ONTARIO ECONOMIC & HOUSING OUTLOOK...Kingston Toronto Windsor CANADA MORTGAGE AND HOUSING...
Transcript of ONTARIO ECONOMIC & HOUSING OUTLOOK...Kingston Toronto Windsor CANADA MORTGAGE AND HOUSING...
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ONTARIO ECONOMIC &HOUSING OUTLOOK
TED TSIAKOPOULOS
Ontario Regional Economist
Canada Mortgage & Housing Corporation
September 2015
CANADA MORTGAGE AND HOUSING CORPORATION
What to Expect Ahead
• Rebalancing of Growth Underway
• Demand Shifts to More Affordable Housing
• Price Growth Will Slow But Correction Not Likely
• Higher Price Risk in Toronto, Less So Elsewhere
• Higher Price Risk for Singles vs Condos
CANADA MORTGAGE AND HOUSING CORPORATION
Demand for Resale Housing Remains Strong
Source: CREA, CMHC Forecast(f)
MLS® Sales - ONTARIO
160000
170000
180000
190000
200000
210000
220000
2005 2007 2009 2011 2013 2015f
CANADA MORTGAGE AND HOUSING CORPORATION
North & East Not As Strong as Southern Ontario Markets
Existing Home Sales % chg By Selected CMA - 2014
Source: CREA
-10 -5 0 5 10
Barrie
Hamilton
Oshawa
Ottawa
Sudbury
Kingston
Toronto
Windsor
CANADA MORTGAGE AND HOUSING CORPORATION
Residential Starts Mirror Similar Picture in 2014
Housing Starts % chg By Selected CMA - 2014
Source: CMHC
-60% -40% -20% 0% 20% 40%
Barrie
Oshawa
Windsor
Hamilton
Toronto
Ottawa
Greater Sudbury
CANADA MORTGAGE AND HOUSING CORPORATION
Ontario Housing Star ts Running Below Long Run Potential
0100002000030000400005000060000700008000090000
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
f
2016
f
Starts Low High
Source: CMHC
Demographic Range
CANADA MORTGAGE AND HOUSING CORPORATION
Economy & Labour Market Growing Below Historic Norms
3
2.2
1.51.3
0
0.5
1
1.5
2
2.5
3
3.5
Pre-Recession Post Recession
GDP Growth Emp Growth
Source: CMHC , Statistics Canada
CANADA MORTGAGE AND HOUSING CORPORATION
Population Growth Slowing As Migration Below Historic Norms
-40000
-20000
0
20000
40000
60000
80000
100000
120000
140000
2010 2011 2012 2013 2014 2015(F) 2016(F) 2017(F)
Total Net Migration Net Intl Net Inter
Source: CMH , Statistics Canada
CANADA MORTGAGE AND HOUSING CORPORATION
Affordability Favours Some Markets Over Others
Source: CREA, Statistics Canada, CMHC calculations
Actual Income as % Share of Required Income to Purchase Resale Home - 2015
0 50 100 150 200
Toronto
Oshawa
Hamilton
Barrie
London
Ottawa
Thunder Bay
Windsor
Affordable
CANADA MORTGAGE AND HOUSING CORPORATION
GTA & Surrounding Labour Markets Stable, SW Strong,
North and East Weaker
Source: Statistics Canada, CMHC Forecast(f)
Job Growth %–
-3
-2
-1
0
1
2
3
4
5
6
Hamilton Oshawa Ottawa Windsor Sudbury GTA
2014
2015f
2016f
CANADA MORTGAGE AND HOUSING CORPORATION
A Rebalancing of Growth* in Canada
Source: Statistics Canada, CMHC Forecast(f) *Forecast as of May 2015 (Q2)
Employment % chg
-1.5
-1.0
-0.5
0.0
0.5
1.0
1.5
2.0
2.5
2015(F)
2016(F)
CANADA MORTGAGE AND HOUSING CORPORATION
Lower Commodity Prices A Drag on Growth in Prairies & Atlantic
Commodity Price Index - US$ (2005=100)
Source: IMF Commodity Price Database
0
50
100
150
200
250
300
2008 2010 2012 2014
All
Metals
Energy
CANADA MORTGAGE AND HOUSING CORPORATION
Ontario Manufacturing Sales Fast Approaching 2004 Highs
60
65
70
75
80
85
90
95
100
105
2000 2002 2004 2006 2008 2010 2012 2014
Manufacturing sales – six month average index (2004=100)
Source: Statistics Canada
CANADA MORTGAGE AND HOUSING CORPORATION
Rebalancing of Global Growth Favours Advanced Economies
Source: Consensus Forecasts, IMF
GDP % chg - 2007$
-4
-2
0
2
4
6
8
United States
Japan Europe China Russia
2014
2015f
2016f
CANADA MORTGAGE AND HOUSING CORPORATION
Can US Decouple From Rest of World? Consumers Say Yes!
