Printer Friendly

CHMC forecasts upswing in housing market.

Professionals attending the Canadian Mortgage and Housing Corp.'s (CMHC) Housing Outlook Conference in Thunder Bay were given a dose of good news when CMHC officials said both the first time home buyer market and the rental market are heading toward better times in 2001.

The conference, a half-day session on Nov. 30-with presentations by some of Canada's foremost housing market analysts and top economists, offered a glimpse at key markets and opportunities, as well as the factors that will affect the housing market in Ontario and locally in 2001.

"Despite a poor year for single-detached starts in 2000, CMHC is forecasting an improvement in single and multi-family starts in the year ahead as some high-profile lots come on stream," Warren Philp, the market analyst in CMHC's Thunder Bay office, says.

"Both the first-time home buyer market and the rental market should see marked improvement in 2001 as employment at the casino and call centres starts to impact the local housing market," Philp says.

CMHC Ontario Regional Economist Alex Medow kicked-off the day's presentations by offering an overview of economic conditions, job markets and demographics and explaining the role they play in the province's home resale markets and new housing construction.

"Ontario's economy, while expanding for much of the past decade, has seen its most significant growth over the last three years," Medow says. "Despite the fact that southern Ontario has seen the majority of this growth, we are now seeing and expecting some of this expansion in Northern Ontario."

"Sluggishness in the U.S. economy may slow Ontario's manufacturing and export sectors. Currently, however, the province's economic indicators are mostly positive, and the strong job growth is predicted to continue."

Commenting on Ontario's resale home markets versus new home markets, Medow says new construction is dependent on the state of the local resale market.

If the resale market is "loose" and prices are affordable enough, there won't be as much new construction. "Home ownership is still reasonably affordable," he says. But, Ontario is heading toward a moderate expansion in 2001 and the average home price is going up. This excludes Thunder Bay, where new home prices are down. Areas with the greatest amount of economic growth will see the biggest expansion in the market, he says.

Thunder Bay's housing market has suffered in recent years because of an out-migration trend.

Philp expects the June 2001 census will be a telling indicator of performance over the 1996 to 2001 period and notes that statistics for 1994 through 1999 show the majority of people leaving the city have migrated to either Toronto or Calgary.

There are people coming to Thunder Bay as well, but the majority are moving to the city from outside the census metropolitan areas (CMAs).

"The bulk of those people are coming from the region," he says. Poor employment opportunities for people between the ages of 25 and 44 is the leading cause for out-migration. That age group is made up of the biggest number of home buyers and builders.

The 2001 census will paint a better picture, he says, "but we're going to be hard-pressed to show we've seen population growth" since the last census in 1996.

The conference also looked at vacancy rates and apartment rentals in the city. Philp says Thunder Bay is in line with other cities with populations over 100,000, according to results from a recent rental marketing survey put out by CMHC.

For the second straight year, the vacancy rate among apartments with at least three units in the Thunder Bay CMA fell marginally to 5.8 per cent in October from 7.5 per cent a year before.

"Thunder Bay's rate decline matched a national trend towards lower vacancies in centres with populations over 100,000," Philip says. "Twenty-two of Canada's 26 major centres have lower vacancy rates than a year ago."

"Further comparisons show that Thunder Bay was the centre with the third highest vacancy rate in the land, with Sudbury once again having the highest (7.7 per cent) and Trois Rivieres in Quebec (6.8 per cent) having the second highest vacancy rates among CMAs in the country."

Philp says employment factors are the key points to consider when trying to ascertain market movement.

"CMHC expects that the decline in the local vacancy rate was due to factors such as the employment generated by the new charity casino, and itinerant construction workers hired to work on any number of high profile industrial, commercial and institutional projects, ongoing in Thunder Bay presently," Philp says.

The marketing survey also showed that the vacancy rate in the city's north end fell to 4.9 per cent from 6.3 per cent in October 1999; the vacancy rate in the south end fell more significantly to 6.8 per cent from 8.7 per cent last October.

A vacancy rate of 3.0 per cent reflects a balanced market where there is adequate supply for those seeking rental accommodation, Philp adds. When vacancy rates exceed five per cent for a prolonged period of time, choice gets better, but new rental construction is discouraged.

"Despite the relatively high vacancy rate, average two-bedroom apartment rents rose," Philp says: "The average rent for two bedroom apartments in CMA structures with at least three units was $654 in October 2000, up from $647 last October. Rents are still below their peak of $672 in 1996."

Forecasting for 2001, Philp says he expects employment gains in the city in 2000-2001 will stimulate the housing market in the new year, but added migration "holds the key to future housing demand."
COPYRIGHT 2001 Laurentian Business Publishing, Inc.
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 2001, Gale Group. All rights reserved. Gale Group is a Thomson Corporation Company.

Article Details
Printer friendly Cite/link Email Feedback
Title Annotation:Housing Outlook Conference; Canadian Mortgage and Housing Corporation holds
Publication:Northern Ontario Business
Article Type:Brief Article
Geographic Code:1CANA
Date:Jan 1, 2001
Previous Article:Economic illiteracy.
Next Article:Promoting tourism.

Related Articles
Vehicle sales, housing starts spur growth in castings.
Senior housing, health-care funding outlook improves.
Housing outlook remains strong in future.
Housing expert projects setbacks.
Affordability driving-market: Thunder Bay housing starts expected to continue on upswing.
The National Association of Home Builders (NAHB; Washington, D.C.) has launched Housing Economics Online, a web-based publication that provides...

Terms of use | Privacy policy | Copyright © 2019 Farlex, Inc. | Feedback | For webmasters