metropolitan housing outlook spring 2010...canadian private residential mortgage insurer since 1995....

Metropolitan Housing Outlook Spring 2010

In-Depth Housing Analysis forCanada, the Provinces, and

Nine Metropolitan Areas

ECONOMIC PERFORMANCE AND TRENDS

Metropolitan Housing Outlook: In-Depth Housing Analysis for Canada, the Provinces, and Nine Metropolitan Areas

by Alan Arcand, Mario Lefebvre, Jane McIntyre, Greg Sutherland, and Robin Wiebe

Genworth Financial CanadaGenworth Financial Canada, a subsidiary of GenworthMI Canada Inc. (TSX:MIC), has been the leadingCanadian private residential mortgage insurer since 1995.Known as “The Homeownership Company,” it providesdefault mortgage insurance to Canadian residential mort-gage lenders that enables low down payment borrowersto own a home more affordably and stay in their homesduring difficult financial times. Genworth FinancialCanada combines technological and service excellencewith risk management expertise to deliver innovation to the mortgage marketplace. As of March 31, 2010,Genworth MI Canada had $5.1 billion in total assetsand $2.7 billion in shareholders’ equity. Based inOakville, Ontario, the Company employs approximately265 people across Canada.

Additional information about Genworth FinancialCanada is available at www.genworth.ca.

Preface This report provides an in-depth analysis of the housingmarket at the national, provincial, and metropolitan levels.Covering a wide range of housing market statistics, suchas interest rates, housing starts, mortgage approvals, andhome prices, this report connects the economy with hous-ing market activity. It also provides insights into thefinancial situation of consumers.

Nine census metropolitan areas are covered: Québec City,Montréal, Toronto, Ottawa–Gatineau, Winnipeg, Calgary,Edmonton, Vancouver, and Victoria.

Provincial coverage includes the Atlantic provinces, Quebec,Ontario, the Prairies, Alberta, and British Columbia.

This report is completed two times a year, in the springand fall.

About The ConferenceBoard of CanadaWe are:• The foremost, independent, not-for-profit

applied research organization in Canada.

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services for all levels of government.

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Conference Board, Inc. of New York, which

serves nearly 2,000 companies in 60 nations

and has offices in Brussels and Hong Kong.

Publication 10-273©2009 The Conference Board of Canada*Printed in Canada • All rights reservedAgreement No. 40063028*Incorporated as AERIC Inc.

Forecasts and research often involve numerous assumptions and datasources, and are subject to inherent risks and uncertainties. This informationis not intended as specific investment, accounting, legal, or tax advice.

What Has Changed? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

National Overview

Canada . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

Provincial Overview

Atlantic Canada . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

Quebec . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

Ontario . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

Prairies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

Alberta . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

British Columbia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

Metropolitan Overview

Québec City . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .24

Montréal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27

Toronto . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30

Ottawa–Gatineau . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33

Winnipeg . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36

Calgary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39

Edmonton . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .42

Vancouver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45

Victoria . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .48

Contents

Real gross domestic product in

Canada is forecast to increase by

3.2 per cent in 2010, up from 2.9 per

cent in the previous Metropolitan

Housing Outlook. Real GDP rose

by 5 per cent, seasonally adjusted

at annual rates, in the fourth quarter

of 2009, as consumption, govern-

ment spending, and exports were

all stronger than expected.

The Canadian dollar is expected

to average US$0.98 this year, up

considerably from the previous fore-

cast of US$0.92. Higher commodity

prices and strong economic funda-

mentals, including Canada’s healthy

banking system and abundant raw

materials, account for the upward

revision.

Continued low interest rates and

tight resale supply have pushed

housing starts up much higher than

expected so far in 2010. Activity in

the new home market has also been

spurred by buyers trying to purchase

homes before sales tax harmonization,

through the HST, comes into effect

in Ontario and British Columbia on

July 1. Starts are now forecast to reach

187,300 units this year, an upward

revision from the 164,800 units in

the last outlook.

In line with higher demand, the

growth in new homes prices is also

now expected to be stronger in

2010. In the current outlook, the

average price of a new home is

forecast to rise by 1.6 per cent this

year. This compares with no growth

in the last forecast. Resale price

growth will also be higher than was

previously expected—3.7 per cent

versus 1.7 per cent.

Stronger-than-expected activity in

both the new and existing markets

will translate into higher growth in

mortgage approvals, both in terms

of volumes and dollar value. The

previous forecast called for the

number of mortgage approvals to

grow by 1.3 per cent in 2010 and

for their value to increase 2.7 per

cent. It is now expected that the

volume of mortgage approvals will

rise 6.0 per cent this year and their

dollar value by 3.5 per cent.

What Has Changed?

2 The Conference Board of Canada

National Overview

After three consecutive quarterly

declines, Canada’s real gross domestic

product advanced modestly in the

third quarter of 2009 and surged to

an annualized pace of 5 per cent in

the fourth quarter. Thus, after con-

tracting by 2.6 per cent in 2009,

real GDP in Canada is expected to

advance by 3.2 per cent in 2010—

0.3 points higher than forecast in

our previous Metropolitan Housing

Outlook. Household and government

spending will be this year’s biggest

contributors to economic growth.

Private sector investment is also

recovering, though at a slower pace.

Similar overall GDP growth of 3.3 per

cent is on tap for 2011. Annual out-

put advances are forecast to average

3 per cent in 2012–2014.

Even though employment and

real GDP remain well below poten-

tial, Bank of Canada officials are

concerned about nascent inflationary

pressures. Indirect tax increases like

the introduction of the harmonized

sale tax in Ontario and British

Columbia and increases in the Quebec

sales tax, along with rising energy

prices and mortgage rates, will lift

inflation, despite a partial offset from

the high Canadian dollar. Such ten-

sions, combined with domestic eco-

nomic strength, will likely force the

Bank to start raising rates mid-year.

The onset of the recession in

2008 cut housing starts 7.6 per cent

that year and a further 29.4 per cent

in 2009. This slowdown limited new

home prices to a 3.4 per cent increase

in 2008 and cut them 2.3 per cent

last year. On the resale side, record-

low mortgage rates and the emer-

gence of a recovery in the second half

of 2009 boosted homebuyer enthu-

siasm, leading to strong demand for

existing dwellings and rising resale

prices. The recovery has also spurred

housing starts, reducing supply con-

cerns. Early this year, starts were near-

ing annualized levels of 200,000 units,

well above the 130,000 units during

the first half of 2009.

Low interest rates and the push

to buy homes before the July 1 sales

tax harmonization in Ontario and

British Columbia will keep both new

and resale markets strong through

the first half of 2010. Thereafter,

tighter mortgage qualification rules,

rising interest rates, and the harmo-

nized sales tax will cool housing

demand. Total housing starts are

forecast to average 187,300 this

year and 193,600 in 2011. These

figures are well below the average

annual 221,300 housing starts

recorded over 2002 to 2008.

Meanwhile, total mortgage

approvals rose by double-digit rates

last year, both in level and dollar

terms. Recent years’ price hikes

have forced more buyers into high-

ratio loans. These grew more than

twice as fast as conventional mort-

gage approvals last year. Approvals

are expected to increase again in

2010, albeit at a slower rate. Growth

in approvals was expected to remain

strong through the first quarter of

this year, then soften as interest

rates rise and new government rules

on mortgage qualifications bite. Still,

volumes of conventional and high-

ratio mortgage approvals are expected

to increase by 5.8 per cent and 6.2 per

cent respectively this year. But weaker

price growth in 2010 will mean dollar

volumes of mortgage approvals will

rise at a slower pace than the number

of approvals for the first time since

the early 1990s. Mortgage approvals

will continue to soften in 2011,

resulting in a 3.7 per cent decrease

in the number of approvals for the

year as a whole.

Provincial Overview

Housing starts fell in all regions

during 2009 but are projected to rise

everywhere in 2010, albeit modestly

in Quebec and Atlantic Canada. Resale

prices, down only in Alberta last year,

are forecast to advance across the

board in 2010. New house prices

are slated to rise tepidly, following

mixed 2009 results.

British Columbia’s GDP is fore-

cast to grow 3.7 per cent in 2010,

following last year’s 2.5 per cent

decline. Forestry sector improvement

will set a more positive economic

tone. The 1.7 per cent gain in employ-

ment in 2010 will partially reverse

the 2.4 per cent loss in 2009. Housing

starts are projected to leap 68.6 per

cent to over 27,000 units this year,

following two annual setbacks, but

remain well below 2007’s peak.

House price growth will accelerate

this year—to 2.6 per cent for new

homes and 4.3 per cent for resale units.

Executive Summary

The Conference Board of Canada 3

Alberta’s economy is also in

recovery, largely thanks to firmer

energy prices. Real GDP is forecast

to expand 2.5 per cent and employ-

ment will rise 1.0 per cent this year.

Housing starts, down 30.0 per cent

last year, are forecast to jump 47.3 per

cent to 30,000 units in 2010, but are

not expected to regain peak levels

during our forecast. House prices

have stopped falling; the average

new home value is expected to rise

fractionally in 2010, and the average

resale value is expected to be up

nearly 4 per cent.

The combined GDP of Manitoba

and Saskatchewan is predicted to rise

2.2 per cent in 2010 after a 2.4 per

cent dip in 2009. While employment

grew last year, its 0.7 per cent gain

was a four-year low. Similar growth

is forecast for 2010. Manitoba’s

recovery will feature manufacturing

sector expansion, increased mining

extraction, and a robust finance,

insurance, and real estate industry.

Saskatchewan will enjoy rebounding

commodity markets and improved

potash sales. An 18.3 per cent rise

to nearly 9,600 housing starts is

forecast for 2010, after last year’s

34.7 per cent drop. House price

growth was nil for new homes in

2009 and under 5 per cent for exist-

ing units. Little change in new home

prices is expected again in 2010, but

existing house values are predicted

to rise 2.4 per cent.

Ontario is expected to bounce

back from a 3.6 per cent GDP con-

traction in 2009 to post 3.5 per cent

growth this year. Exports, particu-

larly of automobiles and their parts,

will fuel the recovery. Employment,

down 2.4 per cent in 2009, is fore-

cast to rise 1.1 per cent in 2010.

Housing starts fell by a third to

50,000 units in 2009, the fewest since

1996, but a forecast 31.4 per cent

jump this year will produce nearly

66,000 units. Price increases are set

to clock in at 1.7 per cent for new

homes and 4.2 per cent for resale

dwellings.

Quebec’s 2009 downturn was

comparatively moderate, and so its

recovery will also be muted. The

2.2 per cent GDP expansion forecast

for 2010 significantly lags Canada’s

expected 3.2 per cent. The province’s

manufacturing sector, although

expected to expand, will be held

back by past declines in aerospace

orders and the high Canadian dollar.

Although job counts dipped less than

1 per cent during 2009, this year’s

forecast gain is only 0.6 per cent.

Housing starts have fallen in four of

the past five years, including 2009’s

9.3 per cent dip to 43,450 units. Little

improvement is expected for 2010.

New home prices are slated to rise

1.3 per cent this year—a 12-year

low—while prices for resale units

are forecast to grow 2.9 per cent,

down from 4.4 per cent in 2009.

The combined output of the four

Atlantic provinces is forecast to rise

2.0 per cent in 2010, following last

year’s 1.6 per cent contraction.

Stronger oil output and a return to

production at the Voisey’s Bay mine

headline prospects for Newfoundland

and Labrador. Wind power generation

in Prince Edward Island, production

from the Deep Panuke natural gas

field in Nova Scotia, and prospective

potash mining in New Brunswick are

other highlights. In turn, employment

will rebound from 2009’s 0.6 per

cent decline, increasing 0.7 per cent

this year. Housing starts are forecast

to rise 1.1 per cent in 2010, after

drops of 1.3 per cent and 11.0 per

cent in the last two years. Price

growth for both new and existing

houses will slow this year, to 0.5 per

cent for new units and 0.9 per cent

for existing homes.

Municipal Overview

All nine cities covered by this

report are forecast to enjoy eco-

nomic expansion in 2010 following

across-the-board declines in 2009.

GDP advances are slated to range

from 2.2 per cent in Winnipeg to

4.0 per cent in Vancouver. Most

cities will see growth accelerate

in 2011; only Ottawa–Gatineau,

Vancouver, and Victoria will see the

pace of growth ease. The Alberta

cities are forecast to enjoy the

strongest 2012–2014 growth

prospects as GDP is expected to

advance at least 4.3 per cent per

year on average.

All cities except Québec City

suffered housing starts declines during

2009. Drops ranged from an 8.4 per

cent dip in Edmonton to a 58.1 per

cent plunge in Vancouver. Québec

City starts rose 1.7 per cent. For all

five of our Western cities, 2009 rep-

resented the second straight year of

declining starts, putting construc-

tion sharply off peak volumes. This

was true only for Montréal in the

East. While most cities are forecast

to see advances in 2010, expected

starts will typically remain below

their peak. In Vancouver, for example,

while starts are slated to advance

75.5 per cent this year, our nine

cities’ largest relative gain, the

14,400-unit volume will still lag

2007’s high near 20,640 units.

Conditions are similar in the other

four Western cities, but mixed patterns

are expected in the East: Toronto is

forecast to see 22.1 per cent more


starts this year, while new home

construction is expected to ease in

Ottawa–Gatineau and Québec City.

While sales of existing homes

are forecast to rise in all nine cities

this year, increases will typically

lag 2009 advances. Winnipeg is one

exception, as its sales fell last year.

Québec City will also see slightly

faster growth. Toronto’s 12.5 per cent

sales increase leads 2010 projections,

while Ottawa–Gatineau should see

sales rise only 1.5 per cent. Trans-

actions are forecast to rise more

slowly across the board in 2011,

with outright decreases expected

in four cities.

This report’s cities are all

expected to feature balanced markets

in 2010. This represents cooling every-

where, since the sales-to-new-listings

ratio is forecast to dip in all nine cities

this year. Québec City, Vancouver,

and Victoria are expected to have

the strongest markets this year, with

ratios of 64–66 per cent. Other cities’

ratios are clustered between 57 and

59 per cent.

Balanced resale markets sug-

gest moderate price hikes. Led by

Edmonton’s projected 4.0 per cent

increase, the highest in this report,

prices in our four westernmost cities

are set to rebound from declines last

year. In 2011, expected price growth

will range from Winnipeg’s 1.4 per

cent to 3.1 per cent in Victoria.

Low mortgage rates and softer

house prices cut principle and interest

payments deeply in all nine of our

cities during 2009. Québec City’s

13.5 per cent payment drop was last

year’s smallest, while Calgary’s pay-

ment fell 23.5 per cent. Although

principle and interest charges are

slated to rise everywhere in 2010,

hikes will be moderate. Vancouver’s

3.6 per cent rise will be the largest.


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Fin

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Can

ad

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)


Economic Outlook

Given the collapse of the global

economy in 2008 and 2009, Canada

is in a remarkably good position

today. Prudent Canadian financial

institutions survived the turmoil rel-

atively unscathed. Housing markets

endured only a temporary down-

swing in prices, and labour markets

did better than expected, with most

firms hanging on to their employees

despite a massive hit to corporate

profits. These factors helped main-

tain household income and confidence,

encouraged consumers to reopen

their wallets, and (coupled with

unprecedented monetary and fiscal

stimulus) have put the Canadian

economy firmly on a path of recovery.

After three consecutive quarterly

declines, Statistics Canada reported

meek real growth in the economy in

the third quarter of 2009. Growth

then surged in the fourth quarter—

with real gross domestic product

advancing at an annualized pace of

5 per cent. Thus, after contracting

by 2.6 per cent in 2009, real GDP

in Canada is forecast to advance by

3.2 per cent in 2010—0.3 points

higher than forecast in our previous

housing outlook. Household and gov-

ernment spending will be the biggest

contributors to economic growth this

year. Private sector investment is also

recovering, though at a slower pace.

Similar overall GDP growth of 3.3 per

cent is on tap for 2011, and annual

output advances are forecast to

average 3 per cent in 2012–2014.

Financial MarketsOutlook

Even though employment and real

GDP remain well below potential,

Bank of Canada officials are con-

cerned about budding inflationary

pressures that have been showing

up in the Bank’s measure of core

inflation. Moreover, indirect tax

increases—in the form of sales tax

harmonization in Ontario and British

Columbia and increases in the Quebec

sales tax—will complicate the Bank’s

efforts to tame overall inflation. Higher

costs of living will undoubtedly put

some upward pressure on wages over

the next two years. Meanwhile, rising

energy prices and mortgage rates

will add to home ownership and

transportation costs. These factors

will help lift overall Consumer Price

Index inflation to 1.8 per cent in

2010 and 2.6 per cent in 2011.

However, inflationary pressures

are being partly offset by the high-

flying Canadian dollar. While higher

commodity prices are helping to

restore profits, cash flow, and capital

investment in the resource sector, they

are also putting significant upward

pressure on the value of the Canadian

dollar. Over the first quarter of 2010,

the loonie averaged over US$0.96, a

20 per cent appreciation over year-ago

Chart 1—Housing Starts (000s)

2007 08 09 10f 11f 12f 13f 14f0

50,000100,000150,000200,000250,000

Singles Multiples 20−year average

Canada

Chart 2—House Price Growth (% change)

08 09 10f 11f 12f 13f 14f−6−30369

12New Resale

2007

Sources: The Conference Board of Canada; CMHC Housing TimeSeries Database.

