Canada Housing Outlook 2011

Housing Outlook 2011




Although existing home sales in the fourth quarter of 2010 were down 19% year over year, the fact they were up 12.7% compared to Q3/2010 clearly suggests that Canada’s housing market was picking up strength in the final months of 2010.

Factors contributing to this improvement include strong growth of full time employment (+152,000 gain over the previous four months) plus an improvement in affordability stemming from a combination of lower mortgage rates and a significant slowdown in house prices.

Looking forward, the fundamental drivers of housing demand remain positive.

First, based on the most recent Bank of Canada Business Outlook Survey, the outlook for job growth over the next twelve months exhibited a healthy increase in the fourth quarter and now stands at its highest level since the fourth quarter of 2009.

Second, according to the most recent Royal Bank Housing Trends and Affordability Report, housing affordability improved in the third quarter due to lower mortgage rates and some softening in home prices.

Moreover, according to the report, further improvement in affordability is likely due to moderating house prices and rising incomes, despite the prospect for somewhat higher mortgage rates.

While the fundamentals of sustained growth of employment and positive affordability should underpin housing demand over the near term, the federal government’s recently announced plans to tighten mortgage lending rules by reducing the maximum amortization period on government insured mortgages from 35 to 30 years will probably put a drag on housing demand during the second half of the year.

Based on information reported in the November 2010 Annual State of the Residential Mortgage Market in Canada, prepared for the Canadian Association of Mortgage Professionals, this measure will primarily impact first time buyers since an estimated 30% of new mortgages issued over the past year had 35 year terms.

For 2010 as a whole, housing starts are expected to total 180,000 compared to an estimated 193,000 in 2010 and 149,000 in 2009.
Canada housing starts – all areas


Data Source: CMHC/Chart: Reed Construction Data, CanaData
Contributing Editor JOHN CLINKARD


Warm Regards,
Jared Dreyer, AMP
Mortgage Professional
604 649-5991
www.dreyergroup.ca
jared@dreyergroup.ca


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About Dreyer Group Smiles

Dreyer Group Smiles is a program dedicated to giving to facilities that provide safe and transitional housing to children and youth in the Fraser Valley of British Columbia. By providing funds to these programs, Dreyer Group will make a meaningful difference to kids who otherwise may not have a roof over their heads, or hope for a bright future.
Dreyer Group hopes to expand this effort through their clients and business partners. In addition, they plan to raise additional funds through annual events and corporate fundraising initiatives. Dreyer Group is working closely with the Salvation Army to allocate these funds to the children and shelters.


About Dreyer Group Mortgages, A Member of the VERICO Brokers Network

As a senior mortgage consulting team with extensive experience in the financial services industry and thousands of happy clients throughout the Lower Mainland, we understand what it takes to build long-term relationships through service and expertise. As an independent brokerage, we are not restricted to one financial institutions mortgage options. We provide the best range of financing solutions by accessing over 40 lenders and hundreds of products coast-to-coast.

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