CMHC Toronto Q4 2014Outlook

8/10/2019 CMHC Toronto Q4 2014Outlook

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TORONTO HOUSING MARKET

CANADA MORTGAGE AND HOUSING CORPORATION

HOUSING OUTLOOK CONFERENCE

Optional

City photo Optional

ous ng mar e n e gence you can coun

on


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Outline

High Rise vs. Low Rise



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More MLS Sales Next Year

100,000

Total MLS Sales

89,2

55

88,2

14

91,7

60

88,1

57

88,9

46

92,5

00

96,0

0

92,0

00

80,000

90,000

76,3

87

70,000

60,000

2008 2009 2010 2011 2012 2013 2014F 2015F 2016F


MLS is a registered trademark of the Canadian Real Estate Association (CREA)Source: CREA, CMHC forecasts (F)


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Supply Will Keep the Resale Market Balanced

Sales-to-New Lis tings Ratio

100%

80%

40%

20%

2

004Q1

2

005Q3

2

007Q1

2

008Q3

2

010Q1

2

011Q3

2

013Q1

2

014Q3

01

6Q01F


Source: CREA, CMHC forecasts (F)

2


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Home Price Growth to Mirror Inflation

9.1%10%

Average MLS Price Growth

7.5%

6.6%

4.8%

7.0%

7.9%

7.0%

5.0%

6.5%

6%

7%

8%

4.3%

2.2%1.8%

2%

3%

4%

.

0%

1%

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014F 2015F 2016F


Source: CREA, CMHC forecasts (F)


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New Home Sales Slowly Trending Up

50,000

60,000

Low Rise Sales

30,000

40,000

High Rise Sales

10,000

20,000

0

2000M01

2001M01

2002M01

2003M01

2004M01

2005M01

2006M01

2007M01

2008M01

2009M01

2010M01

2011M01

2012M01

2013M01

2014M01


Source: Realnet Inc.


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Condominium Apartments to Dominate Housing Starts

50,000

18,00

17,5

30,000

40,000

9,700

8,500

0

0

10,000

,

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014F2015F2016F

Apartment Semi-detached Row Single-detached


Source: CMHC Starts & Completions Survey, CMHC forecasts (F)


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Job Market Will Lend Support to Home Buying

Toronto CMAUnemployment Rate (%)

87.9

8.5

9.0

9.5

10.0

.

6.0

6.5

7.07.5

.

5.0

5.5

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014F2015F2016F


Source: Statistics Canada, CMHC forecasts (F)


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Employment Growth by Industry

Accommodationandfoodservices

Construction

Business,buildingandothersupportservices

, .

Healthcareandsocialassistance

Publicadministration

Educationalservices

F.I.R.E.

Trade

Professional,scientific

and

technical

services

ransportat onan ware ous ng

Otherservices

Manufacturing

Information,cultureandrecreation


15.0% 10.0% 5.0% 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0%


Source: Statistics Canada


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Em lo ment rowth b a e rou

120

125

105

110

dex

90

95

100I

80

85

2008Q1 2009Q1 2010Q1 2011Q1 2012Q1 2013Q1 2014Q1

CANADA MORTGAGE AND HOUSING CORPORATIONSource: Statistics Canada


Renters FTB Repeat


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Incomes Rising

$913

$900

$950 Avg. Weekly Earn ings, Toron to CMA

$800

$850

$700

$750

$600

$650


2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013


Source: Statistics Canada


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E uities at All-Time Hi hsTSX 300 Index, 2009-present

$16,000

$18,000

$10,000

$12,000

$14,000

$6,000

$8,000

0

$2,000

$4,000

CANADA MORTGAGE AND HOUSING CORPORATIONCANADA MORTGAGE AND HOUSING CORPORATION

Source: TSX

2009 2010 2011 2012 2013 2014


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Contributors to USA GDP rowth

5

6

ein

GDP

2

3

NetExports

Investment

Governmentn

tochang

2

1

0

Consumption

Contributi

4

3

CANADA MORTGAGE AND HOUSING CORPORATIONSource: US Bureau of Economic Statistics



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New home sales: USA

1,400

1,600

800

1,000

1,200

berofsales

400

600Num

0

CANADA MORTGAGE AND HOUSING CORPORATIONSource: US Census Bureau



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Existin home avera e rice: USA