Sources: The Conference Board of Canada; CMHC Housing TimeSeries Database; Canadian Real Estate Association.

Household and government spending roared ahead over the second

half of 2009, putting Canada's economy on a firm path of recovery.

Activity in the housing market has picked up significantly. In particular,

demand for existing homes surged in recent months. Meanwhile, new

home construction is on the comeback trail too, as housing starts are

expected to rise by 25.6 per cent this year. Price growth in the resale

market is forecast to remain fairly strong this year, at 3.7 per cent, while

new home prices are expected to rise by a modest 1.6 per cent.

Mortgage approvals are expected to grow by a solid 6.0 per cent this

year, before dipping in 2011 as higher mortgage rates begin to bite.


levels. As the global recovery

becomes more firmly entrenched,

Canada’s solid banking system, strong

domestic economy, relatively healthy

fiscal situation, and wealth in raw

materials—especially oil—will con-

tinue to support a strong loonie. More-

over, the strength of the Canadian

economy, coupled with budding

inflationary pressures, will likely

force the Bank of Canada to remove

stimulus and start raising rates by

mid-year. Increases in the bank rate

are thus expected to lead rate hikes

in the United States—a factor that

will be enough to push the loonie

above parity temporarily. Overall,

the Canadian dollar is forecast to

average US$0.98 this year and just

above parity in 2011.

Housing Outlook

The start of the global recession

in 2008 brought the housing market

to its knees. In the new home market,

construction plummeted, a reaction

typical of prudent developers.

Housing starts dropped 7.6 per cent

that year and 29.4 per cent in 2009.

In turn, new home prices increased

by a much more modest 3.4 per cent

in 2008, and then fell 2.3 per cent

last year—the first annual decline

in new home prices since 1996.

But the economy started to

recover in the second half of 2009,

leading to a solid rebound in con-

sumer confidence. Added to this was

a limited supply of new homes and

record-low mortgage rates, and the

result was frenzied demand for exist-

ing homes. Home resale activity has

been solid in most regions of the

country, and listings have so far

failed to keep pace. Accordingly,

prices have climbed sharply. However,

the strong demand for resale homes

has encouraged developers to start

building again. Early this year, hous-

ing starts closed in on annualized

levels just shy of 200,000 units,

after averaging just 130,000 units

over the first half of 2009.

Low interest rates and the push

to buy homes before the July 1 sales

tax harmonization in Ontario and

British Columbia will keep the

housing market strong through the

first half of 2010. The federal gov-

ernment also announced stricter mort-

gage rules that took effect on April 19.

The implementation of tighter mort-

gage rules and of the HST in Ontario

and B.C., combined with rising

interest rates, will cool the heated

housing market. True, housing

starts are forecast to climb from

149,000 units in 2009 to 187,300 in

2010 and to 193,600 in 2011. But

these figures are well below the

average annual 221,300 housing

starts recorded over 2002 to 2008.

Mortgage Outlook

Interest rates declined steadily

over the past two years as the Bank of

Canada sought to improve liquidity

in the financial system and help stim-

ulate the economy. Mortgage rates

fell in tandem with overall interest

rates—the conventional five-year

rate reached a low of 5.6 per cent

last year. Mortgage rates are expected

to bottom out at 5.3 per cent in the

second quarter of 2010, and then

begin to move back upward to average

6.5 per cent in 2011.

The persistence of low interest

rates kept mortgage demand on an

upward trend through the recession.

Total mortgage approvals rose by

double-digit rates last year, in level

and dollar terms. But with more

buyers forced into the high-risk

category (meaning they have less

than a 25 per cent down payment),

high-risk mortgage approvals grew

more than twice as fast as conven-

tional mortgage approvals last year.

Mortgage approvals are expected

to increase again in 2010, albeit at

slower rate. Growth in approvals was

expected to remain strong through

the first quarter of this year, but will

Chart 3—Mortgage Approval Growth (dollar volume per cent change)

2007 08 09 10f 11f 12f 13f 14f−15−10−505

101520

Conventional High−ratio

Sources: The Conference Board of Canada; GE MortgageInsurance Canada; CMHC Housing Time Series Database.

Chart 4—Household Net Worth (as a per cent of disposable income)

1995 96 97 98 99 00 01 02 03 04 05 06 07 08 09450

500

550

600

650

700

Sources: The Conference Board of Canada; Statistics Canada.


soften as interest rates rise and as the

government’s stricter rules on mort-

gage qualifications take effect. The

implementation of the HST in Ontario

and British Columbia on July 1

will also limit mortgage approval

growth in these two key provinces.

In fact, future demand has likely

been pulled forward by buyers

seeking to purchase homes before

interest rates rise and before the

HST and stricter mortgage rules

are implemented.

In unit terms, total mortgage

approvals are expected to climb by

6.0 per cent this year, before falling

by 3.7 per cent in 2011. Similar

results are expected in both the con-

ventional and high-ratio markets.

The number of conventional mortgage

approvals is expected to increase by

5.8 per cent this year and then dip

by 3.9 per cent in 2011. The num-

ber of high-risk approvals is fore-

cast to rise 6.2 per cent in 2010 and

fall by 3.4 per cent next year.

Chart 5—Consumer Finances: Atlantic Provinces

0.20.30.40.50.60.7

050100150200250

Mort. in arrears (%)

Bankruptcies per 1 mil. persons

1995 96 97 98 99 00 01 02 03 04 05 06 07 08 09

Sources: The Conference Board of Canada; Canadian BankersAssociation; Superintendent of Bankruptcy Canada.

Chart 6—Consumer Finances: Quebec

00.20.40.60.81.01.2

0100200300400500600



1995 96 97 98 99 00 01 02 03 04 05 06 07 08 09


Chart 7–Consumer Finances: Ontario

0.10.20.30.40.50.60.7

50100150200250300350



1995 96 97 98 99 00 01 02 03 04 05 06 07 08 09


Chart 8—Consumer Finances: Prairie Provinces

0.10.20.30.40.50.60.7

100120140160180200220



1995 96 97 98 99 00 01 02 03 04 05 06 07 08 09


Chart 9—Consumer Finances: Alberta

00.20.40.60.81.0

100150200250300350



1995 96 97 98 99 00 01 02 03 04 05 06 07 08 09


Chart 10—Consumer Finances: British Columbia

1995 96 97 98 99 00 01 02 03 04 05 06 07 08 090.10.20.30.40.50.60.7

050100150200250300





Table 1—Economic Indicators

2007 2008 2009 2010f 2011f 2012f 2013f 2014f

Real GDP at market prices 1,315,907 1,321,360 1,286,431 1,328,144 1,371,697 1,417,153 1,459,993 1,497,455(2002 $ millions) 2.5 0.4 –2.6 3.2 3.3 3.3 3.0 2.6Total employment (000s) 16,864 17,121 16,849 17,117 17,545 17,900 18,161 18,378

2.3 1.5 –1.6 1.6 2.5 2.0 1.5 1.2Unemployment rate (%) 6.0 6.1 8.3 8.0 7.3 6.6 6.1 5.8Personal income per capita ($) 35,597 36,861 36,581 37,722 39,120 40,513 41,883 43,073

4.7 3.6 –0.8 3.1 3.7 3.6 3.4 2.8Population (000s) 32,887 33,276 33,690 34,090 34,458 34,834 35,219 35,610

1.1 1.2 1.2 1.2 1.1 1.1 1.1 1.1Retail sales ($ millions) 412,037 426,047 413,125 436,870 458,116 479,242 499,220 517,398

5.8 3.4 –3.0 5.7 4.9 4.6 4.2 3.6Exchange rate (U.S./Can.) 0.93 0.94 0.88 0.98 1.01 1.01 1.00 0.99Inflation rate (%) 2.1 2.4 0.3 1.8 2.6 2.0 2.1 1.9

Bank rate 4.6 3.2 0.6 0.8 2.9 4.6 4.7 4.7Prime lending rate 6.1 4.7 2.4 2.3 4.4 6.1 6.2 6.2Three-month Treasury bill 4.2 2.4 0.3 0.4 2.5 4.2 4.3 4.3One-year conventional mortgage rate 6.9 6.7 4.0 3.8 5.5 6.6 6.7 6.7Three-year conventional mortgage rate 7.1 6.9 4.6 4.5 6.0 7.0 7.3 7.3Five-year conventional mortgage rate 7.1 7.1 5.6 5.5 6.5 7.3 7.5 7.6Federal bonds: 1 year 4.2 2.7 1.2 1.3 2.6 4.0 4.4 4.6Federal bonds: 5 years 4.2 3.0 2.4 2.4 3.2 4.3 4.7 4.8Federal bonds: 7 years 4.2 3.3 2.7 2.6 3.4 4.4 4.7 4.9Federal bonds: 10 years 4.3 3.6 3.3 3.1 3.7 4.6 4.9 5.0Federal bonds: long term 4.3 4.0 3.9 3.6 4.0 4.7 5.0 5.2

Housing starts 228,343 211,056 149,081 187,259 193,630 198,926 200,165 202,2990.4 –7.6 –29.4 25.6 3.4 2.7 0.6 1.1

Singles 118,917 93,202 75,659 99,189 101,345 102,864 101,610 102,284–2.0 –21.6 –18.8 31.1 2.2 1.5 –1.2 0.7

Multiples 109,426 117,854 73,422 88,070 92,285 96,062 98,555 100,0143.2 7.7 –37.7 20.0 4.8 4.1 2.6 1.5

Housing completions 209,137 214,215 176,842 177,012 181,688 190,813 193,552 195,717–3.4 2.4 –17.4 0.1 2.6 5.0 1.4 1.1

Singles 115,705 104,092 78,367 92,980 97,762 101,408 100,608 100,378–0.2 –10.0 –24.7 18.6 5.1 3.7 –0.8 –0.2

Multiples 93,432 110,123 98,475 84,031 83,926 89,405 92,944 95,339–7.2 17.9 –10.6 –14.7 –0.1 6.5 4.0 2.6

Average price of a new home ($) 383,133 396,197 387,056 393,187 400,515 409,132 418,010 427,0327.7 3.4 –2.3 1.6 1.9 2.2 2.2 2.2

Average price of a resale home ($) 306,702 301,755 316,938 328,678 335,988 344,123 352,543 360,99210.9 –1.6 5.0 3.7 2.2 2.4 2.4 2.4

Italics indicate percentage change.Sources: The Conference Board of Canada; Bank of Canada; CMHC Housing Time Series Database; Canadian Real Estate Association; StatisticsCanada.

Table 2—Financial Indicators (%)

Table 3—Housing Indicators


Economic Outlook

Real gross domestic product in

Atlantic Canada fell by 1.6 per cent

in 2009, dragged down by a 5.5 per

cent contraction in the Newfoundland

and Labrador economy. Fortunately,

rising demand for commodities and

the eventual resumption of operations

at the Voisey’s Bay nickel mine and

mill will help real GDP in the province

expand 2.4 per cent in 2010. After

slipping by 0.2 per cent in 2009,

Nova Scotia’s economy will benefit

from $800 million in government

stimulus spending and a revival in

consumer demand, which will help

lift growth in real GDP by 1.9 per

cent. New Brunswick is also expected

to ride the tide of economic recovery,

with real GDP expected to advance

by 1.7 per cent, up from last year’s

mild contraction of 0.4 per cent. In

Prince Edward Island, public spend-

ing on goods and services helped

the provincial economy stay out of

recession in 2009 and will support

a 1.8 per cent increase in real GDP

for the province. Overall, Atlantic

Canada’s economy is set to grow by


Housing Outlook

Pent-up demand and healthy

economic growth averaging 4.3 per

cent annually in Atlantic Canada

from 1999 to 2003 helped housing

starts increased by 11.8 per cent per

year. In fact, starts hit a 14-year

high of 13,100 units in 2003. But

with demand largely satisfied and

economic growth slipping to 1.3 per

cent, builders cut starts by an average

of 3 per cent per year from 2004 to

2006. Price growth in the new home

market also eased slightly, to an

annual average of 2.5 per cent,

from 3.0 per cent per year from

1999 to 2003. Resale price growth

remained high during this entire

period, however, averaging a

stronger 6.1 per cent per year.

Significant growth in

Newfoundland and Labrador’s oil

and gas sector helped to boost the

demand for new housing once more

in 2007, in turn pushing total starts

in the Atlantic region up by 3.7 per

cent. Unfortunately, the upswing

didn’t last long. The beginnings of

a global downturn in late 2008 had

consumers turning their backs on

the market in 2008 and 2009, lead-

ing to declines in housing starts in

both years.

Better economic conditions

in 2010 and low interest rates are

expected to bring some consumers

back to the new home market, lift-

ing housing starts by 1.1 per cent to

11,000 units this year. However, at

this level, starts are well above demo-

graphic requirements for the region.

At the same time, interest rates are

expected to start rising to more normal

levels, dampening demand for new

homes. As a result, starts are expected

to weaken over the coming years,

Atlantic Canada Stronger economic growth will not translate into a rapid recovery for

Atlantic Canada’s housing market this year. Growth in housing starts

will be held to 1.1 per cent as the market begins to adjust to underlying

demographic fundamentals. By the end of the forecast period in 2014,

housing starts in the Atlantic region are predicted to be nearly 20 per

cent, or 2,000 units, lower than their current level. In response to the

lower demand, price growth in the new and resale home markets is also

expected to moderate.


2007 08 09 10f 11f 12f 13f 14f02468

1012

New Resale



2007 08 09 10f 11f 12f 13f 14f0

3,0006,0009,000

12,00015,000




falling by 4.8 per cent per year

from 2011 to 2014. Construction

is expected to begin on 9,100 new

homes in 2014, about 1,700 units

below the 20-year average.

Price growth in both the new

and resale markets is also forecast

to slow. Indeed, the average price

of a new home is expected to rise

by just 0.5 per cent in 2010, while

resale prices will grow by 0.9 per

cent—the lowest annual increases

since 1998. From 2011 to 2014,

average annual new and resale home

price growth is forecast to come

in at 1.9 per cent and 1.8 per cent,

respectively.


2007 2008 2009 2010f 2011f 2012f 2013f 2014f

Real GDP at basic prices 69,185 69,994 68,877 70,236 72,314 74,650 75,780 76,408(2002 $ millions) 3.1 1.2 –1.6 2.0 3.0 3.2 1.5 0.8Total employment (000s) 1,097 1,110 1,103 1,111 1,129 1,156 1,160 1,158

1.4 1.1 –0.6 0.7 1.6 2.4 0.4 –0.2Unemployment rate (%) 9.2 9.4 10.6 10.7 9.8 8.5 8.2 8.1Personal income per capita ($) 30,540 31,374 31,888 32,538 33,713 35,227 36,381 37,299

3.7 2.7 1.6 2.0 3.6 4.5 3.3 2.5Population (000s) 4,380 4,407 4,444 4,476 4,499 4,520 4,543 4,564


5.9 5.6 0.3 3.5 3.8 5.2 3.2 2.3Inflation rate (%) 1.8 3.0 0.0 1.9 2.0 2.0 2.0 1.9

Italics indicate percentage change.Sources: The Conference Board of Canada; Statistics Canada.


2007 2008 2009 2010f 2011f 2012f 2013f 2014f

Housing starts 12,391 12,229 10,888 11,009 9,285 9,495 9,403 9,0553.7 –1.3 –11.0 1.1 –15.7 2.3 –1.0 –3.7

Singles 8,377 8,401 7,370 8,359 6,927 6,946 6,808 6,54910.5 0.3 –12.3 13.4 –17.1 0.3 –2.0 –3.8

Multiples 4,014 3,828 3,518 2,650 2,358 2,549 2,595 2,506–8.3 –4.6 –8.1 –24.7 –11.0 8.1 1.8 –3.4

Housing completions 11,463 12,496 11,275 10,832 9,597 9,490 9,587 9,4110.3 9.0 –9.8 –3.9 –11.4 –1.1 1.0 –1.8

Singles 7,515 8,413 7,430 7,767 7,253 7,030 6,951 6,774–2.6 12.0 –11.7 4.5 –6.6 –3.1 –1.1 –2.5

Multiples 3,948 4,083 3,844 3,065 2,343 2,460 2,636 2,6376.2 3.4 –5.8 –20.3 –23.5 5.0 7.2 0.0

Average price of a new home ($) 275,422 305,117 314,418 315,959 321,002 327,302 334,049 340,6104.1 10.8 3.0 0.5 1.6 2.0 2.1 2.0

Average price of a resale home ($) 158,616 171,551 182,391 184,114 185,925 189,767 193,502 197,5027.0 8.2 6.3 0.9 1.0 2.1 2.0 2.1

Italics indicate percentage change.Sources: The Conference Board of Canada; CMHC Housing Time Series Database; Canadian Real Estate Association; Statistics Canada.