Source: US BEA
Contribution to US Economic Growth By Sector %
-3
-2
-1
0
1
2
3
4
2011 2012 2013 2014 2015
Consumers
Net Exports
CANADA MORTGAGE AND HOUSING CORPORATION
Lift from US Economy Depends on Competitiveness
0
5
10
15
20
25
2004 2006 2008 2010 2012 2014
China
Canada
Mexico
Japan
Country Specific Share of US Imports
Source: Industry Canada Trade Database
CANADA MORTGAGE AND HOUSING CORPORATION
Bank of Canada More Accommodative vs Fed
Source: Bank of Canada
0
0.5
1
1.5
2
2.5
3
3.5
4
4.5
5
2007 2009 2011 2013 2015
CANADA MORTGAGE AND HOUSING CORPORATION
Home Prices Growing Faster Versus Incomes
Source: CREA, Statistics Canada, CMHC
MLS® Price, Income Growth - ONTARIO
0
1
2
3
4
5
6
7
8
2010 2011 2012 2013 2014
Price
Income
CANADA MORTGAGE AND HOUSING CORPORATION
Source: CREA II, Toronto Real Estate Board, CMHC Calculations
-20
-10
0
10
20
30
40
50
<$400,000 $400,000 - $799,999 $800,000 - $999,999 >$1,000,000
Growth in Toronto single-detached MLS sales is concentrated in higher price ranges
2014Q1/2015Q1
% chg yr/yr
Higher End Home Sales Skewing Prices Higher
CANADA MORTGAGE AND HOUSING CORPORATION
Other Explanations?
• Lower interest rates
• Land supply
• Wealth increasing for households aged 55+
CANADA MORTGAGE AND HOUSING CORPORATION
Toronto Risk Rating Turns Higher: Regina & Winnipeg Also High
Low Moderate High
Risk Level
Source: CMHC, House Price Analysis and Assessment Framework – 2015q1
VancouverCalgary
Toronto
Regina
MontréalOttawa
Winnipeg
QuébecHalifax
OverheatingPrice
Acceleration Overvaluation OverbuildingOverall
Assessment
St.John’s
SaskatoonEdmonton
Canada
CANADA MORTGAGE AND HOUSING CORPORATION
Market Not Overheating: North & East Cooler Markets
Source: CREA, CMHC
Share of New Listings Sold By Quarter By CMA – 2015q2
0%10%20%30%40%50%60%70%80%
SELLERS
CANADA MORTGAGE AND HOUSING CORPORATION
Ontario Apartment Construction Strengthening
Source: CMHC Forecast(f)
05000
10000150002000025000300003500040000
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
f
2016
f
Apt Starts 15 yr Avg
CANADA MORTGAGE AND HOUSING CORPORATION
Demographics Support High Density Demand
0
2
4
6
8
10
12
14
one person lone parents couple without kids
Total households
2001
2011
Growth by Household Type - ONTARIO
Source: Statistics Canada Census
CANADA MORTGAGE AND HOUSING CORPORATION
Demand Not Just From End Users – Investors More Active
Estimated Share % of Existing Condominium Universe Rented Out
Source: CMHC Fall RMS Survey
10
15
20
25
30
35
2007 2008 2009 2010 2011 2012 2013 2014
Toronto
Ottawa
CANADA MORTGAGE AND HOUSING CORPORATION
Rental Demand Outstripping Supply in Ontario
Source: CMHC Forecast 2011-16, Statistics Canada*Does not include condominiums completed and available for rent
0
5000
10000
15000
20000
2006-11 2011-16
Renter Household Growth (Demand)
Rental Completions*(Supply)
CANADA MORTGAGE AND HOUSING CORPORATION
New Unsold Apartment Units Rising
Source: CMHC
Apartment unsold units as % of population per 10,000 - ONTARIO
0
1
2
3
4
5
Jan-
90
Dec
-90
Nov
-91
Oct
-92
Sep-
93
Aug
-94
Jul-
95
Jun-
96
May
-97
Apr
-98
Mar
-99
Feb-
00
Jan-
01
Dec
-01
Nov
-02
Oct
-03
Sep-
04
Aug
-05
Jul-
06
Jun-
07
May
-08
Apr
-09
Mar
-10
Feb-
11
Jan-
12
Dec
-12
Nov
-13
Oct
-14
Unsold apts per 10,000 (pop) Average
CANADA MORTGAGE AND HOUSING CORPORATION
Condo Vacancy Rates May Edge Higher But Condo Rental Market Tight
1.1 1
1.8
2.7
3.6
0.71.1
1.3
3.4
1.7
0
0.5
1
1.5
2
2.5
3
3.5
4
Van Cal Tor Mon Ott
2013
2014
Source: CMHC
Condominium Apartment Vacancy Rates by CMA – 2013 vs 2014
CANADA MORTGAGE AND HOUSING CORPORATION
Condo Resale Market Tight Enough To Absorb Unsold Units
.1
.2
.3
.4
.5
.6
.7
1998 2000 2002 2004 2006 2008 2010 2012 2014
Sales To Active Listings Ratio, s.a - GTA
BALANCED
SELLERS
Source: CREA, CMHC calculation
CANADA MORTGAGE AND HOUSING CORPORATION
Ontario Housing Outlook - RISKS
• Confidence shaken by continued Asian & European growth concerns
• Lift from US economy tempered by global competition
• Rising Inventories remain unabsorbed and dampen price gains
• Slowing GTA prices spill into neighbouring communities
• Rising share of wealth held in real estate & prone to shocks
UPSIDE RISKS
• US economic growth accelerates above forecast
• Sluggish growth in global economy, lower C$ supports capital inflows
DOWNSIDE RISKS
Thank You
Questions?