180

190

200

150

160

170

iceindex

120

130

140Pr

100

110

CANADA MORTGAGE AND HOUSING CORPORATIONSource: S&P Shiller Home Price Index



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Ontario ex orts oods to destinations

1%Mexico

1%PRC

6%

2%

UK

HongKong

78 %USA

CANADA MORTGAGE AND HOUSING CORPORATIONSource: Government of Ontario


0% 20% 40% 60% 80% 100%


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Ontario ex orts to oods

1%Nickel

2%Medications Packaged forRetail

10%

6%

Gold

MotorVehicleParts

28 %Autos

CANADA MORTGAGE AND HOUSING CORPORATIONSource: Government of Ontario


0% 5% 10% 15% 20% 25% 30%


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Exchan e rate: USD/CAD

1.00

1.05

0.95

0.90

0.80

0.85

CANADA MORTGAGE AND HOUSING CORPORATIONSource: Bank of Canada


09/01/2012 09/11/2012 09/09/2013 09/07/2014


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5Y osted mort a e rate

7.50

8.00

6.00

6.50

7.00

age

4.50

5.00

5.50

Perc

en

3.00

3.50

4.00

CANADA MORTGAGE AND HOUSING CORPORATIONSource: Bank of Canada, CMHC forecast


2006 2007 2008 2009 2010 2011 2012 2013 2014 2015F


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Core Consumer Price Index

dex 3.0%

3.5%

changeini

2.0%

2.5%

r-over-year

1.0%

1.5%

Ye

0.0%

0.5%

CANADA MORTGAGE AND HOUSING CORPORATIONCANADA MORTGAGE AND HOUSING CORPORATION

Source: Bank of Canada

2010 2011 2012 2013 2014


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Outline

Outlook

High Rise vs. Low

Risks to Forecasts



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Single-Detached Home Prices Outpacing Others

140

Index (Jan 2011=100)

100

110

120

70

80

90

Singledetached

Townhouse

50

60

Jan2011 Jan2012 Jan2013 Jan2014


Source: CREA HPI Index for MLS sales, CMHC calculations


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Condominium Apartments Remain the Affordable Choice

Monthly Carrying Costs

$4,000

$4,500 CondoApartment,5%DownPayment

Singledetached,

5%

Down

Payment

PurposeBuiltTwobedroomApartmentRent

$2,500

$3,000

$3,500TwobedroomRentalCondominiumApartmentRent

$1,000

$1,500

$2,000

Assumptions:

$0

$500

2006 2007 2008 2009 2010 2011 2012 2013


oron o ea s a e oar ) average s nge- e ac e an con omn um apar men un pr c e. rs me uyer uses e pre- , = r, pre , = r,2008-2010, AM=35, 2011, AM=30, 2012 and after, AM=25) and 5% down payment, and 5-yr lending rate for up to 2010M03. From 2010M04, uses the Chartered Bank conventionalmortgage rate, 5-yr


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More High Rise Sales Sites

Number of Active Sales Sites

600

400

500

200

300

Low Rise Active Sites

0

100

Jan-02 Jan-04 Jan-06 Jan-08 Jan-10 Jan-12 Jan-14

High Rise Active Sites

CANADA MORTGAGE AND HOUSING CORPORATIONSource: Realnet Inc.


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Condos Help Fill Rental Market Supply

30,000

Number of Starts

15,000

20,000

,Condominium Apartment Starts

Rental Apartment Starts

10766

632

5,000

10,000

0


Source: CMHC Starts & Completions Survey


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Vacancy Rates to Remain Low Despite Increases in

Average Vacancy Rate (%)

2

2.5

3

.Purpose-Built Rental Apartments

Rental Condominium Apartments

1.9 1.81.9

1

1.5

2

0

0.5

2006 2007 2008 2009 2010 2011 2012 2013 2014F 2015F 2016F


Source: CMHC Rental Market Survey


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Prime Renter & FTB Age Categories Show

12.0%

Growth in Employment,Toronto CMA

6.0%

8.0%

10.0% 15 to 24 Yrs

25 to 44 Years

45 to 64 Years

1.8% 1.9% 1.1%

0.0%

2.0%

4.0%

2012 2013 2014

-8.0%

-6.0%

-4.0%

- .