2007 08 09 10f 11f 12f 13f 14f0

24

6

8New Resale


Economic Outlook

While other provinces were

deeply affected by the global reces-

sion, Quebec managed to delay the

decline and even reduce the damage

done. Timely public infrastructure

investment flowed into the province,

and the aerospace industry had orders

to fill for much of 2009. Neverthe-

less, the province’s real gross domes-

tic product still declined by 2.0 per

cent last year. And because Quebec

experienced a more moderate decline

in output than many other provinces,

it will not enjoy as strong a rebound.

In fact, the economy is expected to

expand by a modest 2.2 per cent

this year, ranking it sixth out of the

ten provinces in terms of growth.

Because of the long-term nature of

aerospace orders, this industry will

continue to suffer declines in output

until its recovery begins in 2011.

The high-valued Canadian dollar

and relatively fragile demand will

not make things easier on other

manufacturing industries such as pulp

and paper. Overall, exports will grow

only moderately this year, after a

double-digit decline in 2009.

Housing Outlook

From 2001 to 2004, strong

demand, thanks to low interest rates

and pent-up demand from the previ-

ous decade, led to average annual

growth in housing starts of 25 per

cent. Prices followed suit, rising by

5.7 per cent per year, on average, to

reach $231,000. Meanwhile, resale

prices grew by an average of 11.3 per

cent annually, indicating strength in

the existing home market as well. But

as growth in the provincial economy

slowed in 2005, so too did demand

for new homes. Builders began to

pull back from the market, reducing

starts by nearly 19 per cent over 2005

and 2006. Better growth in real GDP

brought a few builders back to the

market in 2007, increasing starts a

modest 1.4 per cent. But, as the reces-

sion became reality in late 2008,

builders once again exercised caution,

leading to a 1.3 per cent decline in

housing starts that year and a further

9.3 per cent drop in 2009.

Although still healthy, price

growth has also slowed. The average

price of a new home increased 4.8 per

cent annually from 2006 to 2008,

before slowing further to 2.9 per cent

in 2009. In the resale home market,

price growth averaged 5.8 per cent

per year from 2005 to 2008, and

then decelerated to 4.4 per cent last

year. Still, new home prices in the

province averaged $286,800 in 2009

while resale home prices topped

$224,000—over $100,000 more

than at the start of the decade.

Although starts are forecast to

increase slightly in 2010 (up 0.3 per

cent), Quebec’s new home market is

expected to lose steam in the coming

years. In spite of the recent declines,

Quebec Quebec’s economy will expand by 2.2 per cent this year, following

a 2.0 per cent dip in 2009. The improving economy will allow housing

starts to increase slightly, despite rising mortgage rates. But a boom in

the province’s housing market through the early years of the previous

decade resulted in a current level of starts that remains above demo-

graphic fundamentals, in spite of declines in 2008 and 2009. Accordingly,

in the coming years, housing starts are expected to trend downward

and price growth for new and resale housing will moderate.


2007 08 09 10f 11f 12f 13f 14f0

10,00020,00030,00040,00050,000




demographic requirements for the

province suggest that the current

level of housing starts is still too

high. Starts are therefore expected

to decline 9.6 per cent per year on

average from 2011 to 2013.

Price growth will continue to

slow this year in both the new and

resale home markets. New home

prices are forecast to rise by 1.3 per

cent in 2010 and then average growth

of 2.3 per cent annually from 2011

to 2014. The resale market is expected

to see prices rise 2.9 per cent this year

and then by an annual average of

2.5 per cent through the medium term.


2007 2008 2009 2010f 2011f 2012f 2013f 2014f



4.8 2.6 –0.1 2.2 3.0 3.5 3.1 2.7Population (000s) 7,680 7,745 7,820 7,881 7,938 7,996 8,053 8,109


4.6 5.1 –1.3 3.3 4.8 4.6 3.6 3.2Inflation rate (%) 1.6 2.1 0.6 2.0 3.1 2.1 2.1 1.9



2007 2008 2009 2010f 2011f 2012f 2013f 2014f

Housing starts 48,553 47,904 43,452 43,572 39,530 33,355 32,033 32,6041.4 –1.3 –9.3 0.3 –9.3 –15.6 –4.0 1.8

Singles 22,177 19,781 17,504 20,657 18,906 15,973 15,218 15,4451.2 –10.8 –11.5 18.0 –8.5 –15.5 –4.7 1.5

Multiples 26,376 28,123 25,948 22,915 20,624 17,382 16,815 17,1591.6 6.6 –7.7 –11.7 –10.0 –15.7 –3.3 2.0

Housing completions 49,242 47,654 44,228 44,440 40,394 36,943 33,102 32,4790.9 –3.2 –7.2 0.5 –9.1 –8.5 –10.4 –1.9

Singles 21,857 19,172 16,850 18,355 19,057 17,158 15,306 15,0430.1 –12.3 –12.1 8.9 3.8 –10.0 –10.8 –1.7

Multiples 27,385 28,481 27,378 26,085 21,337 19,784 17,796 17,4371.5 4.0 –3.9 –4.7 –18.2 –7.3 –10.0 –2.0





Economic Outlook

After a crippling 2009, when

virtually every aspect of Ontario’s

economy suffered from the effects

of the global recession, 2010 will

prove to be a year of gradual recov-

ery for the province. Net depletions

of capital stock—most importantly,

of automotive machinery and

equipment—will nearly be reversed

this year, allowing Ontario to bring

more of its significant industrial

production capacity back online.

Meanwhile, export growth will pick

up steam alongside a broad recovery

in the U.S. consumer sector. At the

same time, government infrastruc-

ture spending will continue to grow

at a double-digit pace for a second

consecutive year, backstopping a

feeble resurgence in private-sector

construction investment. All told,

Ontario’s economy will grow by

3.5 per cent in 2010 and by a fur-

ther 3.7 per cent in 2011 as private

sector activity accelerates.

Housing Outlook

Healthy economic growth through

the second half of the 1990s, together

with spillover demand from the

resale market and lower interest

rates after 2001, propelled housing

starts to an average annual increase

of 11.9 per cent from 1996 to 2003.

But the 85,200 new homes started in

2003 were above Ontario’s demo-

graphic requirements, and so builders

began to retreat from the market.

Housing starts slipped 0.1 per cent

in 2004 and then by 7.2 per cent

per year, on average, over 2005 to

2007, bringing them back down to

68,100 units by 2007.

Growth in new home prices

remained fairly strong from 2004

to 2007, increasing by an average

of 4 per cent annually, up slightly

from the 3.9 per cent average annual

growth over 1997 to 2003. Resale

prices increased at an even faster

7.2 per cent per year over 2004

to 2007.

Housing starts increased in

2008, rising by 10.2 per cent. But

this growth was entirely driven by

a jump in multiple starts in the first

quarter of the year, thanks to new

high-rise construction in downtown

Toronto. As the worldwide economic

slowdown took hold in late 2008,

consumers exercised a great deal of

caution, reducing expenditures, espe-

cially on big-ticket items. Accord-

ingly, housing starts tumbled through

the final three quarters of the year

and into first half of 2009 as well,

leading to an overall decline of


Fortunately, the worst of the

recession is over. Real gross domes-

tic product increased in the last two

quarters of 2009 and further improve-

ments are expected for 2010. This

year is expected to see 74,000 new

jobs and steady growth in wages

and personal disposable incomes,

factors that will help boost con-

sumer spending by 2.5 per cent in

real terms. In turn, housing starts

are expected to rebound by 31.4 per

Ontario A rebound in Ontario’s economy this year will help boost demand

for new homes. After falling by 33.2 per cent last year, housing starts

are forecast to rise by 31.4 per cent in 2010, although prices will

increase by just 1.7 per cent. But growth in resale prices will continue

to be fairly strong in 2010, coming in at 4.2 per cent. Both markets are

expected to see moderate price growth near 2.5 per cent through the

medium term.


2007 08 09 10f 11f 12f 13f 14f0

24

6

8New Resale



2007 08 09 10f 11f 12f 13f 14f0

20,00040,00060,00080,000

100,000Singles Multiples 20−year average



cent in 2010. Higher interest rates

will result in lower, albeit still strong,

growth of 13.4 per cent in starts in

2011.

New home price growth stagnated

in 2009, in line with the decline in

housing starts. Growth in new home

prices over the next two years is

expected to remain modest, at 1.7 per

cent in 2010 and 1.9 per cent in

2011. Meanwhile, price growth in

the resale market is forecast to

reach 4.2 per cent this year, before

slowing to 2.0 per cent next year.

Over the medium term (2012 to

2014), price growth in the new and

resale housing markets is projected

to average a moderate 2.5 per cent

per year.


2007 2008 2009 2010f 2011f 2012f 2013f 2014f

Real GDP at basic prices 492,346 491,114 473,546 490,097 508,021 527,408 543,235 557,632(2002 $ millions) 2.3 –0.3 –3.6 3.5 3.7 3.8 3.0 2.7Total employment (000s) 6,592 6,687 6,528 6,602 6,797 7,004 7,154 7,280


3.9 2.6 –1.6 2.5 3.8 3.8 3.4 2.9Population (000s) 12,777 12,917 13,052 13,175 13,331 13,496 13,672 13,855


3.9 3.5 –2.8 4.6 6.0 5.4 4.5 4.0Inflation rate (%) 1.8 2.3 0.4 2.5 2.9 2.1 2.1 2.0



2007 2008 2009 2010f 2011f 2012f 2013f 2014f

Housing starts 68,123 75,072 50,177 65,956 74,770 83,439 86,330 87,645–7.2 10.2 –33.2 31.4 13.4 11.6 3.5 1.5

Singles 37,910 31,105 22,647 32,920 37,081 40,501 40,938 41,448–1.0 –17.9 –27.2 45.4 12.6 9.2 1.1 1.2

Multiples 30,213 43,967 27,529 33,037 37,689 42,939 45,392 46,197–13.9 45.5 –37.4 20.0 14.1 13.9 5.7 1.8


Singles 36,380 34,538 24,801 27,380 34,372 38,852 40,242 40,697–9.0 –5.1 –28.2 10.4 25.5 13.0 3.6 1.1

Multiples 27,731 33,343 31,377 29,388 30,690 36,669 41,202 43,210–20.0 20.2 –5.9 –6.3 4.4 19.5 12.4 4.9





Economic Outlook

Following a 2.4 per cent dip in

2009, Manitoba and Saskatchewan’s

combined gross domestic product

is forecast to expand 2.2 per cent

in 2010 and average 2.7 per cent

growth per year in 2011–2014.

Uniquely among our six regions,

employment rose during the 2009

downturn, although its 0.7 per cent

gain was the smallest in four years.

Similar job growth is forecast for

2010, but acceleration to 1.5 per cent

is on tap for 2011–2012. And, while

faster growth in the labour force

nudged the unemployment rate up to

5 per cent last year, it was over three

percentage points below Canada’s

average. This year’s expected unem-

ployment rate, 5.6 per cent, remains

modest by national standards.

Manitoba should enjoy broad-based

expansion as its manufacturing sector

recovers, mining companies ramp up

work, and finance, insurance, and

real estate industry strength lifts the

services sector. In Saskatchewan,

rebounding commodity markets are

expected to energize growth in 2010.

Potash sales are expected to climb

as buyers restock inventories and

new contracts are signed with China

and India.

Housing Outlook

Housing markets in Manitoba

and Saskatchewan are in recovery.

Total housing starts rose in each of

2009’s final three quarters, although

a first-quarter plunge to a seven-year

low of only 5,600 units on an annu-

alized basis cut the annual total to

near 8,000 units—the lowest since

2003. Still, annualized fourth-quarter

starts hit nearly 10,000 units, strong

regionally, setting the stage for a

good 2010.

Demographics are generating

healthy housing demand. Strong job

markets have attracted in-migrants,

lifting population growth to 1.4 per

cent in 2009, the highest on record.

A 1.2 per cent population advance

expected this year would mark the

third consecutive gain above 1.0 per

cent. While population increases are

slated to dip to near 0.8 per cent in

2011–2014, this is far above the

annual average 0.14 per cent during

the 20 years to 2007.

Such underpinnings will sup-

port an 18 per cent rise in housing

starts to 9,550 units this year, sig-

nificantly below boom-era levels

near 12,000 units annually, but still

well above the annual average of

6,460 starts posted in the 20 years

to 2009. A small dip, to just below

9,000 units in 2011, will be followed

by modest annual hikes through

2014, bringing that year’s total to

10,400 units.

House prices have held up well,

despite market softness. The average

new home price was essentially flat

last year, a welcome pause following

Prairies Decent economic conditions prevailing on the Prairies are generat-

ing housing market optimism. GDP growth this year will largely erase

last year’s downturn, while continued employment growth will keep the

unemployment rate relatively low. Housing starts are on the mend, with

good fourth-quarter volumes a highlight in 2009. Healthy expected pop-

ulation growth should maintain housing demand, keeping starts above

historical averages. Regional house price growth has slowed following

several brisk years and is expected to remain moderate for both new

and existing units.


2007 08 09 10f 11f 12f 13f 14f05

10152025

New Resale



2007 08 09 10f 11f 12f 13f 14f0

2,0004,0006,0008,000

10,00012,00014,000




hikes of 20 per cent and 15 per cent

during the previous two years and a

doubling of the average price in the

past decade. A modest 0.2 per cent

hike in new home prices this year is

forecast to be followed by 1.0–1.5 per

cent annual gains in 2011–2014.

By 2014, the average new home

in Manitoba and Saskatchewan

is forecast to cost $378,187.

Price hikes for existing homes

have been even stronger. The aver-

age resale home sold for $216,672,

last year, up 4.9 per cent from 2008.

Such growth, healthy compared with

advances in the past two decades,

nonetheless trailed twin 20.2 per

cent price hikes in 2007 and 2008.

It took only the seven years ending

2009 for the average resale price to

double. Moderate price growth of

2.4 per cent is forecast for 2010, with

annual gains averaging 1.8 per cent

in 2011–2014.


2007 2008 2009 2010f 2011f 2012f 2013f 2014f


1.8 1.9 0.7 0.7 1.5 1.5 1.1 1.0Unemployment rate (%) 4.3 4.1 5.0 5.6 5.4 5.0 4.7 4.5Personal income per capita ($) 32,059 34,525 33,965 34,916 35,872 37,069 38,266 39,294

7.2 7.7 –1.6 2.8 2.7 3.3 3.2 2.7Population (000s) 2,191 2,217 2,247 2,273 2,292 2,311 2,330 2,349


10.8 8.8 –2.1 3.6 3.4 4.5 3.8 3.2Inflation rate (%) 2.5 2.7 0.8 1.8 2.5 2.1 2.1 2.1



2007 2008 2009 2010f 2011f 2012f 2013f 2014f

Housing starts 11,745 12,365 8,074 9,550 8,931 9,876 10,089 10,42034.3 5.3 –34.7 18.3 –6.5 10.6 2.2 3.3

Singles 7,874 8,208 5,871 7,177 6,685 7,348 7,433 7,66726.2 4.2 –28.5 22.2 –6.9 9.9 1.2 3.2

Multiples 3,871 4,157 2,203 2,373 2,245 2,529 2,657 2,75354.7 7.4 –47.0 7.7 –5.4 12.6 5.1 3.6

Housing completions 9,316 12,150 9,759 8,906 8,802 9,348 9,691 9,92718.2 30.4 –19.7 –8.7 –1.2 6.2 3.7 2.4

Singles 7,003 8,003 6,430 6,484 6,590 6,937 7,018 7,14425.7 14.3 –19.7 0.8 1.6 5.3 1.2 1.8

Multiples 2,313 4,147 3,329 2,422 2,211 2,410 2,673 2,7830.2 79.3 –19.7 –27.3 –8.7 9.0 10.9 4.1





Economic Outlook

Alberta’s economy is on the

mend following a miserable 2009.

Previously collapsed energy prices

are now firmer, spurring drilling

activity in the last few months of

2009. Lower input costs in the

energy sector—a silver lining to the

recession—helped rekindle develop-

ment of oil sands mining projects.

Income growth will help spur a

2.1 per cent expansion in services-

producing industries. Overall, real

GDP will expand by 2.5 per cent

this year and 4.1 per cent in 2011.

Output expansion will buoy labour

markets, with over 20,000 net new

jobs forecast this year, mainly in

construction and services. But the

labour force will expand even faster,

lifting the unemployment rate to a

15-year high of 7.2 per cent. Net

job creation will accelerate to

70,000 positions in 2011, finally

cutting the unemployment rate to

6.4 per cent. Although population

growth is forecast to average a solid

1.7 per cent per year in 2011–2014,

it will be lower than the 2.2 per cent

rate during the decade to 2009.

Housing Outlook

The firming Alberta economy

is prompting a housing market turn-

around. Provincial housing starts

firmed throughout 2009, hitting

an annualized 29,000 units in the

fourth quarter, more than twice the

first quarter rate. A near tripling

of multiple starts led the increase,

while singles starts almost doubled.

