*One year following the federal government tightened mortgage insurance regulations, the existing home market has fully recovered
• In July, existing home sales were up 9.0% from year ago levels and home prices raised 8.1% from year ago levels. From a regional perspective, strength in Greater Toronto, Greater Vancouver, Calgary and Edmonton was offset by weakness in Montreal and most major urban areas in the Atlantic Provinces.
• Overall, while the housing market has shown some signs of revival in recent months, activity is likely to be tempered by rising interest rates and the market is still expected to achieve its soft landing.
• In other news, manufacturing shipments fell 0.5% in July – a fourth decline in 6 months. In real terms, sales were down an even larger 1.3%.
Housing Market Outlook - CMCH third quarter review (attached) – here’s couple of key factors affecting housing starts at a glance …
• Mortgage rates: Mortgage rates are expected to increase gradually and steadily, over the forecast horizon. However, they will remain low by historical standards. Current mortgage rates are supportive of housing demand.
• Employment : The labour market has gotten off to a slower than expected start in 2013, with employment growing in the first six months at a little over half the rate in 2011 and 2012. Nevertheless, employment is expected to improve during the course of the year and is forecast to grow 1.4 per cent in both 2013 and 2014, which will support Canada’s housing sector.
• Population: Lower population growth among the 25 to 34 year age group is expected to lead to a slight moderation in demand from first-time home buyers this year and over the longer term. Furthermore, Canada’s low birth rate should lessen the demand for additional housing stock in the medium and longer term. Population aging, however, is likely to impact the type and tenure of housing demanded.
Romy Alegria is a Mobile Mortgage Specialist with TD Bank who specializes in Residential and Commercial Real Property Mortgages in the Greater Toronto Area.
Romy Alegria | Manager, MMS | TD Canada Trust
P: 416.278.2540 | F: 1-866.222.5708