Canada Mortgage and Housing Corporation (CMHC) presented its annual Housing Outlook Conference entitled “Beyond the Recovery” today to some 950 industry professionals. At this event, CMHC's experts gave an overview of the situation across the province, provided a detailed review of the real estate market in the Montréal area and presented their forecasts for 2010.
Across the province
In Quebec, the economic recovery that began at the end of 2009, the demographic environment (characterized by the aging of the population and strong migration) and the borrowing conditions that favoured the catching up on and moving up of home purchases were all factors that contributed to the vigorous activity on the housing markets in 2010.
“However, since the second half of the year, the landscape has changed. In fact, economic growth is already less significant and demand, less strong, which will cause the markets to slow down in 2011,” said Kevin Hughes, Regional Economist at CMHC.
According to CMHC, housing starts in the province will fall by 10.6 per cent and reach 45,000 units in 2011. Single-detached home building, which already began to slow down in the spring, will register a decrease of about 3 per cent (to 18,750 units), while multiple-unit housing construction, still strong, will sustain a greater decline (around 15 per cent).
Next year, the volume of resales should be similar to the 2010 level. CMHC forecasts that there will be 80,500 MLS® transactions. “In 2011, moderate economic growth and less tight market conditions will result in a stable pace of activity. With the resale market becoming more balanced, we anticipate that prices will rise more slowly,” added Kevin Hughes.
Demographics, always demographics!
The annual proportion of Quebec households who buy a home is greater than the proportion of households who sell one, until the age of 75. Using these proportions with the latest demographic projections reveals that the number of buyers will remain above the number of sellers for the next 20 years but that the gap will narrow over time.
Montréal CMA
Resale market
In 2010, demand was strongly expressed early in the year on the resale market, producing a pendulum effect during the latter half of the year, which resulted in a decrease in the level of activity. This led to the emergence of strong seller’s market conditions in all segments and significant growth in the average MLS® price. MLS® sales will register a small increase of 0.5 per cent, while the average MLS® price will rise by 7.7 per cent to $296,000.
In 2011, the pace of transactions on the resale market will be much less volatile. The increase in transactions will be curbed by the earlier-than-planned purchases on the part of a number of buyers in 2010 and a measured rise in interest rates. The resale market will be more balanced and less and less favourable to sellers, in all segments. The condominium market will be the first to reach a balanced situation in 2011. This easing will extend to all geographic sectors of the CMA. In the case of single-family houses, the North Shore and Vaudreuil-Soulanges are the markets that will become balanced in 2011. In all, 42,600 MLS® sales will be registered in 2011, or 1.4 per cent more than in 2010. Since the growth in prices will be less pronounced, the average MLS® price will reach $303,000, up by 2.4 per cent.
Residential construction
In 2010, 21,400 dwellings will be started this year, or 11.2 per cent more than last year. The North Shore has the most municipalities posting strong increases in housing starts. Demand on the new home market was notably favoured by the scarce supply observed on the resale market at the beginning of the year. Echoing the easing of the resale market, home building also progressively lost some of its intensity over the second half of the year, particularly in the case of single-detached houses.
Condominiums will account for the greatest share of new housing activity in Greater Montréal in 2010 and 2011. In 2010, condominium starts will reach some 10,000 units, a level close to the record set in 2004. Starts of this type are showing significant growth this year, both on the Island and in the suburbs.
Residential construction in the metropolitan area will then return to a less significant level, more in line with the pace of the economy in 2011. “This slowdown will be due to the decrease in starts of condominiums, which will experience an extended absorption phase, after registering a record level of activity,” said Bertrand Recher, Seniors Market Analyst. In 2011, construction is expected to get under way on 19,500 housing units, for a decrease of 8.9 per cent from 2010.
In the retirement home segment, construction should remain limited and stable in 2010 and 2011, as this market is facing a drop in demand following years of intense activity. The vacancy rate for standard spaces in retirement homes in the Montréal area stood at 8.6 per cent in February 2010. According to our forecasts, over the next 20 years, the population aged 75 years or older will grow faster in the suburbs, especially on the North Shore, than on the Island.