These late-year gains could not pre-

vent total starts from falling 30 per

cent to 20,400 units, the second

straight yearly drop and the fewest

since 1996. Such levels seem well

behind demographic requirements,

giving starts a relatively optimistic

outlook. The slump in housing

starts, combined with slower but

still solid population growth during

the downturn, suggests that pent-up

demand is brewing. A climb back

to a starts-to-population ratio in

line with historical norms will per-

sist through our forecast, keeping

starts solid.

In 2010, a 47.3 per cent snap-back

will bring total starts to 30,000 units,

the best in three years, but still

nowhere near 2006–2007 annual

peaks above 48,000 units. Starts of

single-family units are forecast to

advance 38.3 per cent to just under

19,900 units, following a 2.4 per cent

easing in 2009. Multiple-unit starts,

meanwhile, are expected to rebound

from last year’s 58.2 per cent loss

with a 68.5 per cent leap to almost

10,200 units. The medium term is

expected to see total starts hover

between 31,000 and 33,000 units. The

share of single-unit starts, which hit

an 11-year high of 70 per cent in 2009

as multiples collapsed, will ease to

just under two-thirds in 2010–2014,

similar to the past decade’s average.

Alberta A better tone to energy markets is setting the stage for economic

revival in Alberta. Gross domestic product will expand decently in 2010

and even faster in 2011. Rebounding employment will improve con-

sumer confidence this year and support homebuying, although moder-

ately easing population growth will temper market gains. Housing

starts are firming and will rise significantly this year, albeit not to peak

levels. Better markets will propel house price gains, particularly for

resale units.


2007 08 09 10f 11f 12f 13f 14f−10

0

10

20

30New Resale



2007 08 09 10f 11f 12f 13f 14f0

10,00020,00030,00040,00050,000




The downturn has eroded prices

for both new and existing houses in

Alberta, but such losses seem over.

The average price for a new home

here fell 8.6 per cent to $429,461

in 2009—the first drop since 1995.

Although average prices for existing

homes fell only 3.4 per cent last year,

this represented the second straight

annual decline. Prices for both new

and existing units will advance in

2010—a fractional 0.3 per cent for

new homes, but a more substantial

3.8 per cent for resale dwellings.

While new home prices are forecast

to remain behind their 2008 peak

by 2014, resale units, on average,

will surpass their 2007 high in 2011.



2007 2008 2009 2010f 2011f 2012f 2013f 2014f



6.3 5.9 –0.6 1.5 4.2 4.5 3.7 3.0Population (000s) 3,502 3,583 3,675 3,736 3,805 3,871 3,937 4,001


9.3 –0.2 –9.3 1.3 6.3 7.0 5.3 4.4Inflation rate (%) 4.9 3.2 –0.1 1.7 2.5 2.1 2.0 2.1



2007 2008 2009 2010f 2011f 2012f 2013f 2014f

Housing starts 48,336 29,165 20,403 30,044 31,620 32,434 31,646 31,410–1.3 –39.7 –30.0 47.3 5.2 2.6 –2.4 –0.7

Singles 28,105 14,716 14,370 19,878 20,645 20,751 19,906 19,725–11.7 –47.6 –2.4 38.3 3.9 0.5 –4.1 –0.9

Multiples 20,231 14,449 6,033 10,166 10,975 11,683 11,741 11,68518.1 –28.6 –58.2 68.5 8.0 6.5 0.5 –0.5

Housing completions 41,825 39,446 27,044 24,561 28,780 30,704 30,624 30,2346.9 –5.7 –31.4 –9.2 17.2 6.7 –0.3 –1.3

Singles 29,007 22,624 13,777 16,625 19,516 20,413 19,843 19,40111.1 –22.0 –39.1 20.7 17.4 4.6 –2.8 –2.2

Multiples 12,818 16,821 13,267 7,935 9,263 10,291 10,782 10,834–1.7 31.2 –21.1 –40.2 16.7 11.1 4.8 0.5


Average price of a resale home ($) 359,071 352,613 340,530 353,603 362,835 371,980 381,354 390,58225.4 –1.8 –3.4 3.8 2.6 2.5 2.5 2.4


Economic Outlook

B.C.’s economy is emerging from

a deep recession. Indicators like retail

sales trended upward over last year’s

second half and employment edged

higher in its final quarter. Building on

this momentum, real gross domestic

product in B.C. is expected to advance

by 3.7 per cent this year. A modest

rebound in the U.S. housing market

will propel gains in B.C.’s battered

forestry industry. An increase in

demand for commodities will also

boost manufacturing. Output in the

goods-producing side of the econ-

omy will also be spurred by strong

growth in the mining sector, partic-

ularly natural gas extraction. A

revived B.C. housing market will

benefit the construction sector this

year and in 2011, with help in 2010

from strong non-residential invest-

ment. On the services side, the influx

of visitors for the Olympic Games

provided a boost to retail sales and

other services sector industries earlier

this year. Stronger provincial labour

markets will help maintain some of

this positive momentum through the

rest of 2010. Provincial GDP growth

will slow moderately to 3.1 per cent

in 2011.

Housing Outlook

British Columbia’s housing mar-

ket is recovering after several tough

quarters. Housing starts across the

province accelerated strongly in 2009’s

second half, exceeding 21,000 units

in the fourth quarter on an annual-

ized basis, up 60 per cent from an

anemic first quarter. The advance

was driven by rebounding multiple-

unit starts, which surged 59 per cent

in the fourth quarter of 2009. This

is an optimistic sign since multiple

starts typically make up a greater

share of total starts in B.C. than in

any of this report’s six regions and

suffered disproportionately during

the downturn. Indeed, despite the

late-year pickup, the annualized

rate of multiple-unit starts below

11,700 was well off yearly totals

above 20,000 units in 2004–2008.

Moreover, in 2009, multiple starts

were down two-thirds from their

2007 peak, while 2009 single-unit

starts were down a significant but

comparatively smaller 49 per cent

from a 2006 high. Accordingly,

total provincial starts clocked in

just below 16,100 units last year,

the fewest since 2000.

Economic improvement and

better housing affordability, two

high-octane housing market fuels,

are forecast to propel B.C.’s housing

starts. In any other year, a projected

29.1 per cent rise for single-unit

starts would headline construction

advances, but in 2010, multiple-unit

starts are forecast to more than double.

Expected hikes in multiple-unit starts

in Vancouver and Victoria will lead

the ascent to above 16,900 multiple

starts in 2010. Single starts will hit

British Columbia Economic recovery in British Columbia, particularly in its forestry

industry, is paving the way for improved housing markets this year.

Housing starts are already accelerating, driven by improvement in the

all-important multiple-unit sector. Still, the expected recovery will leave

housing starts behind the past decade’s peak levels this year and

through 2014 as population growth moderates. Price growth for both

new and existing units is expected to pick up this year, but remain

modest through 2014.


2007 08 09 10f 11f 12f 13f 14f−8−4048

1216

New Resale



2007 08 09 10f 11f 12f 13f 14f0

10,00020,00030,00040,00050,000




10,200 units. Total starts are thus

forecast to exceed 27,100 units in

B.C. this year, up 68.6 per cent from

2009, but still more than 12,000 units

off the 2007 peak.

In the medium term, economic

expansion and rising employment

will underpin healthy population

growth, generating fresh housing

demand. Starts will keep rising but

remain just below 31,200 homes in

2014. Starts of multiple units are

expected to gain market share,

accounting for nearly two-thirds of

all starts by 2014; in the 20 years to

2009, multiples made up 55 per cent

of provincial starts.

Price growth for both new and

existing homes will accelerate this

year as the market firms. New homes’

average value, which fell 6.6 per

cent last year, will rise 2.6 per cent

this year to $639,000. Average resale

prices avoided erosion in 2009, rising

2.0 per cent, and a 4.3 per cent rise

to $478,000 is forecast in 2010.


2007 2008 2009 2010f 2011f 2012f 2013f 2014f



4.2 3.4 –1.6 2.0 3.1 3.6 3.1 2.5Population (000s) 4,303 4,375 4,449 4,509 4,570 4,632 4,695 4,759


6.7 0.4 –5.5 5.6 4.6 5.2 4.0 3.3Inflation rate (%) 1.7 2.1 0.0 2.0 2.7 2.0 2.0 2.1



2007 2008 2009 2010f 2011f 2012f 2013f 2014f

Housing starts 39,195 34,320 16,089 27,128 29,494 30,326 30,663 31,1667.6 –12.4 –53.1 68.6 8.7 2.8 1.1 1.6

Singles 14,474 10,990 7,897 10,198 11,101 11,346 11,308 11,451–6.2 –24.1 –28.1 29.1 8.9 2.2 –0.3 1.3

Multiples 24,721 23,330 8,192 16,930 18,393 18,980 19,355 19,71517.7 –5.6 –64.9 106.7 8.6 3.2 2.0 1.9

Housing completions 33,283 34,712 25,940 20,761 26,684 28,525 29,277 29,750–4.3 4.3 –25.3 –20.0 28.5 6.9 2.6 1.6

Singles 13,951 11,319 8,582 8,837 10,650 11,214 11,263 11,312–5.3 –18.9 –24.2 3.0 20.5 5.3 0.4 0.4

Multiples 19,332 23,393 17,358 11,924 16,034 17,311 18,015 18,439–3.6 21.0 –25.8 –31.3 34.5 8.0 4.1 2.4





Economic Outlook

Gross domestic product in the

Québec census metropolitan area

(CMA) shrank 0.7 per cent in 2009,

the first dip in 13 years, pulled down

by a 10.3 per cent drop in manufac-

turing output. Even though a strong

dollar appears certain in the near

term, the recovering U.S. economy

will help induce a 2.6 per cent

manufacturing gain for the CMA

in 2010. Stronger personal income

growth this year will prompt resumed

retail sales growth and, in turn, fuel

2.4 per cent output growth in the

overall services sector. All told, real

GDP is set to rise by 2.5 per cent

this year.

Housing Outlook

EXISTING HOUSING MARKET The existing home market in

Québec City enjoyed impressive

growth from the mid-1990s until

2001, as unit sales were boosted by

a strengthening economy as well as

pent-up demand. In total, sales rose

9.6 per cent on an average annual

basis over this time frame. Despite the

strong increase in sales, the market

remained in a balanced state until

2001, keeping a lid on home price

inflation. Indeed, existing home

prices fell by 0.6 per cent in 1997,

and then averaged 2.6 per cent

growth per year from 1998 to 2001.

But with pent-up demand largely

satisfied, the number of existing homes

exchanging hands since 2001 has

been fairly stable. In fact, annual

average sales growth from 2002 to

2007 was only 0.6 per cent. Mean-

while, the number of new listings

drifted downwards, creating a sellers’

market and prompting vigorous price

growth. Indeed, from 2002 to 2007,

the average price of an existing home

grew by 11.1 per cent annually, to

reach $180,000.

Because of the global recession,

Québec City’s economy was on the

downswing in 2008, weakening

demand in the resale market and

pushing unit sales 1.2 per cent lower.

But the weakness was short-lived. The

resale housing market stabilized in

the first quarter of 2009, thanks in

part to a significant drop in mortgage

rates. Stronger population growth in

the region may have also played a

role. Through 2008 and 2009, pop-

ulation growth in the CMA was just

over 1 per cent per year, nearly

double the annual rate seen in the

first half of the decade. In total, unit

sales rose 3.1 per cent last year.

Population growth is expected

to remain elevated in 2010 as well.

This factor, combined with better

economic growth, will set the stage

for a further 3.9 per cent increase in

unit sales this year. Through the

medium term (2012 to 2014), sales

growth is forecast to average a much

more modest 2 per cent per year, as

higher interest rates begin to bite.

Québec City A 2.5 per cent increase in Québec City’s economy this year will

bode well for the resale housing market, as unit sales are expected to

rise by 3.9 per cent in 2010. Housing starts, however, are expected to

decline by 9.0 per cent this year and keep falling through the medium

term, in line with demographic requirements. Meanwhile, after several

years of impressive growth, prices in both the new and resale markets

will continue to increase but at a much more moderate pace.

Chart 2—New Housing Price and Months’ Supply

2007 08 09 10f 11f 12f 13f 14f0

50,000100,000150,000200,000250,000

00.51.01.52.02.5

Price ($) Months’ supply

Sources: The Conference Board of Canada; CMHC Housing Time Series Database.


2007 08 09 10f 11f 12f 13f 14f0

1,0002,0003,0004,0005,0006,000




The existing housing market is

expected to become more balanced

as growth in new listings outpaces

the increase in sales. This suggests

that resale price growth will moderate

in the coming years, decelerating to

3.6 per cent in 2010 before slowing

to 1.5 per cent next year. Price growth

is then expected to average 2.6 per

cent annually from 2012 to 2014.

NEW HOUSING MARKET By 2000, Québec City’s new

housing market was also on the

upswing. Years of weak price

growth, combined with a stronger

economy and spillover demand

from the resale market, helped to

push housing starts up by 29.7 per

cent on an average annual basis from

2000 to 2004.

For the first couple of years of

this boom, demand outstripped supply.

As a result, months’ supply fell to

0.4 months in 2002, down signifi-

cantly from its peak of 4 months in

the mid-1990s and 1.8 months just

three years prior. The supply con-

straints put significant upward pres-

sure on prices. In fact, the average

price of a new home jumped 9.1 per

cent in 2002 and 6.1 per cent the

year after.

But months’ supply climbed for

five straight years beginning in 2003.

This forced builders to retreat from

the market starting in 2005. Housing

starts fell by an average of 5.8 per

cent per year from 2005 to 2007,

helping to limit the rising months’

supply. Therefore, price growth

remained strong. In fact, price

growth came in at 4.5 per cent, on

an average annual basis, from 2005

to 2007. Indeed, by 2008, average

new home prices topped $200,000

for the first time.

Inventories dropped slightly in

2008, prompting builders to return


2007 2008 2009 2010f 2011f 2012f 2013f 2014f

Real GDP at basic prices 24,206 24,725 24,548 25,161 25,817 26,492 27,130 27,729(2002 $ millions) 3.3 2.1 –0.7 2.5 2.6 2.6 2.4 2.2Total employment (000s) 385 390 392 395 398 404 408 412


4.1 2.8 0.3 1.8 2.8 3.6 3.4 3.0Population (000s) 731 738 746 754 762 769 776 783


4.0 5.6 –0.8 3.6 5.2 4.7 3.9 3.6Inflation rate (%) 1.3 2.1 0.8 2.1 3.1 2.1 2.1 2.0


Chart 3—MLS Sales-to-New-Listings Ratio and Price Growth (%)

2007 08 09 10f 11f 12f 13f 14f02468

1012

0153045607590

Price growth Sales/new listings ratio

Sources: The Conference Board of Canada, Canadian Real Estate Association.

Chart 4—Affordability

2007 08 09 10f 11f 12f 13f 14f0

300600900

1,2001,5001,800

04812162024

P&I payment ($) P&I/income (%)

Note: Principle and interest payments assume average resaleprice, 10 per cent down payment, 25-year amortization, and 5-year fixed mortgage rate.Sources: The Conference Board of Canada; CMHC Housing TimeSeries Database.


to the new home market in 2008 and

2009. Starts increased 3.5 per cent

in 2008 and an additional 1.7 per

cent last year, to reach 5,400 units—

the seventh straight year that starts

surpassed 5,000 units.

Unfortunately, housing starts are

unsustainable at current levels, given

demographic requirements. Demand

for new homes is also expected to

be hampered by rising mortgage

rates in the months to come. As a

result, builders will start to back

away from the new home market

once again this year. Starts are fore-

cast to decline by 9.0 per cent in 2010

and by an average of 5.3 per cent from

2011 to 2014, falling to 3,900 units

by the end of the forecast.

Price growth is finally expected

to moderate as well. Growth in new

home prices is forecast to slow to

2.8 per cent this year and to 1.4 per

cent in 2011. Over the medium term

(2012 to 2014), new home prices

are projected to rise by an average

of 2.3 per cent per year.

Table 2—New Housing Market Indicators

2007 2008 2009 2010f 2011f 2012f 2013f 2014f

Housing starts 5,146 5,327 5,416 4,930 4,807 4,061 3,909 3,938–2.2 3.5 1.7 –9.0 –2.5 –15.5 –3.7 0.8

Singles 2,115 1,993 1,730 1,908 1,914 1,653 1,609 1,622–5.5 –5.7 –13.2 10.3 0.3 –13.6 –2.7 0.8

Multiples 3,032 3,334 3,686 3,022 2,893 2,407 2,299 2,3160.2 10.0 10.6 –18.0 –4.3 –16.8 –4.5 0.7

Under construction 2,190 2,946 2,490 2,721 2,404 2,126 1,983 2,0698.0 34.5 –15.5 9.3 –11.7 –11.6 –6.7 4.3

Housing completions 4,442 5,486 5,120 5,342 4,943 4,432 3,912 3,811–25.0 23.5 –6.7 4.3 –7.5 –10.3 –11.7 –2.6

Singles 2,162 1,983 1,757 1,828 1,910 1,774 1,605 1,596–6.3 –8.3 –11.4 4.1 4.5 –7.1 –9.5 –0.5

Multiples 2,280 3,503 3,363 3,514 3,033 2,658 2,307 2,215–36.9 53.6 –4.0 4.5 –13.7 –12.4 –13.2 –4.0

Newly completed and unabsorbed 616 602 856 773 660 651 621 621–5.5 –2.4 42.1 –9.6 –14.7 –1.2 –4.7 0.1

Absorptions 4,724 5,222 5,094 5,458 5,016 4,441 3,940 3,797–16.8 10.5 –2.4 7.1 –8.1 –11.5 –11.3 –3.6

Months’ supply 1.6 1.4 2.0 1.7 1.6 1.8 1.9 2.0Average price of a new home ($) 191,176 201,357 215,381 221,412 224,511 229,675 234,958 240,597

4.0 5.3 7.0 2.8 1.4 2.3 2.3 2.4

Italics indicate percentage change.Sources: The Conference Board of Canada; CMHC Housing Time Series Database.

