CHMCAmidst all of the news around the real estate market lately, Monte went to the CMHC Housing Outlook Conference this past Tuesday. He took some notes on the talking points, predictions and trends for the industry – We'd like to share them with you as a quick Market Update:

First speaker was Ted Tsiakopoulos, Regional Economist, CMHC

Mr. Tsiakopoulos focuses on the Ontario Economy and more specifically the economy of the GTA. Here are some points he emphasized in his one hour speech
  • Rebalancing of Growth globally with expansion moving from Emerging Economies, Western Canada, Low Rates, and New Build Construction to a market that is dominated by Developed
  • Economies (USA, Japan, and UK leading the way), Central Canada, Gradually Higher Interest Rates, and Resale Housing Market
  • Ontario growth (2014) will surpass Canadian Growth for first time in a decade
  • 2014 Ontario job Growth forecasted at 1.5% and GDP at 2.5%
  • Ontario businesses gaining confidence and have a lot of money on sidelines
  • Ontario Exports to increase in 2014 bolstered by strengthened US economy, strength of $USD, and flattened commodity prices
  • US Industrial Sector set for rapid expansion, as is Japan. China flat.
  • US Consumption higher, US Energy Market Exploding, US Employment trending higher, Weaker CDN$ to continue
  • Forecasting 50 basis point increase in rates for 2014
  • Ontario Home Price Growth Slows but still trending higher for 2014 and 2015
  • Growth in the Echo Boom Generation 2015-16, Huge transfer of Wealth going on
  • Housing Costs restrictive in some centres; Ottawa, Oshawa, Barrie prohibitive, Thunder Bay, Windsor, London affordable. Toronto balanced.
  • Every 100 basis points in rate increase leads to reduction in 5% of sales in housing market. 5% reduction in sales would lead to balanced market. Forecasting only 50 basis points increase in 2014
Summary
  • Rebalancing of growth creates opportunities
  • Modest growth in Sales and Prices = new normal
  • New housing starts lose pace = resale more long term upside
  • Baby boomers still in drivers seat but Echo boomers to gradually increase influence in latter part of decade
  • Risks include China slow down, rates move higher than expected
Ed Heese – Senior Market Analyst, CMHC
  • 2014 MLS Sales to be flat with slight increase, tail off to end of year
  • MLS Prices to increase 1% to 2.5% depending on market centre
  • Housing Starts to decrease slightly
  • Vacancy rate for rentals to increase from 1.7% to 1.8%. No effect on market pricing.
  • 2013 MLS growth to date is 4.5%
  • Employment and Earning growth to increase in 2014 and again in 2015
  • Earnings growth to exceed MLS Price forecast in 2014, this is the first time this has happened since 1990’s.
  • Condominium builders already factored and adjusted to coming market inventory.
  • Price Premium of New Condo sales over Resale Condo Sales dropping from peak of 35% in 2009 and 2012 to under 30% in 2014 and 25% in 2015.
  • Largest demographic in the GTA is between ages of 23 and 44
  • Echo Boomers largely downtown residents, close proximity to work, urban lifestyle, some buyers mainly renters.
  • Transformation to buyers in next 10 years. Tend to buy where they live, condo lifestyle.

     
Summary
  • Market in Balance
  • 2014 housing market to look like 2013
  • Condo market is adjusting
  • Echo Boom – some buyers, mainly renters
  • No Bubble, no price decreases
If you have any questions regarding this conference or the Housing Market in general, please pick up the phone or send me an email. I always welcome your calls and questions.