Multiple Starts : A number of factors such as: the current high level of inventory, which will remain relatively high, the lower growth rate of the population aged 75 and over, which will limit demand for retirement homes, will dampen starts of multiple family homes in 2011. Nonetheless, given the strong pace at the outset of the year multiple starts will rise to 27,600 units in 2010, moving down to 24,000 in 2011.
Resales : Following a strong recovery in 2009 – which has extended into the first quarter of 2010, MLS® sales will moderate during the remainder of this year, as less favourable buying conditions emerge. Sales of existing condominiums (town houses or apartments) will again be an important component of the total. The Multiple Listing Service (MLS®) will record over 86,000 unit sales this year, while 2011 will see 83,000 unit sales.
Prices : Decreasing demand for resale homes combined with rising supply will take pressure off prices in the course of the next two years. With a return to more balanced conditions, price growth in the resale market will moderate during 2010 and 2011 to a
pace that is in line with inflation.
A recovering economy, favourable borrowing conditions and strong migratory flows will fuel Quebec’s housing markets this year and next. Sales of existing homes will surpass the 86,000 mark this year and more than 47,000 new homes will be started in the province.
The Bank of Canada cut the Target for the Overnight Rate in the early months of 2009. The rate was 1.50 per cent at the start of 2009 and has since fallen to 0.25 per cent. Looking ahead, we expect that short-term interest rates will begin to rise in the second half of 2010.
With the overnight rate expected to increase in the coming months, mortgage rates have begun to rise. According to CMHC’s base case scenario, posted mortgage rates will gradually increase throughout the course of 2010, but will do so at a slow pace. For 2010, the one-year posted mortgage rate is assumed to be in the 3.6-4.8 per cent range, while three and five-year posted mortgage rates are forecast to be in the 4.2-6.7 per cent range. For 2011, the oneyear posted mortgage rate is assumed be in the 5.0-6.0 per cent range, while three and five-year posted mortgage rates are forecast to be in the 5.6-7.2 per cent range.
Rates could, however, increase at a faster pace if the economy recovers more quickly than presently anticipated. Conversely, rate increases could be more muted if the economic recovery is more modest in nature.