Table 3—Resale Housing Market Indicators

2007 2008 2009 2010f 2011f 2012f 2013f 2014f

Unit sales 7,904 7,812 8,053 8,367 8,459 8,620 8,792 8,9775.5 –1.2 3.1 3.9 1.1 1.9 2.0 2.1

Dollar volume sales ($ millions) 1,421 1,531 1,700 1,831 1,878 1,964 2,055 2,15317.1 7.7 11.1 7.6 2.6 4.6 4.7 4.8

New listings 11,010 12,125 10,634 12,697 13,925 14,550 15,218 15,933–6.0 10.1 –12.3 19.4 9.7 4.5 4.6 4.7

Sales-to-new-listings ratio (%) 72 64 76 66 61 59 58 56Average price of a resale home ($) 179,842 195,957 211,161 218,781 222,057 227,834 233,758 239,836

11.0 9.0 7.8 3.6 1.5 2.6 2.6 2.6

Italics indicate percentage change.Sources: The Conference Board of Canada; Canadian Real Estate Association.


Economic Outlook

Montréal’s real gross domestic

product contracted for the first time

in 18 years in 2009, slipping 2.1 per

cent. The worldwide economic down-

turn, which began in late 2008, hurt

the region’s manufacturing industry

and domestic demand. But as global

economies began to recover through

the second half of 2009, overall

conditions also started to improve

in Montréal. Manufacturing output

grew by 4.6 per cent at an annual

rate in the fourth quarter of last year,

while growth in the services sector

picked up speed. Further improve-

ments this year, both at home and

abroad, will help Montréal’s economy

2.3 per cent growth.

Housing Outlook

EXISTING HOUSING MARKET Healthy economic growth in

Montréal helped unit sales of existing

homes grow by an average of 25.2 per

cent per year from 1996 to 2002, to

reach a record 38,000 units. How-

ever, despite the significant increases

in demand, sellers were not quick

to jump into the market, pushing

the sales-to-new-listings ratio to an

astonishing 104 per cent in 2002,

up from just 23 per cent in the mid-

1900s. The move to a sellers’ market,

signifying excess demand, led to

resale price growth of an average of

15.6 per cent per year from 2002 to

2004, when average prices topped

$200,000 for the first time. Prices

then continued to grow by an ele-

vated 6.3 per cent in each year from

2005 to 2007. Accordingly, sellers

entered the market in droves. At the

same time, the substantial growth

in prices, combined with weaker

economic growth, resulted in much

lower demand. Monthly mortgage

payments as a per cent of household

income had swollen from a low of

13.5 per cent in 2001 to 20.2 per cent

by 2006. As a result, unit sales rose

by only 0.6 per cent on an average

annual basis from 2003 to 2006,

knocking the sales-to-new-listings

ratio back down to 54.8 per cent.

Demand picked up briefly again

in 2007, as the city’s real GDP growth

improved once more, leading to an

11.3 per cent increase in unit sales

and bumping the sales-to-new-listings

ratio back up 61.6 per cent. As the

threat of a global recession became

reality in late 2008, however, buyers

became cautious, reducing unit sales

by 8.2 per cent. But the resale market

began to turn around in the second

quarter of 2009, thanks to a recover-

ing economy and enticing mortgage

rates. In fact, unit sales increased in

each of the final three quarters of

last year, ending the year up 6.2 per

cent. With sellers caught off guard

by the quick recovery, new listings

dropped 7.3 per cent. Therefore, the

sales-to-new-listings ratio climbed

above 60 per cent again, putting

upward pressure on prices.

With Montréal’s economy still

recovering, the resale market is

expected to see another 5.3 per cent

Montréal A modest recovery in Montréal’s economy this year (real GDP is

forecast to rise by 2.3 per cent) is helping to foster demand in both

the resale and new housing markets. Unit sales of existing homes are

expected to grow by 5.3 per cent in 2010, while housing starts will rise

by 2.3 per cent. However, after several years of relatively strong

increases, price growth is forecast to moderate this year.


08 09 10f 11f 12f 13f 14f100,000150,000200,000250,000300,000350,000

1.01.52.02.53.03.5


2007



2007 08 09 10f 11f 12f 13f 14f0

5,00010,00015,00020,00025,000




increase in unit sales for 2010. Prices

are forecast to rise by a much smaller

2.3 per cent, though, as the market

moves back into balanced territory.

Over the medium term, this balanced

market will lead to modest average

annual growth of 1.6 per cent in unit

sales and 2.6 per cent in prices.

NEW HOUSING MARKET For much of the second half

of the 1990s and through to 2004,

Montréal’s new housing market

benefited from spillover demand

from the resale market, allowing

total housing starts to grow by an

average of 20 per cent per year from

1997 to 2004, to reach a 16-year

high of 28,500 units. Growth was

somewhat higher in the multiple-unit

market—at 25 per cent on an average

annual basis versus 15.2 per cent

for single units—partly thanks to

increased demand from an aging

population, as well as wealthy for-

eigners and young professionals

wishing to live in the downtown core.

This significant growth in starts

was still not enough to meet growing

demand, as months’ supply slipped

from 2 months in 1997 to a low of

0.9 months in 2003. The tighter

market then boosted price growth,

with new home prices rising by an

annual average of 6.1 per cent from

2001 to 2005, compared with just

1.5 per cent per year from 1997

to 2000.

By 2005, with average new home

prices topping $250,000 for the first

time and growth in the economy

slowing, demand was beginning to

weaken. Indeed, the number of unsold

units jumped from 1,500 units in

2003 to 4,200 units in 2006. In

response, builders reduced starts

by 11.6 per cent in 2005 and by an

additional 9.7 per cent in 2006. The

global financial crisis that erupted

in late 2008 and early 2009, along

with persistently high builder inven-

tories, resulted in housing starts


2007 2008 2009 2010f 2011f 2012f 2013f 2014f


2.4 –0.2 –1.0 1.7 1.3 1.4 1.0 1.1Unemployment rate (%) 6.9 7.5 9.2 9.0 8.6 8.3 7.5 6.9Personal income per capita ($) 33,799 34,535 34,377 35,057 36,050 37,258 38,432 39,537

3.8 2.2 –0.5 2.0 2.8 3.4 3.2 2.9Population (000s) 3,721 3,765 3,815 3,861 3,903 3,946 3,990 4,035


3.4 3.5 0.2 3.5 5.2 4.9 4.0 3.8Inflation rate (%) 1.6 2.1 0.8 1.9 3.1 2.1 2.1 2.0



2007 08 09 10f 11f 12f 13f 14f1234567

40455055606570




2007 08 09 10f 11f 12f 13f 14f500

1,0001,5002,0002,500

1015202530




falling by 4.8 per cent in 2008 and

by an additional 13.4 per cent last

year, to reach 19,300 units—their

lowest level since 2002. Surpris-

ingly, price growth remained fairly

strong, averaging 4.5 per cent from

2006 to 2008. However, it finally

slowed to 2.3 per cent last year.

As in the resale market, better

economic conditions in 2010 will

help to lift new housing demand,

boosting starts 2.3 per cent this year

to 19,800 units. The number of single-

family starts is expected to rise, off-

setting a dip in new multi-family-unit

construction. Nevertheless, builders

are expected to break ground on

12,800 multiple units this year—high

by historical standards and more than

double their level at the start of this

decade. Price growth will continue

to moderate, though, slipping to just

1.1 per cent in 2010. Rising mortgage

rates will then push down starts over

the next couple of years, bringing them

down to a still healthy 17,500 units

by 2012.


2007 2008 2009 2010f 2011f 2012f 2013f 2014f

Housing starts 23,410 22,285 19,309 19,755 19,549 17,541 17,565 18,3322.9 –4.8 –13.4 2.3 –1.0 –10.3 0.1 4.4

Singles 7,989 6,602 5,466 6,990 7,305 7,004 7,307 7,8942.8 –17.4 –17.2 27.9 4.5 –4.1 4.3 8.0

Multiples 15,421 15,682 13,843 12,764 12,243 10,537 10,258 10,4382.9 1.7 –11.7 –7.8 –4.1 –13.9 –2.6 1.8

Under construction 15,117 15,170 12,861 12,553 12,504 12,497 12,470 12,425–11.5 0.3 –15.2 –2.4 –0.4 –0.1 –0.2 –0.4

Housing completions 24,361 23,808 19,486 19,826 19,572 17,551 17,584 18,3770.9 –2.3 –18.2 1.7 –1.3 –10.3 0.2 4.5

Singles 7,720 7,364 5,216 7,011 7,312 6,994 7,311 7,929–7.5 –4.6 –29.2 34.4 4.3 –4.4 4.5 8.5

Multiples 16,641 16,444 14,270 12,815 12,260 10,557 10,273 10,4485.3 –1.2 –13.2 –10.2 –4.3 –13.9 –2.7 1.7

Newly completed and unabsorbed 4,798 4,648 4,662 4,208 3,526 2,990 2,889 3,00314.6 –3.1 0.3 –9.7 –16.2 –15.2 –3.4 4.0

Absorptions 24,853 23,490 19,747 20,435 20,163 18,000 17,566 18,1999.8 –5.5 –15.9 3.5 –1.3 –10.7 –2.4 3.6


4.3 4.9 2.3 1.1 1.8 2.4 2.4 2.6



2007 2008 2009 2010f 2011f 2012f 2013f 2014f

Unit sales 43,608 40,017 42,502 44,755 45,381 46,153 46,937 47,78211.3 –8.2 6.2 5.3 1.4 1.7 1.7 1.8

Dollar volume sales ($ millions) 10,933 10,385 11,562 12,457 12,909 13,483 14,083 14,72318.3 –5.0 11.3 7.7 3.6 4.4 4.4 4.5

New listings 70,799 74,794 69,298 75,325 81,778 83,350 84,952 86,671–1.0 5.6 –7.3 8.7 8.6 1.9 1.9 2.0


6.3 3.5 4.8 2.3 2.2 2.7 2.7 2.7



Economic Outlook

A recovery is under way in

Toronto’s economy, which dipped

2.8 per cent last year, pulled down

by the global recession. Manufac-

turing output increased in the second

half of 2009, while construction out-

put rose in the final quarter, thanks

to a big jump in new home construc-

tion. As worldwide demand picks

up through 2010, conditions in both

industries are expected to keep

improving. The services sector will

also enjoy better days, following

mediocre growth of 0.1 per cent in

2009. Accordingly, Toronto’s real

gross domestic product is forecast

to rebound this year, rising by a

solid 3.7 per cent.

Housing Outlook

EXISTING HOUSING MARKET Pent-up demand combined with

lower interest rates to boost demand

in Toronto’s resale housing market

from 2001 to 2004, with sale growing

by 10.2 per cent on an average annual

basis. And with a sales-to-new-listings

ratio of 66.1 per cent in 2001, indi-

cating a sellers’ market, prices grew

by 6.6 per cent per year on average.

But the housing market finally started

to cool off in 2005, as unit sales

increased by just 1.8 per cent that

year and fell by 1.4 per cent in 2006.

Although sales grew strongly in 2007,

the global recession in 2008 reduced

housing affordability, and a new city

land transfer tax led to a 20.3 per

cent drop in sales to 67,700 units in

2008—the lowest in six years.

The market hovered between

sellers’ and balanced states over 2005

to 2007, allowing average prices to

grow a solid 6.2 per cent per year

and reach $390,000— with mortgage

payments reaching 24.1 per cent as

a share of household incomes.

But weak price growth in 2008,

record low interest rates, and

improving consumer confidence led

to an 18.0 per cent increase in sales

in 2009. Demand for resale homes

is expected to remain strong in the

first half of 2010, especially as some

future demand is being pulled for-

ward by buyers hoping to purchase

homes while interest rates remain low

and before the July 1 introduction

of the harmonized sales tax, which

will apply to closing costs. Resale

sales are expected to increase by

12.5 per cent this year and then fall

by 10.3 per cent next year. Over the

rest of the forecast period, sales are

expected to climb by a modest 1.9 per

cent per year.

Meanwhile, price growth in the

resale market was a respectable

4.0 per cent in 2009. Lower sales-

to-new-listings ratios will result in

average price growth decelerating

to 2.7 per cent this year and 2.1 per

cent in 2011. Over 2012 to 2014,

resale price growth is expected to

average 2.4 per cent per year.

Toronto A 3.7 per cent rebound in Toronto’s real GDP this year, along with

low mortgage rates, will help boost sales of existing homes and housing

starts. Average resale prices are expected to rise by 2.7 per cent, while

new home prices grow by 1.6 per cent this year. Unfortunately, rising

interest rates later this year and the introduction of the HST will

weaken demand through the last half of 2010 and into 2011. Indeed,

existing home sales are forecast to fall by 10.3 per cent next year.


2007 08 09 10f 11f 12f 13f 14f200,000300,000400,000500,000600,000

0.20.40.60.81.0




2007 08 09 10f 11f 12f 13f 14f0

10,00020,00030,00040,00050,000




NEW HOUSING MARKET Housing starts increased by a

torrid 19.4 per cent per year from

1996 to 2000, several years earlier

than the boom in Toronto’s resale

market, driven by pent-up demand

from the early 1990s and strong

economic growth. Starts then grew

by an average of 5.5 per cent per year

over the first three years of last decade,

thanks to spillover demand from the

resale market and low interest rates.

Despite this strong growth, most of

these new units were absorbed by

vigorous demand. Accordingly,

months’ supply remained between

0.4 and 0.6 months, signifying a tight

market. As a result, prices picked

up, rising by an average of 5 per

cent per year from 2003 to 2005.

But housing starts peaked in

2003 at 45,500 units, one year after

the peak in absorptions. Builders

retreated from the market in the face

of weakening demand, with starts

falling by an average of 7.6 per cent

annually from 2004 to 2007. While

price growth was beginning to ease

in 2006 and 2007, in level terms,

average new home prices had sur-

passed $500,000—$100,000 more

than they were in 2000.

A significant jump in multiple

starts in the first quarter of 2008

helped to push housing starts up by

28.9 per cent in 2008. But this growth

was largely based on pre-sales of units

in several large new high-rise condos

in the downtown core. Once the reces-

sion hit in late 2008, demand and

subsequently housing starts tumbled

rapidly. For 2009 as a whole, starts

fell by 38.5 per cent, slipping below

30,000 for the first time in 11 years.

Prices slipped 0.1 per cent last year,

the first decline in Toronto’s new

home prices since 1996.

Fortunately, housing demand

picked up quickly at the first sign

of an economic recovery, thanks in

particular to attractive mortgage rates.


2007 2008 2009 2010f 2011f 2012f 2013f 2014f



2.8 2.6 –1.7 2.1 3.4 3.7 3.6 2.9Population (000s) 5,433 5,531 5,623 5,717 5,820 5,931 6,051 6,177


5.3 4.2 –4.0 4.8 6.5 5.8 5.2 4.8Inflation rate (%) 1.9 2.4 0.5 2.5 2.9 2.1 2.1 2.0




2007 08 09 10f 11f 12f 13f 14f0

2

4

6

8

30

40

50

60

70Price growth Sales/new listings ratio



2007 08 09 10f 11f 12f 13f 14f1,5002,0002,5003,0003,500

1015202530



Indeed, starts in both the single and

multiple markets rose strongly in

the second half of last year. With

economic conditions continuing to

improve in 2010, starts are expected

to post growth of 22.1 per cent this

year. Growth will be particularly

strong in the first half of the year as

new home buyers try to avoid paying

higher interest rates and the HST,

although the impact of the HST will

be mitigated by the Ontario govern-

ment’s enhanced new housing rebate,

which ensures that new homes priced

up to $400,000 will not be subject to

the additional 8 per cent tax. Indeed,

housing starts are expected to climb

throughout the forecast, thanks

largely to favourable demographic

factors, as population growth is

projected to average a robust 2 per


In spite of the renewed strength

in the new home market, price growth

will remain modest in 2010 and 2011,

at 1.6 per cent and 2.0 per cent, respec-

tively. New home price growth is the

forecast to average 2.4 per cent per

year from 2012 to 2014.


