s return to earth this spring was, in retrospect, a mostly benign affair,” said the report, “the fears were that the payback for the clearly unsustainable record high levels of existing home sales at the start of the year would be an all out rout.”
The lower the number on the Housing Affordability Index, the more affordable a home is considered. Toronto Housing affordability earlier this year was 60, and now it’s rated a 56.1 according to the report.
Canadian housing starts rose 6.1% to an annualized 196,700 in February from a slightly revised 185,400 (was 185,600) in January. Expectations going into the report had been for a smaller rise to 190,000 units.
The rise in total housing starts in February was almost entirely the result of increases in the multiple-starts segment. The relatively volatile multiples component was up 19.1% in February to an annualized 89,900 units. The more stable singles component rose as well, although by a much more modest 0.5% to 89,200 units. Rural starts were estimated at 17,600 in February, down from the 21,100 estimate in January.
Starts were boosted by a large 28.6% surge in Ontario, although gains were also recorded in Atlantic Canada (14.3%), the Prairie region (10.8%) and British Columbia (8.0%). Providing partial offset to these increases was a 14.1% drop in Quebec starts.
Today’s report that Canadian housing starts rose solidly in February, although largely driven by gains in the volatile multiples component, is in line with our expectation that housing activity in Canada will continue to pick up during the first half of 2010 following the surge in activity at the end of last year. This rise is expected to reflect still low interest rates and pent up demand built up over the first half of 2009. It is also expected to reflect a partial pick-up in housing activity leading up to the harmonization of the provincial and federal sales taxes in British Columbia and Ontario in July.
The implementation of the HST will raise the level of taxation on new housing, although primarily affecting higher-priced units. Improvement in residential real-estate markets is expected to continue to contribute to overall growth rates being sustained at an above potential pace throughout 2010, and we expect improvements in labour markets to continue. Be that as it may, the recent recession generated a large amount of economic slack, and January’s 8.3% unemployment rate serves as a reminder that the level of activity remains subdued. We expect that this slack will keep inflation moderate in the near term, allowing the Bank of Canada to follow through on its conditional commitment to maintain the overnight rate at 0.25% throughout the second quarter of this year.
Nathan Janzen, Economist, RBC Economics – www.royalbank.com
By Martin K. I. Rumack
You may be aware that there has been a change in TARION requirements for the resale of a new home by a party who buys from a Builder and does not occupy the property and then sells to a second Buyer. This provision will not apply to a situation where the Buyer obtains the written consent from the Builder to assign the Agreement to a second Buyer, and the actual closing documents are entered into between the Builder and the second Buyer.
If the first Buyer does not occupy the unit, and the closing documents to the second Buyer will be between the Reseller and the second Buyer; and not between the Builder and the second Buyer, the reseller i.e. the first Buyer must register as a registrant with TARION and pay the required fees of $350.00. For your reference, attached please find a summary from TARION of their requirements. Any person who does not comply is subject to the penalties imposed by TARION. Therefore, you must ensure, that if you are representing a reseller of a new home who has not occupied the home, registers with TARION so that the sale may be completed in compliance with the TARION requirements.
Martin K. I. Rumack is a Toronto based Barrister and Solicitor and is a regular contributor to the Muddy York Blog. Contact Information: 202 – 2 St. Clair Avenue East, Toronto, Ontario, M4T 2T5, Tel: (416) 961-3441 (Ext. 26)