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CMHC’s Ontario Housing conference 2014 highlights: the news is good!

CMHCA few weeks ago, I attended CMHC’s Ontario Housing Market Outlook conference.  This annual conference provides Financial experts with an insight into some of the best data available.    Now, in case you didn’t know it, CMHC probably has the largest database of information in Canada.  So when they publish stats and make forecasts, we need to listen.

This year’s speakers included Ted Tsiakopoulos, Regional Economist CMHC, Ed Heese, Senior Market Analyst CMHC, Dave McLean, President Mattamy Homes (Canada’s largest home builder) and Peter Zimmerman, Director of Development Freed Developments (highrise condo builders).   I really enjoyed hearing Ted speak.  His presentation was backed up by a wealth of stats.   Let’s see if you agree about the forecast.

There was a lot of data shared so I’ve summarized it here for your review:

  • New housing starts will slow but resales will increase.
  • In general, GTA resales to remain flat for 2014.
  • GTA prices are expected to go up 1.5%.
  • Women are buying more condos than ever before as more single women tend to feel safer in a condo with a security system or guard.
  • People aged 25-44 dominate house purchases and ownership.
  • Less migration to Western Provinces as Ontario’s economy improves causing more demand for housing.
  • Lower unemployment rate in Ontario and Quebec.  And lower overall unemployment in Canada (but higher unemployment is forecast in all other provinces.)
  • Downward revision to developing worlds.   (China growth was forecast at 10% but has dropped to 7% or 7.5%).
  • US economy seen improving with more personal spending on the rise.
  • Watch for a weaker $Canadian dollar.. possibly under $0.90??
  • Weaker $CAD means higher exports and that’s good for the economy.
  • Income growth to outpace economic growth and house price increases.  (First time that’s happened in a long time.)
  • Home owners are able to absorb a 1.00% rate hike (interesting stat as this is a pressure test and the findings support our ability to handle higher payments… sorry pessimists, we’re still able to handle our debts.)
  • Average Mortgage Renewal Rate will be lower 2014 than their current interest rate.  In other words, most people will be enjoying a lower rate of interest at renewal time than what they are currently paying.   (can you say more disposable income?… let’s make sure we use those extra $$s to pay off our debts).
  • Baby Boomers still have biggest influence in the economy… but that’s about to change as the Echo Boomers (kids of the Baby Boomers) outnumber Baby boomers….  watch for year 2016 as the year of the echo boomers.
  • Echo Boomers are more inclined to rent now, but are expected to drive housing sales from 2016 to 2021.
  • Toronto has more highrise condo building today than anywhere else in North America.
  • Investors could make up as much as 40% of all new condo sales in Toronto (Some experts believe that number may even be as high as 70% ).
  • Toronto vacancies are higher but still low at around 1.2%.    (this accounts for Toronto’s high rents)
  • Burlington, Ontario is a real hot spot with higher price increases, more real estate sales and a spike in condo sales, too.  Lower prices most definitely has something to do with this.

I guess we shouldn’t expect CMHC to forecast a housing bubble given their mandate is to promote housing in Canada.   But they make a good argument about why the housing market should remain strong.   The demand to live in downtown Toronto seems to be higher than ever.   With the younger generation looking to live close to work, with no car and preferring to rent vs own, the market seems in check according to CMHC.

So even though we are seeing Toronto’s skyline dominated by condo towers and cranes, there appears to be sufficient demand to fuel the market or at least to keep it healthy

Your best interest is my only interest.

As always, I welcome your comments, calls and questions.

Steve Garganis 416 224 0114 steve@mortgagenow.ca

Steve Garganis View All

As an industry insider, Steve will share info that the BANKS don't want you to know. Steve has appeared on TV's Global Morning News, CBC's "Our Toronto" and The Real Life TV show. He's also been quoted in several newspapers such as the Globe and Mail, The Toronto Star, The Vancouver Sun, The Star Phoenix, etc.

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