2007 2008 2009 2010f 2011f 2012f 2013f 2014f

Housing starts 33,078 42,637 26,237 32,046 38,370 43,283 46,349 48,915–11.4 28.9 –38.5 22.1 19.7 12.8 7.1 5.5

Singles 14,706 11,601 7,950 11,943 14,493 16,295 17,427 18,3013.5 –21.1 –31.5 50.2 21.3 12.4 6.9 5.0

Multiples 18,372 31,036 18,287 20,103 23,877 26,988 28,921 30,615–20.6 68.9 –41.1 9.9 18.8 13.0 7.2 5.9

Under construction 43,227 48,337 47,937 47,564 47,581 47,613 47,614 47,6043.1 11.8 –0.8 –0.8 0.0 0.1 0.0 0.0


Singles 14,082 13,882 8,852 11,933 14,516 16,305 17,421 18,294–4.7 –1.4 –36.2 34.8 21.6 12.3 6.8 5.0

Multiples 16,275 22,376 19,504 20,071 23,846 26,964 28,918 30,633–30.3 37.5 –12.8 2.9 18.8 13.1 7.2 5.9

Newly completed and unabsorbed 1,213 1,220 1,169 1,311 1,515 1,735 1,889 2,017–16.3 0.6 –4.2 12.1 15.6 14.6 8.9 6.7

Absorptions 30,841 36,050 28,401 31,795 38,102 43,082 46,205 48,807–19.5 16.9 –21.2 12.0 19.8 13.1 7.2 5.6


2.7 3.5 –0.1 1.6 2.0 2.5 2.4 2.3



2007 2008 2009 2010f 2011f 2012f 2013f 2014f

Unit sales 84,973 67,720 79,899 89,854 80,641 82,084 83,629 85,35712.7 –20.3 18.0 12.5 –10.3 1.8 1.9 2.1

Dollar volume sales ($ millions) 33,151 26,671 32,739 37,810 34,652 36,122 37,723 39,42620.8 –19.5 22.8 15.5 –8.4 4.2 4.4 4.5

New listings 137,962 144,638 122,232 153,203 144,629 147,808 151,166 154,709–1.5 4.8 –15.5 25.3 –5.6 2.2 2.3 2.3


7.1 1.0 4.0 2.7 2.1 2.4 2.5 2.4



Economic Outlook

In an effort to reduce the balloon-

ing deficit, the federal government

announced a departmental spending

freeze in its most recent budget. Given

that the local public administration

sector accounts for one-quarter of

Ottawa–Gatineau’s total output, any

downturn in public administration

will have a significant impact on the

overall local economy. Real gross

domestic product growth is expected

to come in at a solid 2.8 per cent this

year, but then slow to 2.1 per cent

in 2011 and average just 2.4 per


Housing Outlook

EXISTING HOUSING MARKET Strong economic growth in the

last half of the 1990s, thanks to the

high-tech boom and to renewed hiring

by the federal government near the

decade’s end, spurred growth in

existing housing sales of an impres-

sive 16 per cent per year from 1996 to

2000, to reach a record 15,900 trans-

actions. New listings failed to keep

pace, so the sales-to-new-listings ratio

jumped to 70 per cent by 2000, in

sellers’ territory, pushing prices up

by 5.1 per cent that year, the fastest

pace in 11 years. The resale market

has remained fairly tight since then, as

the bursting of the high-tech bubble

was offset by steady hiring in the

federal government, fostering annual

average price growth of 10.5 per cent

from 2001 to 2004 and of 4.8 per

cent from 2005 to 2007.

In 2008, the start of the global

recession led consumers to pull back

from the resale market, driving down

unit sales by 6.8 per cent. But, by

early 2009, when it appeared the

worst of the economic slowdown had

passed, consumers flocked back to

the market, taking advantage of low

interest rates and pushing up unit

sales by 7.1 per cent. The market

hovered between a strong balanced

position and a sellers’ market over

these two years, maintaining pressure

on prices, which rose by 6.5 per cent

in 2008 and 5.1 per cent in 2009.

The average price of an existing

home in Ottawa–Gatineau reached

$282,000 in 2009, nearly double its

level at the start of the decade.

For 2010, unit sales are fore-

cast to increase by a much more

modest 1.5 per cent. While sales

have still been hot lately, higher

interest rates later this year will

help to cool off the market. Unit

sales will also be hampered by the

July 1 introduction of the HST,

which will subject closing costs to

the 15 per cent tax. Furthermore,

the housing market will have to

contend with a departmental spend-

ing freeze by the federal govern-

ment, which will likely result in

some cutbacks in the public service.

Unit sales are expected to decline

by 2.0 per cent in 2011, before

Ottawa–Gatineau Real GDP in Ottawa–Gatineau is forecast to rise by 2.8 per cent

this year, following a 1.2 per cent decline in 2009. But in spite of the

stronger economic growth, demand in the region’s housing markets is

expected to slow through 2010, because rising interest rates, the intro-

duction of the HST, and concern over federal government spending

restraint will result in a modest 1.5 per cent increase in unit sales of

existing homes and a 0.9 per cent decline in housing starts. Price

growth in both markets will be modest as well.



08 09 10f 11f 12f 13f 14f100,000200,000300,000400,000500,000

0.40.81.21.62.0


2007



2007 08 09 10f 11f 12f 13f 14f0

2,0004,0006,0008,000

10,00012,000



rising by a modest 0.8 per cent per

year through the medium term.

As the market finally moves into

a balanced position, price growth is

expected to moderate to 3.4 per cent

this year and 2.0 per cent in 2011.

From 2012 to 2014, the average price

of an existing home is projected to

increase by 2.5 per cent per year.

NEW HOUSING MARKET The strong economy, along

with spillover demand from the

resale market, also helped to boost

Ottawa–Gatineau’s new home mar-

ket from 1996 to 2002. In fact, even

though housing starts increased

17.7 per cent on an average annual

basis, demand still outstripped supply.

Months’ supply in the new home

market dropped from 2.1 months in

1996 to just 0.6 months by 2002. As

the market tightened, price growth

began to accelerate, rising by an

average annual rate of 8.9 per cent

from 2000 to 2002.

Over the next five years (2003

to 2007), demand for new homes

cooled slightly and months’ supply

edged up. Builders reacted accord-

ingly, reducing housing starts by an

average of 2.2 per cent per year. By

2007, starts were at 9,200 units—

lower than in 2002, but still relatively

high by historical standards. Looser

market conditions dampened new

home price growth from 6.6 per cent

in 2004 to 1.8 per cent in 2007. Even

so, average new home prices man-

aged to reach nearly $350,000 by

2007—$110,000 more than at the

start of the decade.

Although the recession dampened

demand in the new home market in

late 2008, a significant increase in

housing starts in the first quarter of

the year was enough to boost them

by 12.8 per cent for the year over-

all. But in 2009, starts tumbled by

14.0 per cent. At the same time,

price growth in the new home market


2007 2008 2009 2010f 2011f 2012f 2013f 2014f



3.6 3.1 –0.4 2.0 2.3 2.8 3.5 3.4Population (000s) 1,183 1,201 1,221 1,235 1,244 1,253 1,263 1,274


3.7 4.4 –1.1 3.9 4.5 3.9 4.0 3.9Inflation rate (%) 1.9 2.2 0.6 2.5 3.0 2.1 2.1 2.0




2007 08 09 10f 11f 12f 13f 14f12345678

4045505560657075




2007 08 09 10f 11f 12f 13f 14f500

1,0001,5002,0002,500

510152025



slowed to 1.5 per cent last year, as

months’ supply jumped to an 11-year

high of 1.5 months.

The new home market showed

some renewed strength in the final

quarter of 2009. But with starts still

at relatively high levels, and with

interest rates moving up this year,

builders are expected to retreat from

the market again in 2010 and 2011,

moving housing starts back toward

demographic requirements. The

new home market is also expected

to feel the pinch of Ontario’s sales

tax harmonization, as well as cooler

economic activity stemming from

expected cutbacks in the federal

public service.

Months’ supply is expected to

average 1.4 months over 2010 to

2014, helping to keep new home price

inflation well contained. Average

annual price growth is forecast to

come in at 1.8 per cent over the

next two years, before accelerating

slightly to 2.6 per cent from 2012

to 2014.


2007 2008 2009 2010f 2011f 2012f 2013f 2014f

Housing starts 9,193 10,374 8,916 8,835 6,525 6,754 6,988 6,9155.1 12.8 –14.0 –0.9 –26.1 3.5 3.5 –1.0

Singles 3,973 4,098 3,527 3,724 2,745 2,904 2,975 2,9277.6 3.2 –13.9 5.6 –26.3 5.8 2.4 –1.6

Multiples 5,220 6,275 5,389 5,111 3,780 3,850 4,013 3,9883.2 20.2 –14.1 –5.2 –26.0 1.9 4.2 –0.6

Under construction 5,682 6,706 6,092 5,790 4,737 4,499 4,845 5,04822.7 18.0 –9.2 –5.0 –18.2 –5.0 7.7 4.2

Housing completions 8,310 9,539 9,440 9,135 7,745 6,499 6,661 6,7911.4 14.8 –1.0 –3.2 –15.2 –16.1 2.5 2.0

Singles 3,566 4,049 3,760 3,696 3,150 2,737 2,885 2,898–0.2 13.5 –7.1 –1.7 –14.8 –13.1 5.4 0.5

Multiples 4,744 5,490 5,680 5,438 4,595 3,762 3,776 3,8932.6 15.7 3.5 –4.3 –15.5 –18.1 0.4 3.1

Newly completed and unabsorbed 695 666 1,106 1,296 910 729 762 80914.5 –4.2 66.1 17.2 –29.8 –19.9 4.5 6.1

Absorptions 8,098 9,698 8,818 9,215 8,105 6,568 6,605 6,755–3.8 19.8 –9.1 4.5 –12.0 –19.0 0.6 2.3


1.8 3.8 1.5 1.8 1.8 2.5 2.6 2.6



2007 2008 2009 2010f 2011f 2012f 2013f 2014f

Unit sales 19,344 18,027 19,306 19,588 19,194 19,350 19,487 19,6655.8 –6.8 7.1 1.5 –2.0 0.8 0.7 0.9


New listings 30,270 32,173 29,822 32,966 34,214 34,528 34,893 35,341–4.1 6.3 –7.3 10.5 3.8 0.9 1.1 1.3


6.0 6.5 5.1 3.4 2.0 2.5 2.5 2.4



Economic Outlook

Although Winnipeg’s gross

domestic product contracted 0.5 per

cent in 2009, this was still a stronger

result than Canada’s 2.6 per cent

decline. Improving prospects in most

industries underpin our expectation

of a 2.2 per cent GDP increase in

2010. Ensuing years are forecast to

see growth averaging 2.7 per cent,

comfortably above the 1.8 per cent

average in the past two decades. But

employment growth, only 0.1 per cent

in 2009, will remain muted, with

only a 0.9 per cent uptick expected

in 2010. Still, decent economic per-

formance will continue to prompt

population growth above the 20-year

average.

Housing Outlook

EXISTING HOUSING MARKET Winnipeg has historically enjoyed

stable resale volumes; during the

2000s, the normalized standard

deviation of annual sales, which

shows how much variation there is

from the average, was lower in only

Québec City and Ottawa among

this report’s nine cities. Moreover,

Winnipeg’s “downturn” lasted only

one quarter—2008’s fourth—and, even

then, sales were only fractionally

below the previous decade’s quar-

terly average. Sales did accelerate

moderately in 2009’s fourth quar-

ter, but remained unexceptional.

Indeed, this market’s peak sales

came in 2008’s second quarter, a

period of struggle elsewhere. And,

while 2.9 per cent fewer units were

traded in Winnipeg during 2009,

the second straight annual decline,

volumes significantly exceeded their

20-year average. A 3.9 per cent

sales hike is in the cards for 2010,

with modest increases to follow.

This market also benefits from a

steady supply. Winnipeg’s normalized

standard deviation of new listings

was the lowest among this report’s

nine cities during the 2000s. Looking

back farther, however, reveals a

longer-term decline in listings.

Annual listings had frequently

exceeded 25,000 units in the late

1980s and early 1990s. But this

period of buyers’ markets then

shifted: 16,000 units was the past

decade’s maximum annual listings.

By 2003, the decline in listings and

the hike in sales had put Winnipeg

in a sellers’ market. The area has

since bounced between a strong

balanced and sellers’ stance.

Winnipeg, somewhat unusually

among our nine markets, saw annu-

alized listings peak in the first quarter

last year and trough in the third. And,

although listings eased in 2009 from

the decade’s peak a year earlier,

Winnipeg Winnipeg’s economy, generally lacklustre during the late 1980s and

early 1990s, shook off this lethargy to post robust GDP, employment,

and population growth beginning in the mid-1990s. Housing markets

responded accordingly, with starts and resale market indicators flash-

ing improvement. Last year’s relatively mild economic and housing

market setback did not erase these gains. Palpable economic recovery

in 2010 will boost housing starts and keep the resale market balanced.

Expectations of healthy population growth and steady employment

advances point to generally decent markets for new and existing

homes in 2011–2014.


08 09 10f 11f 12f 13f 14f100,000200,000300,000400,000500,000

0.51.01.52.02.5


2007



2007 08 09 10f 11f 12f 13f 14f0

1,000

2,000

3,000




potential homebuyers still could

pick from supply well above the

10-year average. Easing listings

and the modest sales uptick through

2009 left Winnipeg’s sales-to-new-

listings ratio just below its sellers’

market threshold by year-end. The

full-year ratio, 74.4 per cent, was

little changed from 2008. Although

sales are forecast to rise again in

2010, much faster listings growth

will cut the ratio to a 12-year low

just under 60 per cent—still a bal-

anced market. The ratio is forecast

to hover in balanced market terri-

tory near 55 per cent between 2011

and 2014.

The ongoing string of strong

balanced markets and sellers’ markets

during the past decade propelled price

growth to double-digit percentage

annual advances between 2003 and

2008. Winnipeg’s average resale

price more than doubled between

2002 and 2009. Last year’s 5.3 per

cent price growth clearly represented

slowing momentum. Cooling will

persist in 2010, with price growth set

to throttle back to 2.3 per cent, and

thereafter, when prices are expected

to advance 1.7 per cent annually.

NEW HOUSING MARKET An energetic resale market, decent

economy, and higher population

growth all encouraged slight over-

building, and so Winnipeg’s new

construction market paused to absorb

this outburst in housing starts. After

rising sharply during 2008, new home

take-up sagged last year in a soft

economy. Absorptions fell 13 per cent

in 2009, although, at over 2,800 units,

they remained historically solid. Early-

year weakness depressed annual

counts, since absorptions were run-

ning at nearly 3,000 units at an annual

rate by the fourth quarter. Accordingly,

the number of completed and unoc-

cupied homes hit a record high above

600 units during the first and second

quarters. While absorptions will fall

further to roughly 2,500 units in


2007 2008 2009 2010f 2011f 2012f 2013f 2014f



4.6 3.9 0.1 2.1 2.6 3.8 3.5 2.9Population (000s) 723 732 742 752 759 766 773 780


7.9 6.7 –0.8 3.8 3.5 5.0 3.9 3.2Inflation rate (%) 2.1 2.3 0.6 1.8 2.5 2.1 2.1 2.1




2007 08 09 10f 11f 12f 13f 14f02468

101214

2030405060708090




2007 08 09 10f 11f 12f 13f 14f400

800

1,200

1,600

12

14

16

18P&I payment ($) P&I/income (%)


2010, falling completions will trim

unabsorbed inventories. Subsequent

years’ gains will ultimately prompt

a record of above 3,600 absorptions

by 2013.

Slowing sales and rising inven-

tories foreshadow production slow-

downs in any industry. Here, housing

starts fell by a third, to just over

2,000 units, in 2009. This included

a fall to below 1,500 units annualized,

the fewest since 2001, during last

year’s second quarter. But despite

this second straight year of decline,

2009’s volume remained fractionally

above the 20-year average. Builders,

encouraged by falling inventories, will

boost starts to almost 2,800 units in

2010. Continued healthy population

growth thereafter is expected to gen-

erate nearly 3,800 starts by 2014.

In this soft market, new home

price growth sagged to only 2.5 per

cent in 2009 after rising over 10 per

cent in each of 2007 and 2008. Further

price growth deceleration, to 1.2 per

cent, is foreseen for 2010, with similar

price hikes expected in 2011–2014.


