Summery of CMHC’s Ottawa Housing Outlook Conference
November 20, 2008
Canadian Overview
Canadian GDP will moderate in 2008 and 2009 compared to 2007
Great economic uncertainty
- 2008 forecast for GDP growth ranges from a low of 0.4% to a high of 0.9%
- 2009 forecast for GDP growth ranges from a low of -0.3% to a high of 2.2%
- Bank of Canada Monetary Policy report forecasts GDP growth of 0.6% for both 2008 and 2009
- Labor participation rates are at record levels
- Disposal income levels are strong
- Employment growth is likely to moderate in 2009
- Unemployment rates projected between 6.4% and 7.2% in 2009
Given the tight labor markets
disposable income will remain strong, in most markets
Mortgage rates are expected to remain low, but will edge slightly higher late in 2009, however rates will remain moderate by historical standards.
The share of mortgages in arrears is near its lowest level since 1990
Nationally the existing home market is now balanced
Sales to new listings ratios
are moderating, particularly in the western provinces.
MLS sale are expected to moderate in 2008 and 2009, declining from 523,700 units in 2007 to 452,200 in 2008 and to 433,300 units in 2009.
The more balance market swill cause house price increases to also moderate from levels that ranged in the 9 to 11% ranges nationally since 2002 to much flatter levels, 0.3% in 2008, and 0.1% in 2009 (note that this is a national market commentary)
It is expected that both Alberta
and British Columbia will see negative gains during the coming two years
whereas Nfld., Saskatoon and to lesser degree Manitoba may see gains
from 12 to 30 percent in 2008 and between 5% to 28 % in 2009.
The remaining areas of the country including Ontario can expect to see house price gains that are more in tune with overall inflation rates and changes in family income levels e.g. 3% to 5%.
Ottawa Overview
Basic MLS data - January to October 2008
Sales volume: 12,621 units
Average house price (all housing forms) $290,256
Price change 2007- 2008 = +6.5%
Sales volume 2007-2008 = (- 3.7%)
Market observations:
- There are fewer first time buyers entering the market
- There has been an increase in repeat buyer demand
- Ageing population, retiring baby boomers, and empty nesters are all putting increased demands on condo apartment and condo row units.
- Both forms of condo ownership lead the growth in price changes from 2007 to 2008 at 7.3% and 8.0% respectively, a trend that is expected to continue.
- Inventories of newly completed single-detached and unsold units are at their lowest levels since 2001.
- The gap between the cost of homeownership and rental accommodation is increasing and currently has a 58% differential
- To few new rental starts are pushing vacancy rates down
- In 2006 approximately 21.3 % of the Ottawa population was comprised of Immigrants.
- Immigrants typically earn less than Canadian-born residents and demand lower priced housing.
Summary:
- The Ottawa job market will remain healthy, but will rise at a slower rate.
- Resale market activity will decrease but remain above the 10 years average
- New home construction will be closer to demographic needs
- Tight rental market, due to a lack of new supply, will push vacancy rates lower
- Condo market activity will moderate slightly, due in part to current economic market uncertainties.
