TREB Housing Outlook 2010
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The document summarizes a presentation on the 2010 housing market outlook. It discusses trends in population growth, immigration, housing sales, prices, affordability, mortgage rates, the economy and GDP. It provides forecasts for these indicators in 2010, noting prices will increase 7% while affordability remains stable. The resale and new home markets are breaking down, with condo apartments making up a growing share of sales. Builders are cooperating with realtors on new projects.
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TREB Housing Outlook 2010
- 1. 2010 Member Forums Housing Market Outlook Jason Mercer Senior Manager, Market Analysis jmercer@trebnet.com
- 2. Part 1: Resale Market Outlook Part 2: Resale Market Breakdown Part 3: New Home Market Part4: Rental Market Part 5: TREB Member Resources
- 4. GTA!Most!Diverse!Metropolitan!Area!in!the!World Share!of!Foreign"Born!Population in!Major!Metropolitan!Areas Toronto Vancouver Miami Los!Angeles Sydney Melbourne New!York!City Montreal Washington!DC 0% 10% 20% 30% 40% 50% Source:!Adapted!from!Statistics!Canada,! 2006!Census!Analysis! Series
- 5. Sustained!Population!Growth!is!Projected Toronto!CMA!Population Historic!and!Projected 10,000,000 8,000,000 6,000,000 4,000,000 Historic!Toronto!CMA!Population 2,000,000 Projected!Toronto!CMA!Publication 0 Source:!Statistics! Canada,! Ontario!Ministry!of!Finance!Projection
- 6. MLS® Sales!Will!Follow!Population!Trend!– Long!Term GTA!MLS®!Sales Historic!and!Projected 140,000 120,000 100,000 80,000 Actual!Existing! Home!Sales 60,000 Historic!Trend 40,000 Long"Term!Sales!Projection 20,000 0 Source:!Statistics! Canada,! Ontario!Ministry!of!Finance!Projection
- 7. Affordability!Improved!Markedly!in!2009,!but… TREB!Affordability!Indicator! Share!of!Average!Household! Income!Used!for!Mortgage!Principal! and!Interest,! Property!Taxes!and!Utilities!on!the!Average!Priced!GTA!Resale!Home 55% 50% 45% 40% 35% 30% 25% Source:!Toronto!Real!Estate!Board! Data!and!Calculation;! Statistics! Canada
- 8. …the!Cost!of!Home!Ownership!will!Rise!in!2010 TREB!Affordability!Indicator! Share!of!Average!Household! Income!Used!for!Mortgage!Principal! and!Interest,! Property!Taxes!and!Utilities!on!the!Average!Priced!GTA!Resale!Home 55% 50% 45% 40% 35% 30% 25% Source:!Toronto!Real!Estate!Board! Data!and!Calculation;! Statistics! Canada
- 9. MLS® Sales!Remaining!Strong!but!Edging!Lower TREB!MLS®!Annualized!Sales/Listings!Trend:! Historic!&!Forecast 190,000 100% Sales/Listings!Trend!(Annualized) MLS!Sales 170,000 90% Sales"to"New!Listings!Ratio 150,000 80% 70% 130,000 60% 110,000 50% 90,000 40% 70,000 30% 50,000 20% Source:!Toronto!Real!Estate!Board
- 10. More!Home!Owners!Will!List! TREB!MLS®!Annualized!Sales/Listings!Trend:! Historic!&!Forecast 190,000 MLS!Sales 100% Sales/Listings!Trend!(Annualized) 170,000 90% Sales"to"New!Listings!Ratio MLS!New!Listings 150,000 80% 70% 130,000 60% 110,000 50% 90,000 40% 70,000 30% 50,000 20% Source:!Toronto!Real!Estate!Board