2007 2008 2009 2010f 2011f 2012f 2013f 2014f

Housing starts 3,503 3,057 2,031 2,522 2,798 3,482 3,649 3,77618.5 –12.7 –33.6 24.2 10.9 24.4 4.8 3.5

Singles 1,870 1,921 1,510 1,976 2,169 2,662 2,779 2,8946.6 2.7 –21.4 30.8 9.8 22.7 4.4 4.2

Multiples 1,633 1,136 520 546 629 820 871 88235.8 –30.4 –54.2 5.0 15.3 30.2 6.2 1.3

Under construction 2,231 2,421 1,622 1,420 1,444 1,636 1,686 1,63032.3 8.5 –33.0 –12.5 1.7 13.3 3.1 –3.3


Singles 1,707 1,927 1,620 1,875 2,181 2,543 2,852 2,955–2.3 12.9 –15.9 15.8 16.3 16.6 12.1 3.6

Multiples 883 1,616 1,050 593 585 704 837 8831.5 83.0 –35.0 –43.6 –1.2 20.3 18.9 5.4

Newly completed and unabsorbed 277 470 545 390 432 513 599 6366.4 69.6 15.8 –28.5 10.9 18.8 16.6 6.2

Absorptions 2,595 3,240 2,807 2,522 2,709 3,149 3,628 3,8090.5 24.9 –13.4 –10.2 7.4 16.2 15.2 5.0


11.8 10.2 2.5 1.2 1.0 1.6 1.5 1.5



2007 2008 2009 2010f 2011f 2012f 2013f 2014f

Unit sales 12,320 11,854 11,509 11,958 12,101 12,355 12,603 12,8426.2 –3.8 –2.9 3.9 1.2 2.1 2.0 1.9

Dollar volume sales ($ millions) 2,146 2,335 2,386 2,535 2,602 2,704 2,810 2,91819.7 8.8 2.2 6.2 2.6 3.9 3.9 3.8

New listings 14,491 16,050 15,479 20,157 21,698 22,216 22,697 23,153–2.0 10.8 –3.6 30.2 7.6 2.4 2.2 2.0


12.7 13.1 5.3 2.3 1.4 1.8 1.9 1.9



Economic Outlook

Calgary’s economy is forecast to

expand 2.8 per cent in 2010, under-

pinned by rebounding non-residential

construction, robust growth among

most services-producing industries,

and stronger energy markets. Employ-

ment is forecast to more than recap-

ture ground lost during the 2009 down-

turn, although even faster expansion

in the labour force will boost the

unemployment rate. Modestly accel-

erating household income increases

should buoy consumer attitudes. The

medium term holds promise, with

output growth forecast to exceed

4 per cent each year in 2011–2014,

accompanied by healthy employment

and population gains.

Housing Outlook

EXISTING HOUSING MARKET A recovery is well entrenched in

Calgary’s resale market. Stronger

sales demand and depleted listings

supply prompted conditions approach-

ing a sellers’ market in last year’s

second half, a dramatic change from

the buyers’ stance during the previous

year. Balanced markets should take

hold in 2010. Existing housing sales

leapt in second quarter of 2009 and

remained at healthy levels through

year-end. This pickup lifted overall

sales by 7.5 per cent to nearly

24,900 units in 2009, but still left

them well off boom-era volumes.

While the quarterly pattern is fore-

cast to flatten in 2010, year-on-year

comparisons will benefit from 2009’s

early weakness, at least through the

spring. For the year as a whole, sales

are forecast to climb by 6.2 per cent

to 26,400 units. Sales are projected

to increase modestly over the rest of

the forecast period. As a result, our

forecast of near 29,350 unit sales in

2014 remains 11 per cent behind

2006’s peak of 33,000 transactions.

The supply of new listings also

edged higher in last year’s second

half, as vendors, made wary by the

previously soft market, cautiously

tested their homes’ market prospects.

Listings were up 2 per cent in the

third quarter and another 4 per cent

in the fourth but, at 42,500 units

annualized, remained one-third off

the peak of 64,000 new listings in

first quarter of 2008. And full-year

2009 listings were off 26 per cent.

But continued market firming is

expected to boost new listings by

10 per cent to almost 46,000 units

this year, with further, albeit smaller,

increases thereafter.

The pairing of eager buyers and

nervous sellers rapidly lifted Calgary’s

sales-to-new-listings ratio from

buyers’ market readings below 40 per

cent in late 2008 and early 2009 to

70 per cent in the third quarter, indi-

cating strong balance. As a result,

Calgary Economic recovery should boost Calgary housing markets in 2010.

GDP growth will foster rebounding employment and healthy population

gains, despite a rising unemployment rate. The resale market has

swung rapidly from a buyers’ stance to near-sellers’ conditions as

buyers have scoured depleted listings inventories, ending recent price

declines. Our forecast features balanced markets and moderate price

increases. But new home markets remain burdened by slow absorp-

tions and high builder stocks. Starts are forecast to recover only slowly

and to remain below mid-decade peaks through 2014, despite ongoing

population growth.


08 09 10f 11f 12f 13f 14f200,000300,000400,000500,000600,000

0.40.71.01.31.6


2007



2007 08 09 10f 11f 12f 13f 14f0

2,0004,0006,0008,000

10,00012,00014,000




2009’s full-year ratio rose to almost

60 per cent, significantly improved

from 41.2 per cent in 2008. Our expec-

tation of steady sales and ongoing

listings increases will further reduce

the ratio to 56 per cent by the fourth

quarter of 2010. This will shave

2010’s full-year ratio to 57 per cent,

near the centre of Calgary’s balanced

market range. Slightly faster expected

growth in listings than in sales will

shave the ratio to roughly 55 per cent

by 2014.

The rapid move to strong balanced

conditions in the second quarter of

2009 underpinned a 1.1 per cent

quarterly price rise, abruptly halting

a string of four quarterly declines.

These drops included a 4.4 per cent

first quarter plunge, the worst in

nearly 19 years. A 4 per cent third-

quarter price advance largely reversed

this drop, but was unable to prevent

a second consecutive annual fall in

Calgary’s average resale price. This

year’s balanced market conditions

are expected to fuel a 3.3 per cent

price advance, to an average near

$398,460. Annual price growth in

the mid-2 per cent range is in the

cards for 2011–2014 as balanced

markets persist. Calgary’s 2007 peak

resale price, $414,000, is forecast

to be eclipsed in 2012.

NEW HOUSING MARKET Clearing builder inventories

remains an obstacle to a full recovery

in Calgary’s new home market, despite

a firmer resale market, decent popu-

lation growth, and low interest rates.

New unit take-up remains tepid and

is forecast to recover only gradually.

In this environment, new construc-

tion will remain subdued, although

the market’s weakest point is over.

Evidence of firmer demand, an

essential precursor to higher starts,

remains elusive. New unit absorp-

tion fell below 7,500 units annual-

ized in fourth quarter of 2009, the

least in 14 years. For all of 2009,


2007 2008 2009 2010f 2011f 2012f 2013f 2014f



4.2 5.4 –0.5 0.3 3.0 3.3 3.4 2.9Population (000s) 1,157 1,192 1,230 1,263 1,290 1,317 1,342 1,367


7.5 0.1 –8.6 1.5 6.5 6.9 6.2 5.8Inflation rate (%) 5.0 3.2 –0.1 1.7 2.5 2.1 2.0 2.1




2007 08 09 10f 11f 12f 13f 14f−5

0

5

10

15

20

20

30

40

50

60




2007 08 09 10f 11f 12f 13f 14f1,500

2,000

2,500

3,000

10

15

20



absorptions totalled only 8,350 units,

the fewest since 1996. This left builder

inventories of completed and unoc-

cupied homes above 1,000 units on

average during 2009, although such

stocks did ease by year-end. Only

a modest drawdown in stocks is

expected this year, keeping builders

edgy.

As a result, a recovery from the

14-year low of 6,192 housing starts

in 2009 will be muted. Although

quarterly starts have rebounded

from their very low annualized pace

of 3,700 units in the first quarter of

2009, the 8,800-unit fourth-quarter

pace was unexceptional. Starts are

forecast to perform only slightly

better in 2010, creeping up to an

annual total near 8,700 units. This is

only about half the nearly 17,000 units

started at the market’s 2006 peak,

and also trails the annual average of

10,320 starts in the prior 20 years.

Further gains expected in 2011

through 2014 will leave starts under

11,300 units.


2007 2008 2009 2010f 2011f 2012f 2013f 2014f

Housing starts 13,460 12,050 6,192 8,689 9,957 10,671 10,878 11,265–20.6 –10.5 –48.6 40.3 14.6 7.2 1.9 3.6

Singles 7,771 4,436 4,679 6,181 6,805 7,020 6,913 7,023–26.0 –42.9 5.5 32.1 10.1 3.2 –1.5 1.6

Multiples 5,689 7,614 1,513 2,508 3,153 3,651 3,965 4,242–12.0 33.8 –80.1 65.7 25.7 15.8 8.6 7.0

Under construction 14,615 13,788 9,363 8,820 9,763 10,411 10,759 11,06613.1 –5.7 –32.1 –5.8 10.7 6.6 3.3 2.9

Housing completions 13,112 14,195 8,238 8,431 9,025 10,162 10,594 10,9433.3 8.3 –42.0 2.3 7.0 12.6 4.3 3.3

Singles 9,149 6,908 4,291 6,113 6,523 6,975 6,931 6,94011.8 –24.5 –37.9 42.5 6.7 6.9 –0.6 0.1

Multiples 3,963 7,287 3,947 2,318 2,502 3,187 3,663 4,003–12.1 83.9 –45.8 –41.3 7.9 27.4 14.9 9.3

Newly completed and unabsorbed 520 831 1,015 897 790 844 873 903–13.9 59.6 22.2 –11.5 –11.9 6.7 3.5 3.5

Absorptions 13,136 13,738 8,350 8,537 9,000 10,118 10,571 10,9040.3 4.6 –39.2 2.2 5.4 12.4 4.5 3.2


16.2 0.6 –6.7 0.9 1.8 2.2 2.1 2.1



2007 2008 2009 2010f 2011f 2012f 2013f 2014f

Unit sales 32,177 23,135 24,881 26,422 26,824 27,668 28,566 29,348–2.6 –28.1 7.5 6.2 1.5 3.1 3.2 2.7


New listings 54,203 56,189 41,641 45,986 48,425 50,122 51,855 53,33321.2 3.7 –25.9 10.4 5.3 3.5 3.5 2.8


19.4 –2.1 –4.8 3.3 2.6 2.6 2.6 2.5



Economic Outlook

Edmonton’s gross domestic

product is forecast to rebound by

2.9 per cent this year, as a recuper-

ating energy sector stabilizes the

area’s oil-centred manufacturing

cluster and as services sector expan-

sion resumes. GDP growth is expected

to jump above 4 per cent in 2011.

Local employment will fully recoup

2009’s 0.6 per cent dip in 2010, but

robust hikes are a year off. More-

over, faster labour force expansion

will push the unemployment rate to

a 14-year high of 7.3 per cent in

2010. The waning attraction of a

loosening labour market is forecast

to shave population growth to a

five-year low in 2010.

Housing Outlook

EXISTING HOUSING MARKET Sales of existing Edmonton houses

are picking up. Transactions averaged

fewer than 17,000 units annualized

during the seven quarters ending in

the first quarter of 2009, well off

the more than 22,350-unit average

during the prior seven quarters. But

sales rose above 21,000 units in the

spring and slightly further in the

third quarter, before dipping in the

fourth. For 2009 as a whole, sales

increased by 10.2 per cent to nearly

19,140 units, low compared with

2006’s peak of almost 22,000, but

significantly above the 20-year

average. A slight uptick to over

19,600 sales is forecast in 2010,

with further modest gains expected

over the rest of the forecast. By

2014, volumes are expected to

approach the 2006 peak.

Meanwhile, the soggy market

kept potential home sellers on the

sidelines. The supply of new listings

fell sharply in late 2008, then eased

to a three-year low under 30,000 units

in the fourth quarter of 2009. For

all of 2009, listings averaged only

30,696 units, well off volumes just

above 40,000 units in both 2007

and 2008. A firming market should

encourage potential vendors in 2010,

drawing 9 per cent more supply into

the market. Although new listings

are forecast to rise gradually through

2014, the 40,000-unit ceiling will

not be surmounted.

As in other cities, Edmonton’s

resale market tightened significantly

in the second quarter of 2009, but

only to a strong balanced position.

The sales-to-new-listings ratio, which

had dipped below 40 per cent in the

fourth quarter of 2008, soared to the

upper 60 per cent range and remained

there. This lifted 2009’s average ratio

to 62 per cent, the highest since 2006.

Faster increases in listings supply

than in sales demand during 2010

are forecast to cut the sales-to-new-

listings ratio below 60 per cent—still

signalling a balanced market. The

Edmonton An improving economy and resumed employment growth are fore-

cast to buoy Edmonton housing markets in 2010. On the resale side,

last spring’s pickup in demand produced a balanced market, which will

firm, but not electrify, house prices this year. The market is forecast to

remain balanced, and so prices will increase moderately. A new home

market featuring choppy absorptions and significant inventory over-

hang is limiting prospects for housing starts, although some improve-

ment is in the cards. Ongoing population growth will fuel additional new

construction gains, but not to peak levels reached in 2006 and 2007.


08 09 10f 11f 12f 13f 14f100,000200,000300,000400,000500,000

0.51.01.52.02.5


2007



2007 08 09 10f 11f 12f 13f 14f0

4,000

8,000

12,000




sales-to-listings ratio will continue

to ease over the forecast, but will

remain in balanced market territory.

The return to strong balanced

markets firmed pricing, ending recent

declines in average values. Indeed,

Edmonton’s average resale price

jumped 7.9 per cent in the third

quarter alone, the most in nearly

three years. Despite this, the full-

year average price fell 3.7 per cent

in 2009, the second straight yearly

drop. Still, spillover from healthy

markets late last year and continued

balanced conditions will lift the

average resale price by 4.0 per cent

in 2010. Ongoing slight erosion in

the market’s balance is expected to

limit price growth to the mid-2 per

cent range in 2011–2014. The market’s

peak price, $338,700, hit in 2007,

will be regained in 2011, en route

to $366,600 by 2014.

NEW HOUSING MARKET Modest pickups in absorptions

and easing housing completions have

invigorated Edmonton home builders,

leading to a substantial acceleration

in housing starts through 2009 from

the deep trench in 2008. Although

starts are expected to keep recover-

ing steadily, continued high builder

inventories and moderating popula-

tion growth will cap future gains.

New home take-up remains fickle,

because of cautious consumers and

sagging completions following

the recent plunge in starts. Still,

2009’s second half displayed some

strength, as absorptions averaged

above 10,400 units, up from below

8,000 units in the first half. Nonethe-

less, absorptions dipped well below

10,000 units during 2009, the fewest

since 2002, and will drop further in

2010 before recovering in 2011.

Even by our forecast’s end in 2014,

annual absorptions will total only a

modest 9,180 units.

Encouraged by even mild signs of

a market turnaround, home builders


2007 2008 2009 2010f 2011f 2012f 2013f 2014f



4.2 5.8 0.0 0.5 3.4 3.6 3.7 3.1Population (000s) 1,102 1,127 1,155 1,180 1,201 1,222 1,241 1,260


7.1 –0.2 –8.8 1.5 6.6 6.9 6.1 5.6Inflation rate (%) 4.8 3.4 0.2 1.7 2.5 2.1 2.0 2.1




2007 08 09 10f 11f 12f 13f 14f−10

0

10

20

30

40

20

30

40

50

60




2007 08 09 10f 11f 12f 13f 14f1,0001,5002,0002,5003,000

1015202530



ramped up activity in 2009. Housing

starts came in below 3,700 units annu-

alized in the first quarter of 2009, a

13-year low, but were running above

10,400 units by the fourth quarter.

The late-year surge did not prevent

annual housing starts from sagging:

last year’s 6,200-unit count was the

lowest since 2000. Moderating

absorptions and only a modest draw-

down in stocks of completed and

unoccupied units will temper future

construction gains. Starts are fore-

cast to hit 9,150 units in 2011 and

drift gently upwards to near 9,500

units by 2014—nowhere near the

15,000-unit peak set in 2006–2007.

Weak market conditions cut aver-

age new house prices 11.2 per cent

in 2009, the first annual drop since

1996. Little change in this price is

forecast for 2010 as absorption

demand eases. The average price is

forecast to rise gently in 2011–2014,

but approach only $407,500 by 2014,

well off the 2008 mark near $426,400.



2007 2008 2009 2010f 2011f 2012f 2013f 2014f

Housing starts 14,969 6,769 6,199 8,316 9,150 9,496 9,429 9,493–0.2 –54.8 –8.4 34.2 10.0 3.8 –0.7 0.7

Singles 7,695 2,673 3,800 4,782 5,285 5,456 5,410 5,534–15.5 –65.3 42.2 25.8 10.5 3.2 –0.8 2.3

Multiples 7,274 4,097 2,399 3,535 3,865 4,041 4,019 3,95923.5 –43.7 –41.4 47.3 9.3 4.6 –0.5 –1.5

Under construction 14,894 13,988 8,502 7,714 8,656 9,275 9,541 9,74123.3 –6.1 –39.2 –9.3 12.2 7.2 2.9 2.1

Housing completions 11,839 11,217 9,232 7,558 8,209 9,035 9,244 9,275–2.8 –5.3 –17.7 –18.1 8.6 10.1 2.3 0.3

Singles 7,641 6,224 3,107 4,837 4,975 5,402 5,436 5,4618.5 –18.5 –50.1 55.7 2.9 8.6 0.6 0.5

Multiples 4,198 4,993 6,125 2,721 3,233 3,633 3,808 3,815–18.2 18.9 22.7 –55.6 18.8 12.4 4.8 0.2

Newly completed and unabsorbed 852 1,365 1,592 1,303 1,081 1,194 1,317 1,406–31.7 60.2 16.7 –18.2 –17.0 10.4 10.3 6.7

Absorptions 11,678 10,793 9,193 7,947 8,265 8,896 9,144 9,184–9.3 –7.6 –14.8 –13.5 4.0 7.6 2.8 0.4


32.1 1.0 –11.2 –0.4 1.8 2.1 2.0 1.9



2007 2008 2009 2010f 2011f 2012f 2013f 2014f

Unit sales 20,426 17,370 19,139 19,637 19,833 20,309 20,817 21,295–7.1 –15.0 10.2 2.6 1.0 2.4 2.5 2.3


New listings 40,708 40,058 30,696 33,472 34,892 36,324 37,544 38,56860.3 –1.6 –23.4 9.0 4.2 4.1 3.4 2.7


35.0 –1.7 –3.7 4.0 2.6 2.4 2.4 2.3


Economic Outlook

Vancouver’s economy will bounce

back nicely with 4.0 per cent gross

domestic product growth in 2010.

