Housing outlook for second quarter 2009

By Dwight@RateSupermarket.ca
It comes as no surprise that the Canadian Mortgage and Housing Corporation (CMHC) predicts
a continued slow-down in the real estate and building markets in Canada for the second
quarter 2009.
Remember that recession thing that’s wreaking havoc across the globe?
Well, the CMHC recently released its outlook on the second quarter of 2009 (April-June) and,
if you’re in the mood for positive thinking, things are forecasted to turn around … in 2010.
Housing starts in Q2 of 2009 are expected to be 141,500 nationwide, while they’ll see positive
growth by this time next year, to the tune of an additional 8,800 housing starts (150,300).
But, if you’re in a pessimistic mood and wonder how far Canada’s mighty real estate market
has fallen, you’ll note 2008’s second quarter housing starts were 217,600 (and 227,800 in
2007’s Q2!), which makes 2010’s forecasted rebound a little less exciting.
But remember, a ray of hope is sometimes all that’s needed in these doom-and-gloom times of
new housing starts across Canada, so try to take the positive out of this one.
The decline in housing starts in 2009 can be directly tied to the economic downturn. The fact
they’re being compared to near record numbers of 2007 and 2008 certainly doesn’t help with
appearances either. But one look at the employment rates across Canada will explain why
fewer people are putting shovels into the ground in every province in 2009. Although more
housing starts are expected in 2010, CMHC forecasts more people will be looking for work in
every province next year as well.
Unemployment rates across Canada

Province 2007 2008 2009 (F) 2010 (F)

Newfoundland 13.6 13.2 14.3 14.5
PEI 10.3 10.8 12.4 12.6
Nova Scotia 8 7.7 9 9.3
New Brunswick 7.5 8.6 10.1 10.2
Quebec 7.2 7.2 8.7 8.9
Ontario 6.4 6.5 8.7 8.7
Manitoba 4.4 4.2 5.5 6
Saskatchewan 4.2 4.1 5.5 6.1
Alberta 3.5 3.6 6.3 6.7
B.C. 4.2 4.6 7.2 7.5
Canada 6 6.1 8.2 8.4
(F) = Forecasted by CMHC
Unemployment figures from Statistics Canada
The next five years
The CMHC’s housing outlook also gave a five-year forecast (2009-2013) for each
province’s housing start market, which generally reflects how the economy is
expected to be performing during this period.
Alberta
The long-term housing outlook for 2009-2013 in the country’s richest province is not
promising. A five-year housing boom – due to skyrocketing energy prices – has left
Alberta with unprecedented new development, but with the economic downturn and
oil selling for a third of what it did at its peak, there is a much lower demand for new
housing. CMHC says the worst year will be 2009 and investment in the oil sands
should increase as the world’s financial stability improves, aiding the ailing housing
market.
British Columbia
An expected influx of new residents to the western-most province will put B.C.’s
housing market back on track after 2009. As more people turn to the beauty and
diversity of B.C.’s landscape, the demand for ownership and rental housing will
increase, and as available units become scarce, the real estate market will improve.
Manitoba
Manitoba is expected to be the most consistent performer from 2009-2013, because of
its diversified economy and general openness to migrants under the Provincial
Nominee Program. After 2009, housing starts are anticipated to climb because of the
improving economy, lower new home inventories and tightening resale market
conditions.
New Brunswick
New Brunswick already has an economic plan in place, and it involves better
connecting its cities, and the development of the energy sector around Saint John. The
positive impact on the economy is expected by mid-2010, which will increase new
housing construction in urban areas like Saint John, Fredricton and Moncton.
Newfoundland and Labrador
People may be able to stay on The Rock to make a good living over the next five years.
After a decade of fleeing to the west for income, Newfoundland is focusing on energy
and mining development to boost its economic output. There is also growing demand
from seniors, a tighter rental market, a continuing shift towards medium-density
housing, and government-assisted affordable housing initiatives, all of which will help
keep the housing market flat from 2010 to 2013. On The Rock, even a flat market is a
positive.
Nova Scotia
Nova Scotia is getting in on the offshore energy game. This investment in energy will
stimulate the economy, while Halifax continues to prosper, with a positive economic
outlook on the horizon. Housing starts are expected to improve by 2010 and continue
afterward.
Ontario
A large part of Ontario’s economy is dependent on the auto industry, which is
struggling mightily. As unemployment continues to rise as the economy scuffles,
housing demand is low for both new and existing homes. A flooded resale market also
means lower prices for buyers. If the economy turns around as expected by 2012,
Ontario’s housing market should thrive again.
Prince Edward Island
The economy will improve on PEI from 2009-2013, as tourism, agriculture and
fisheries remain its most important sectors supporting growth. The population also
continues to grow, because of the number of aging residents and the provincial
immigration program. Housing starts are expected to rise moderately by 2013.
Quebec
New home construction in Quebec will stay in line with household formation, as the
economy is expected to grow moderately in the next five years. The real estate market
will also shift from a sellers market to a more balanced level. Also, the decrease in the
amount of people over 75, over the next few years, will also result in less retirement
homes being built from now to 2013. New home building will decline, but still remain
at relatively high levels when compared to recent history.
Saskatchewan
Saskatchewan’s growth will continue to be the strongest in Canada, as the resource
sector continues to boom and investments in the province continue. Despite this,
housing starts will slip below boom years of 2007 and 2008, but will stay above the
number from five years previous. Builders will have to alter production to match
heightened new home inventories, especially in the urban markets. Multi-family starts
will be the majority of new builds, while low vacancy rates will result in increased
rental units being built.
Forecasted new housing starts by province from 2009-2013

Province 2008 2009 (F) 2010 (F) 2011 (F) 2012 (F) 2013 (F)
Alberta 29,164 13,700 16,200 18,500 21,500 25,000
B.C. 34,321 19,725 21,700 26,300 29,000 31,700
Manitoba 5,537 3,950 4,250 4,750 4,800 4,700
New Brunswick 4,274 3,475 3,650 3,750 3,700 3,750
Newfoundland 3,261 2,675 2,975 2,900 2,850 2,900
Nova Scotia 3,982 3,100 3,425 3,600 3,550 3,600
Ontario 75,076 51,325 52,300 58,000 55,000 63,000
PEI 712 575 625 650 650 650
Quebec 47,901 40,000 41,350 40,000 38,000 37,000
Saskatchewan 6,828 3,400 3,850 4,200 4,400 4,500
Canada 211,056 141,900 150,300 162,650 163,450 176,800