- 11. Market!Conditions!Not!as!Tight!in!2010 TREB!MLS®!Annualized!Sales/Listings!Trend:! Historic!&!Forecast 190,000 MLS!Sales 100% Sales/Listings!Trend!(Annualized) 170,000 MLS!New!Listings 90% Sales"to"New!Listings!Ratio Sales"to"New!Listings!Ratio 150,000 80% 70% 130,000 60% 110,000 50% 90,000 40% 70,000 30% 50,000 20% Source:!Toronto!Real!Estate!Board
- 12. Market!Tightness!Correlates!With!Price!Growth Sales"to"New"Listings!Ratio!vs.!Average!Annual!Price!Change 80% 20% Annual!Average!Price!Change Sales"to"New!Listings!Ratio 70% 15% 60% 10% 50% 5% 40% Sales"to"New!Listings!Ratio!(Left!Axis) 0% 30% Annual!Average!Price!Change!(Right!Axis) "5% 20% "10% Source:!Toronto!Real!Estate!Board
- 15. Components!of!Affordability Average Price +7%
- 16. Economic!Recovery!is!Underway!in!Canada Canadian!Real!GDP,!Monthly Month"Over"Month!Per!Cent!Change 0.8% 0.4% 0.0% "0.4% "0.8% "1.2% Source:!Statistics!Canada
- 17. GDP!Growth!Will!Continue!in!2010 Canadian!Real!GDP,!Quarterly Annualized!Quarter"Over"Quarter!Per!Cent!Change 6% 4% 2% 0% "2% "4% "6% "8% Source:!Statistics!Canada;!Bank!of!Canada! Baseline!Forecast
- 18. Components!of!GDP!Growth Canadian!Real!GDP,!Quarterly Annualized!Quarter"Over"Quarter!Per!Cent!Change 6% 4% 2% 0% FACT:!More!than!60!per!cent!of!Canadian! "2% GDP!is!accounted!for!by!personal! "4% expenditure "6% "8% Source:!Statistics!Canada;!Bank!of!Canada! Baseline!Forecast
- 19. Consumer!Price!Growth!Moving!Toward!BoC!Target Canadian!Consumer!Price!Index!(CPI) Year"Over"Year!Per!Cent!Change 4% 3% 2% 1% 0% CPI!Annual!Per!Cent! Change "1% Core!CPI!(Bank!of!Canada)!Annual!Per!Cent!Change "2% Source:!Statistics! Canada
- 21. Slope!of!Yield!Curve!Changing Canadian!Government!of!Canada!Bill/Bond!Yield!Curve Spot!and!Derived!Forward!Rates 4.00% 3.50% 3.00% Spot Bill/Bond!Yield 2.50% December!2010!Forward!Curve 2.00% 1.50% 1.00% 0.50% 0.00% Source:!Bank! of!Canada;! TREB! Forward!Rate!Calculations
- 22. Variable!and!Fixed!Mortgage!Rates!Will!Increase! Disproportionately Prime!Rate!and!5"Year!Fixed!Mortgage!Rate Historic!and!2010!Forecast 9 8 7 6 Per!Cent 5 4 3 Average!5"Year!Fixed!Mortgage!Rate 2 Prime!Rate 1 0 Jul"00 Jul"01 Jul"02 Jul"03 Jul"04 Jul"05 Jul"06 Jul"07 Jul"08 Jul"09 Jul"10 Jan"00 Jan"01 Jan"02 Jan"03 Jan"04 Jan"05 Jan"06 Jan"07 Jan"08 Jan"09 Jan"10 Source:!Bank! of!Canada;! TREB! Forecast
- 23. Rates!Will!Still!Be!Very,!Very!Low!Historically Average!5"Year!Fixed!Mortgage!Rate:!Historic!&!Forecast 22% 17% 12% 7% 2% Source:!Statistics! Canada;! TREB! Forecast
- 25. Components!of!Affordability Average Mortgage Price Rates +7% Up
- 26. GTA!Employment!Will!Start!to!Improve!in!2010 Toronto!CMA!Employment Actual!and!Annual!Per!Cent!Change 2,950 4% Employment!Annual!Per!cent!Change 2,900 3% Actual!Employment!(,000s) 2,850 2% 2,800 1% 2,750 0% Annual!Per!Cent!Change!(Right!Scale) 2,700 "1% Actual!Employment! (Left!Scale) 2,650 "2% Source:!Statistics! Canada,! TREB! Forecast
- 27. GTA!Unemployment!Will!Be!Above!Average!in!2010 Toronto!CMA!Unemployment!Rate (Seasonally!Adjusted!Trend) 11% 10% 9% 8% 7% 6% 5% Source:!Statistics! Canada;! TREB! Forecast
- 29. Household!Income!In!Line!with!2010 Toronto!CMA!Average!Household!Income $100,000 $90,000 $80,000 $70,000 $60,000 $50,000 Source:!Statistics! Canada;! TREB! Estimates!and!Forecast