Source: Statistics Canada, CMHC calculations


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Growing Long-Term Investor Activity

25.7%30%

Stock of Rental Condominiums

19.2% 18.8%20%

25%

5%

10%

0%

2003 2008 2013



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Stronger Price Appreciation for New Condos

$554$550

$600

Average Sale Price Per Square Foot, SA

$455

$400

$450

$500

$200

$250

$300

$350


Source: Urbanation Inc., CMHC Seasonal adjustment


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Family Circumstances Will Change During

Sales Launch @ Completion & Unit1.5-2 Years 1.5-2 Years

re-cons ruc on ar o ons ruc on ea y orOccupancy


Source: CMHC


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Demographic Support for High Rise Homes

Growth in PopulationBaby Boomers

15.8%

.

16.4%

15.0%

20.0%

.Millennials

2.7%

10.0%

7.7%

5.0%

10.0%

2.7%5.0%

0.0%


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International Migrants Will Drive Net Migration

120,000

Number of Migrants

60,000

90,000

Net Migration

0

30,000

-30,000

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014f

2015f

2016F

Immigration Interprovincial , Intraprovincial and Non-permanent


Source: Statistics Canada, CMHC forecasts (F)


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Record Level of Condos Under ConstructionBut Share of Unabsorbed Units Remains Constant

Share of UnabsorbedUnits at Completion

Number of CondominiumApartments Under

Construction

40,000

50,000

60,000

6%

7%

8%

20,000

30,000

2%

3%4%

0

10,000

0%

1%

2

000

2

002

2

004

2

006

2

008

2

010

2

012

2

014



Q1

Q1

Q1

Q1

Q1

Q1

Q1

Q1


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High Level of Condominiums Under Construction willSu ort Stead Pace of Com letions

20,000

Number of Condominium Completions

12

,12

13

,58

13

,3

12

,

14

,94

8

17

,87

8

12

,

14

,47

012,000

14,000

16,000

,

10

,4

09

8,581

3,

1

1,53

3,

187

2,689

1,924

4,8

7,

165 4

,8

08 9

,9

15

9,

7

98

,1

34

1

7,52

8

4 212

389

0,94

2

4,000

6,000

8,000

,

94

07

89

0 8

0

,




35/44

.....and In-line With Household Formation

Number of Total Housing Completions

45,000

38,1

21

57 3

6,2

58

6 ,393

33,8

31

,907

3,7

08

,00030,000

35,000

40,000 Average Household Format ion

30,

28,3

531 3

13

15,000

20,000

,

0

5,000

,

2006 2007 2008 2009 2010 2011 2012 2013 2014F


Source: Statistics Canada, CMHC


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Can Newly Constructed Condominium Apartments Meet



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Low-rise homes still the popular choice:

-

75% of all MLS sales YTD are inlow rise homes in the GTA

55% of all MLS sales YTD are inlow rise homes in the City of Toronto


Source: TREB


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Sales of Luxury Homes Driven by Equity

Sales of Single-Detached Homes Priced

$1Mill ion+ as a Share of Total MLS Sales

5%6%

8%

6%

7%

8%

3%

4%

5%

0%

1%

2012 YTD 2013 YTD 2014 YTD


MLS is a registered trademark of the Canadian Real Estate Association (CREA)Source: TREB


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More New Low Rise Home Sales in 905 Regions

New High Rise Sales, 2014 YTDNew Low Rise Sales, 2014 YTD

HALTON, 8%

PEEL, 3%DURHAM, 1%

HALTON,

,5%

TORONTO,

YORK, 11%

YORK, 36%

DURHAM,16%

77%

PEEL, 30%


Source: Realnet Inc.


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Towns Are the New Singles

6%

6%

7%

Town

Growth in MLS Sales

5%

3%

4%4%

3%

3%

4%

5%Single

2%

0%

1%

2%

-1%-2%

-1%

2011 2012 2013 2014 YTD


Source: TREB


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Outline

Outlook

High Rise vs. Low

Risks to Forecasts



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Risks To Forecasts

Global pol itical and economic uncertainty

Lower inflow of international migrants

Short-term build up on inventories, especially in the high rise segment



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Thank you/Merci



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Contact Information

Senior Market Analyst (GTA)

.

Phone:


CMHC Toronto Q4 2014Outlook

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