jason mercer condo network october 30 2009

TREB Housing Market Update

The Condo Network

October 30, 2009

Jason MercerSenior Manager of Market Analysis

Toronto Real Estate Board

Low Rates Have Had The Desired Effect

0%

1%

2%

3%

4%

5%

6%

Source: Bank of Canada

Bank of CanadaTarget for the Overnight Lending Rate

Low Rates Have Had The Desired Effect

2%

7%

12%

17%

22%

Source: Statistics Canada

Average 5-Year Fixed Mortgage Rate

GTA Housing Has Remained Affordable

20%

25%

30%

35%

40%

45%

50%

55%

Source: Toronto Real Estate Board Data and Calculation; Statistics Canada

TREB Affordability IndicatorShare of Average Household Income Used for Mortgage Principal and Interest, Property Taxes and Utilities on the Averaged Priced GTA Resale Home

2010 Sales Will Remain Strong

10,000

15,000

20,000

25,000

30,000

35,000

Source: Toronto Real Estate Board

TREB MLS® Sales Projection: 2010

90-Per Cent Confidence Interval

50-Per Cent Confidence Interval

Condo Share of Sales is Increasing

20 Per cent 1999 Condo Apartment Share of MLS®

24 Per cent 2008 Condo Apartment Share of MLS®

Geography of Condo Sales

Geography of Condo Sales

New Listings Will Grow in 2010

15,000

20,000

25,000

30,000

35,000

40,000

45,000

50,000

55,000

Source: Toronto Real Estate Board

TREB MLS® New Listings Projection: 2010

90-Per Cent Confidence Interval

50-Per Cent Confidence Interval

0

200

400

600

800

1,000

1,200

1,400

Source: CMHC; TREB Adjustment

Toronto CMA Condominium Apartment Completions(12-Month Moving Average)

…Especially for Condos

More Condo Completions in 2010

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

Source: CMHC

Toronto CMA Condominium ApartmentsUnder Construction

More Balanced Market in 2010

-20%

-10%

0%

10%

20%

30%

30%

40%

50%

60%

70%

80% Ave

rage A

nn

ual P

rice G

row

thSale

s-to

-Ne

w L

isti

ngs

Rat

io

Source: Toronto Real Estate Board

TREB MLS® Sales-to-New Listings Ratio/Price Growth Projection

Sales-to-New Listings Ratio (Left Scale)

Average Annual Price Growth (Right Scale)

Average Price Growth Will Be Positive in 2010

325,000

350,000

375,000

400,000

425,000

450,000

475,000

Source: Toronto Real Estate Board

TREB MLS® Average Price Projection: 201090-Per Cent Confidence Interval

50-Per Cent Confidence Interval

Geography of Condo Price

$0 $100 $200 $300 $400 $500 $600 $700

C09C12C02N12C03C10E01E02C01

W02

W10W24W04E12E17E10

W18W05E11N17

Thousands of Dollars

Top 10 and Bottem 10 Average Condo Apartment Prices

Geography of Condo Price

-40% -20% 0% 20% 40% 60%

W13

N08

C11

E14

E06

N18

N11

W18

C12

W22

N06

N07

C10

C09

W29

W21

E16

E12

W16

E02

Top 10 and Bottem 10 Average Condo Apartment Prices

Condo Share of Total GTA Rental Stock

Purpose-Built Rental, 88%

Condominium Rental, 12%

GTA Rental Apartment Stock Shares

Source: CMHC

Condo Rental Stock Up; Average Rent Down

32 Per Cent Rental Transactions

May-Aug. 2009

51 Per Cent Rental ListingsMay-Aug. 2009

One Per Cent Rental Transactions

May-Aug. 2009

Wrap-Up

Leading Indicators: The Road to Recovery

Historic interest rate cuts have provided stimulus. Average GDP growth likely by end of 2010.

Low rates initially prompted a recovery in big-ticket consumer spending on homes and cars.

X Still waiting on stronger US demand leading to increased exports, especially auto-related

Broader retail spending has improved as well, pointing to stronger consumer confidence.

Wrap-Up

GDP and Lagging Indicators: Sustainable Growth?

June GDP release starting to confirm consensus view that Q3 will experience economic growth

The unemployment rate will be volatile and could get worse before it gets better. Should start to see job market recovery in second half of 2010.

If the Bank of Canada is correct about inflation, we should see orderly, incremental rate increases.?

?

? Value of Canadian dollar now more of a concern. Bank of Canada has “pushed forward” outlook.

Accessing TREB Economic Commentaries