Across the province
In Quebec, the economic recovery that began at the end of 2009, the demographic environment (characterized by the aging of the population and strong migration) and the borrowing conditions that favoured the catching up on and moving up of home purchases were all factors that contributed to the vigorous activity on the housing markets in 2010.
“However, since the second half of the year, the landscape has changed. In fact, economic growth is already less significant and demand, less strong, which will cause the markets to slow down in 2011,” said Kevin Hughes, Regional Economist at CMHC.
According to CMHC, housing starts in the province will fall by 10.6 per cent and reach 45,000 units in 2011. Single-detached home building, which already began to slow down in the spring, will register a decrease of about 3 per cent (to 18,750 units), while multiple-unit housing construction, still strong, will sustain a greater decline (around 15 per cent).
Next year, the volume of resales should be similar to the 2010 level. CMHC forecasts that there will be 80,500 MLS® transactions. “In 2011, moderate economic growth and less tight market conditions will result in a stable pace of activity. With the resale market becoming more balanced, we anticipate that prices will rise more slowly,” added Kevin Hughes.
Demographics, always demographics!
The annual proportion of Quebec households who buy a home is greater than the proportion of households who sell one, until the age of 75. Using these proportions with the latest demographic projections reveals that the number of buyers will remain above the number of sellers for the next 20 years but that the gap will narrow over time.
Montréal CMA
Resale market
In 2010, demand was strongly expressed early in the year on the resale market, producing a pendulum effect during the latter half of the year, which resulted in a decrease in the level of activity. This led to the emergence of strong seller’s market conditions in all segments and significant growth in the average MLS® price. MLS® sales will register a small increase of 0.5 per cent, while the average MLS® price will rise by 7.7 per cent to $296,000.
In 2011, the pace of transactions on the resale market will be much less volatile. The increase in transactions will be curbed by the earlier-than-planned purchases on the part of a number of buyers in 2010 and a measured rise in interest rates. The resale market will be more balanced and less and less favourable to sellers, in all segments. The condominium market will be the first to reach a balanced situation in 2011. This easing will extend to all geographic sectors of the CMA. In the case of single-family houses, the North Shore and Vaudreuil-Soulanges are the markets that will become balanced in 2011. In all, 42,600 MLS® sales will be registered in 2011, or 1.4 per cent more than in 2010. Since the growth in prices will be less pronounced, the average MLS® price will reach $303,000, up by 2.4 per cent.
Residential construction
In 2010, 21,400 dwellings will be started this year, or 11.2 per cent more than last year. The North Shore has the most municipalities posting strong increases in housing starts. Demand on the new home market was notably favoured by the scarce supply observed on the resale market at the beginning of the year. Echoing the easing of the resale market, home building also progressively lost some of its intensity over the second half of the year, particularly in the case of single-detached houses.
Condominiums will account for the greatest share of new housing activity in Greater Montréal in 2010 and 2011. In 2010, condominium starts will reach some 10,000 units, a level close to the record set in 2004. Starts of this type are showing significant growth this year, both on the Island and in the suburbs.
Residential construction in the metropolitan area will then return to a less significant level, more in line with the pace of the economy in 2011. “This slowdown will be due to the decrease in starts of condominiums, which will experience an extended absorption phase, after registering a record level of activity,” said Bertrand Recher, Seniors Market Analyst. In 2011, construction is expected to get under way on 19,500 housing units, for a decrease of 8.9 per cent from 2010.
In the retirement home segment, construction should remain limited and stable in 2010 and 2011, as this market is facing a drop in demand following years of intense activity. The vacancy rate for standard spaces in retirement homes in the Montréal area stood at 8.6 per cent in February 2010. According to our forecasts, over the next 20 years, the population aged 75 years or older will grow faster in the suburbs, especially on the North Shore, than on the Island.