High-profile projects will bolster the

non-residential construction sector,

while battered area manufacturers

are expected to enjoy decent medium-

term advances. The Winter Olympics

gave many services sector firms a

brief but welcome boost, and so

services sector growth is forecast to

accelerate sharply for the year as a

whole. Resumed economic expan-

sion is forecast to boost employment

1.2 per cent in 2010, more than

recouping 2009’s loss. Still, even

faster labour force growth will push

the unemployment rate to 7.7 per cent.

Housing Outlook

EXISTING HOUSING MARKET Vancouver’s resale market

appears to have recovered from a

significant downturn in 2008 and

early 2009. Sales, which had sunk

to an 18-year low near 16,000 units

annualized in the fourth quarter of

2008, nearly tripled to a record high

of 47,236 units only a year later. This

rebound lifted full-year transactions

to 36,255 units in 2009, well below

mid-decade peaks, but still up 44 per

cent from 2008. In 2010, although

continued first-quarter strength is

forecast to give way to more mod-

erate trading, sales are still expected

to end 2010 up 9 per cent at nearly

40,000 units, the most in five years.

But these levels are unsustainable.

Accordingly, sales are forecast to

ease to near 35,000 in 2011 and

hover near this level through 2014.

The rekindled enthusiasm from

buyers contrasted markedly with

vendor wariness of a weak market’s

effect on their home’s value. Indeed,

new listings fell below 50,000 units

in 2009’s first quarter (the fewest

since 2004’s first quarter) before

ramping up over the course of the

year. The market thus swung sharply

from a weak buyers’ stance to flirting

with a sellers’ market in just three

quarters: the sales-to-new-listings

ratio averaged only 28.3 per cent

in the fourth quarter of 2008 but

exceeded 76 per cent by the third

quarter of 2009 and remained above

70 per cent in the fourth quarter, put-

ting the full-year average at 66 per

cent. Slowing sales demand through

2010 will combine with steady list-

ings supply to return the market to a

more balanced position in the second

quarter of 2010. The sales-to-new-

listings ratio is expected to end 2010

little changed, near 65 per cent, and

hover near 60 per cent in 2011–2014.

The rapid shift to a sellers’ market

reignited price increases and fuelled

bubble speculation. Vancouver’s

average resale price had declined in

each of the three quarters to the first

Vancouver An improving economy and slightly better affordability are rejuve-

nating Vancouver’s housing market. Resale volumes increased sharply

last year and are poised for additional gains in 2010. Rising listings are

providing additional buyer choice while also cooling price increases

and worries of a bubble. Accordingly, our forecast envisions only mod-

erate resale price growth. New house markets are also firming after a

weak 2009, as improving absorptions whittle builder inventories. Although

starts are forecast to rebound strongly in 2010, more moderate gains

in 2011–2104 will keep volumes below their recent peak.


08 09 10f 11f 12f 13f 14f0

200,000400,000600,000800,000

0.40.81.21.62.0


2007



2007 08 09 10f 11f 12f 13f 14f0

5,00010,00015,00020,00025,000




quarter of 2009, but buyer competi-

tion for the relatively low supply

then ratcheted prices up 22 per cent

between last year’s first quarter and

its fourth. Still, such strength was

insufficient to prevent Vancouver’s

annual average price from falling

0.2 per cent in 2009, the first drop

since 2001. While 2010’s balanced

market is forecast to temper quar-

terly price increases, the full-year

average will still advance 2.2 per

cent. Annual price increases will

average 2.4 per cent in 2011–2014.

Falling interest rates and eas-

ing house prices have improved

Vancouver’s affordability, although

it remains the poorest among this

report’s nine cities. The principle

and interest payment required to

finance Vancouver’s average resale

dwelling fell 21 per cent to a four-

year low in 2009. Vancouverites

can expect only a modest increase

in average mortgage payments this

year, as increases in interest rates

and house prices will remain fairly

muted. But rapid subsequent rises

are forecast to lift monthly principle

and interest payments above $4,000

by 2012.

NEW HOUSING MARKETVancouver’s new home market

is dusting itself off after a bruising

2009. Improved unit take-up is

beginning to deplete swollen builder

inventories. Healthy interest from

prospective buyers has been reported

at proposed condominium develop-

ments, foreshadowing resumed con-

struction in a recently moribund

sector. Single-unit starts, relatively

scanty in this market, have also

fallen sharply and will be slower to

come back, given their high prices.

Our forecast of higher total starts

in 2010 is still below their 20-year

average. Moreover, despite persistent

gains, starts are expected to remain

below their 2007 peak through our

forecast’s end in 2014.


2007 2008 2009 2010f 2011f 2012f 2013f 2014f



2.7 2.9 –2.2 1.6 3.6 3.8 3.5 3.0Population (000s) 2,231 2,279 2,328 2,369 2,405 2,442 2,480 2,518


5.2 0.1 –4.5 6.7 5.1 5.5 4.5 4.5Inflation rate (%) 2.1 2.3 0.1 2.1 2.7 2.0 2.0 2.1




2007 08 09 10f 11f 12f 13f 14f−30369

1215

20304050607080




2007 08 09 10f 11f 12f 13f 14f2,000

3,000

4,000

5,000

20

30

40



Demand growth late last year

suggests that builder inventories of

completed and unoccupied units have

peaked. Absorptions hit their 2009

high in the year’s closing quarter,

significantly paring builder stocks.

Backlogs will ease further in 2010,

even as absorption eases, since rela-

tively low completion volumes will

inevitably follow last year’s soft starts.

The resulting improvement in

market tone should encourage builders.

Starts are already rebounding from

2009’s annualized second-quarter

trough near 6,300 units, the lowest on

records going back to 1972, exceed-

ing 10,000 units in the fourth quarter.

Further gains are expected in 2010,

lifting total starts 76 per cent to over

14,400 units. Although another big

15 per cent jump in starts is foreseen

in 2011, more modest gains there-

after will leave starts near 18,200 units

in 2014, well off 2007’s total near

20,640. A stronger recovery among

multiple starts than among singles

in 2010 will boost their share of

total starts to 74 per cent, following

a dip to 65 per cent in 2009.


2007 2008 2009 2010f 2011f 2012f 2013f 2014f

Housing starts 20,639 19,660 8,228 14,443 16,640 17,243 17,671 18,1679.8 –4.7 –58.1 75.5 15.2 3.6 2.5 2.8

Singles 4,209 3,647 2,841 3,723 4,416 4,662 4,797 5,008–25.4 –13.3 –22.1 31.1 18.6 5.6 2.9 4.4

Multiples 16,430 16,013 5,387 10,720 12,224 12,581 12,874 13,15925.0 –2.5 –66.4 99.0 14.0 2.9 2.3 2.2



Singles 4,552 3,716 3,338 3,516 3,987 4,477 4,624 4,788–14.2 –18.4 –10.2 5.3 13.4 12.3 3.3 3.5

Multiples 13,264 15,434 13,450 9,283 9,193 11,729 12,418 12,7013.9 16.4 –12.9 –31.0 –1.0 27.6 5.9 2.3

Newly completed and unabsorbed 1,162 1,665 2,194 1,073 829 1,108 1,352 1,57138.3 43.2 31.8 –51.1 –22.8 33.7 22.0 16.2

Absorptions 17,574 18,253 17,186 13,682 13,090 15,921 16,822 17,264–1.6 3.9 –5.8 –20.4 –4.3 21.6 5.7 2.6


7.1 2.3 –6.3 2.6 2.1 1.5 1.7 1.7



2007 2008 2009 2010f 2011f 2012f 2013f 2014f

Unit sales 38,978 25,147 36,255 39,614 34,873 35,234 35,567 35,8696.9 –35.5 44.2 9.3 –12.0 1.0 0.9 0.8


New listings 57,147 65,121 54,828 61,199 57,372 58,094 58,770 59,3994.0 14.0 –15.8 11.6 –6.3 1.3 1.2 1.1


11.9 4.0 –0.2 2.2 2.9 2.2 2.3 2.3



Economic Outlook

Thanks to recovering construction

activity, improving manufacturing

output, and rising retail spending,

Victoria’s economy will rebound

by 3.2 per cent this year, boosting

employment by 1.4 per cent. Never-

theless, faster labour force growth

will lift the forecast unemployment

rate to 7.6 per cent in 2010, up from

6.4 per cent in 2009 and from below

4 per cent in 2006–2008. Still, a

better economy will boost average

household income 2.1 per cent in

2010, following a rare 1.0 per cent

dip in 2009. Longer term, we expect

moderate growth in both output and

employment, along with income gains

just above their 20-year average.

Housing Outlook

EXISTING HOUSING MARKET Victoria’s resale volumes have

rebounded smartly, following the

2008 downturn, hitting their highest

seasonally adjusted level since 1991

during 2009’s third quarter. And,

while sales eased slightly in the fourth

quarter, they remained more than

double the year-earlier level. Low

mortgage interest rates and improving

employment whetted purchasers’

housing appetite, leading to 2009’s

second-half feast. For 2009 as a whole,

sales climbed 24 per cent, recapturing

a large portion of the 2008 decline.

This year, slightly diminished afford-

ability, due mainly to resumed house

price growth, will limit sales advances

to 5 per cent. Still, volumes will

exceed 8,000 units for the first time

in three years. In 2011, mortgage

rate hikes will take the steam out

Victoria’s market, cutting forecast

sales by 8 per cent.

Resale listings fell 16 per cent

last year to a four-year low of

11,745 units, as a soft market kept

potential Victoria vendors on the

sidelines through much of the year.

But emerging sales recovery prompted

listings acceleration, particularly in

the fourth quarter. A firming market

will encourage vendors this year,

allowing listings to rise 7 per cent to

12,500 units. Limited listings growth

is forecast for ensuing years, with

volumes hovering between 12,000

and 13,000 units.

The listings sag in early 2009

meant that resumed house hunting

later in the year quickly tightened

the market. The sales-to-new-listings

ratio more than doubled from a buy-

ers’ market reading of 32.8 per cent

in the fourth quarter of 2008 to a

near-sellers’ market of 75.3 per cent

during the third quarter of 2009. In

2010, a gradual moderation in sales

and a slight upward drift in new list-

ings will shave the ratio to roughly

61 per cent during the year’s second

half. Still, the 64 per cent annual

average forecast for all of 2010 is

Victoria Low interest rates, easing housing prices, and a halt to employ-

ment declines have proved a tonic for Victoria’s housing market. Rising

resale volumes in an environment of low listings supply tightened the

market, briefly igniting bubble fears. But additional listings, attracted by

the market’s firming, have alleviated such concerns. Meantime, easing

house prices have improved Victoria’s poor affordability. New construc-

tion is also recovering, bolstered by firmer demand. Our forecast calls

for decent performance in new and resale markets, although activity in

both will remain below recent peaks.


08 09 10f 11f 12f 13f 14f0

100,000200,000300,000400,000500,000

0.51.01.52.02.53.0


2007



2007 08 09 10f 11f 12f 13f 14f0

5001,0001,5002,0002,5003,000




exactly equal to the prior 20 years’

average. Ensuring years will see the

sales-to-new-listings ratio ease to

60 per cent by 2014, firmly in bal-

anced market territory.

Fallout from Victoria’s lurch to a

buyers’ market in late 2008 included

a 1.8 per cent decline in the area’s

average resale price, the first dip

since 2001. Still, the price pause

likely was welcome relief for local

homebuyers who had seen Victoria’s

average price nearly double over the

prior six years. This year’s expected

balanced market will foster a resump-

tion of price growth to 3.1 per cent.

Subsequent years will see price

growth cool to the low 2 per cent

range as the sales-to-new-listings

ratio erodes. By 2014, we forecast

an average resale price of $543,400.

NEW HOUSING MARKET Victoria’s new home market

contracted more sharply in relative

terms than its resale market did, but

has also rebounded a bit more vig-

orously. Relatively scanty resale

supply and continued low interest

rates boosted new home absorptions

in mid-2009, while a drop in housing

starts sliced builder inventories. Nearly

two years featuring a ratio of starts

to population growth below its long

term average point to pent-up demand

that should fuel a recovery in starts

beginning this year.

Seasonally adjusted absorptions of

new units averaged only 1,820 units

during the year leading up to 2009’s

first quarter, below any year since

2003. This, and a heavy volume of

housing completions, boosted the

number of completed and unoccupied

units to an annualized 413 units in

2009’s first quarter, the highest in

10 years. Even though absorptions

soared in the third quarter of 2009,

persistently high completions pushed

builder inventories even higher to a

record above 500 units. Such lofty

housing completions reconciled the


2007 2008 2009 2010f 2011f 2012f 2013f 2014f



4.5 4.2 –0.7 2.1 3.3 3.5 3.5 3.3Population (000s) 343 348 352 357 360 363 366 369


6.4 0.9 –5.0 5.1 4.2 4.7 3.6 3.6Inflation rate (%) 1.1 1.8 0.1 1.9 2.7 2.0 2.0 2.1



2007 08 09 10f 11f 12f 13f 14f−202468

10

10203040506070




2007 08 09 10f 11f 12f 13f 14f0

1,0002,0003,0004,000

1020304050




14-year high in builder inventories

with the 15-year high in absorptions.

Although slowing completions will

cut absorptions below the past

decade’s average in 2010, ensuing

years will see ongoing absorption

gains. The number of completed and

unoccupied units is also projected to

fall significantly in 2010 and again,

albeit more modestly, in 2011.

Stronger homebuyer demand last

year powerfully motivated developers,

leading to a surge in housing starts

in the second half of 2009. Annual-

ized fourth-quarter starts were more

than twice the first quarter’s. Such

late-year strength, however, could

not prevent full-year starts in 2009

from falling 48 per cent to roughly

1,000 units, Victoria’s fewest since

2000. Better times lie ahead, how-

ever, because of ongoing population

growth and recovering employment.

Starts are forecast to jump 41 per cent

to over 1,400 units this year and

rise slightly thereafter. Even by our

forecast’s end, however, starts will

remain well below their 2006 peak.


2007 2008 2009 2010f 2011f 2012f 2013f 2014f

Housing starts 2,577 1,918 1,006 1,421 1,752 1,944 2,120 2,313–4.7 –25.6 –47.6 41.3 23.3 11.0 9.0 9.1

Singles 789 672 627 700 782 777 760 756–15.7 –14.8 –6.7 11.6 11.7 –0.6 –2.2 –0.6

Multiples 1,789 1,246 379 722 970 1,167 1,360 1,5571.2 30.3 –69.6 90.3 34.5 20.3 16.5 14.5


Housing completions 2,141 2,149 2,463 1,240 1,453 1,747 1,929 2,1064.7 0.4 14.6 –49.6 17.1 20.3 10.4 9.2

Singles 815 760 635 720 723 767 753 7429.6 –6.7 –16.4 13.4 0.4 6.2 –1.8 –1.5

Multiples 1,326 1,389 1,828 520 730 980 1,175 1,36416.0 4.8 31.6 –71.5 40.3 34.2 20.0 16.1

Newly completed and unabsorbed 151 284 452 303 261 294 320 34723.5 88.3 59.4 –33.1 –13.7 12.5 9.0 8.6

Absorptions 2,129 1,947 2,400 1,419 1,441 1,715 1,904 2,0767.5 –8.6 23.3 –40.9 1.5 19.0 11.0 9.1


0.5 –0.1 –7.8 0.4 2.5 1.7 1.7 1.6



2007 2008 2009 2010f 2011f 2012f 2013f 2014f

Unit sales 8,402 6,171 7,662 8,018 7,377 7,478 7,587 7,69812.0 –26.6 24.2 4.6 –8.0 1.4 1.5 1.5


New listings 12,840 13,927 11,745 12,534 12,068 12,327 12,579 12,8064.6 8.5 –15.7 6.7 –3.7 2.1 2.0 1.8


9.3 3.8 –1.8 3.1 3.1 2.4 2.4 2.4



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metropolitan housing outlook spring 2010...canadian private residential mortgage insurer since 1995....

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