- 30. Components!of!Affordability Average Mortgage Price Rates +7% Up
- 31. Components!of!Affordability Average Mortgage Hhld Price Rates Income +7% Up Flat
- 32. Components!of!Affordability Average Mortgage Hhld Taxes Price Rates & Income Up Utilities +7% Flat Up
- 33. The!Average!Home!Will!Be!Affordable!in!2010 TREB!Affordability!Indicator! Share!of!Average!Household! Income!Used!for!Mortgage!Principal! and!Interest,! Property!Taxes!and!Utilities!on!the!Average!Priced!GTA!Resale!Home 55% 50% 45% 40% 35% 30% 25% Source:!Toronto!Real!Estate!Board! Data!and!Calculation;! Statistics! Canada
- 34. The!Average!Home!Will!Be!Affordable!in!2010 TREB!Affordability!Indicator! Share!of!Average!Household! Income!Used!for!Mortgage!Principal! and!Interest,! Property!Taxes!and!Utilities!on!the!Average!Priced!GTA!Resale!Home 55% 50% 45% 40% 35% 30% 25% Source:!Toronto!Real!Estate!Board! Data!and!Calculation;! Statistics! Canada
- 35. Part 1: Resale Market Outlook Part 2: Resale Market Breakdown Part 3: New Home Market Part4: Rental Market Part 5: TREB Member Resources
- 36. Share!of!Condominium!Apartment!Sales High"Rise!Share!of!Total!MLS®!Sales 24% 23% 22% 21% 20% 19% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Source:!TREB
- 43. Part 1: Resale Market Outlook Part 2: Resale Market Breakdown Part 3: New Home Market Part4: Rental Market Part 5: TREB Member Resources
- 44. New!Home!Sales!Follow!Resale!Market GTA!MLS®!and!New!Home!Sales:!Annual!Growth/Decline 200% MLS!Sales!(Annual!Per!cent!Change) 150% New!Home!Sales!(Annual!Per!Cent!Change) 100% 50% 0% "50% "100% Nov"07 Nov"08 Nov"09 May"07 May"08 May"09 Jul"07 Jul"08 Jul"09 Jan"07 Mar"07 Jan"08 Mar"08 Jan"09 Mar"09 Sep"07 Sep"08 Sep"09 Source:!Toronto!Real!Estate!Board;!RealNet!Canada! Inc.
- 49. New!Low"Rise!Available!For!Sale Remaining!New! Central: Low"Rise!Inventory 75!(1%) Total:!7,232!(Dec.31/09) West: 1,982!(27%) North: (2,805)!39% East: 2,370!(33%)
- 50. New!High"Rise!Available!For!Sale Remaining!New! High"Rise!Inventory North: Total:!14,344!(Dec.31/09) 1,752!(12%) East: 1,581!(11%) Central:! 6,571!(46%) West:! 4,440!(31%)
- 51. Condominium!Apartment!Construction!Trends Condominium!Apartment!Completions!and! Units!Under!Construction 40,000 Completions 35,000 Average!Number!of!Units!Under!Construction 30,000 25,000 20,000 15,000 10,000 5,000 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Source:!CMHC
- 52. Part 1: Resale Market Outlook Part 2: Resale Market Breakdown Part 3: New Home Market Part4: Rental Market Part 5: TREB Member Resources
- 54. Purpose"Built!Vs.!Condo!Apartment!Vacancies Rental!Vacancy!Rates: Purpose"Built!vs.!Condominium!Apartments 5% Condo!Apartment!Vacancy!Rate 4% Purpose"Built!Rental!Vacancy!Rate 3% 2% 1% 0% Halton Peel Toronto York Durham Source:!CMHC
- 55. Part 1: Resale Market Outlook Part 2: Resale Market Breakdown Part 3: New Home Market Part4: Rental Market Part 5: TREB Member Resources
- 64. What’s on the Radar? ! Social Media ! Increased RECO ! New Home Page Advocacy ! Neighbourhood ! Electronic Signatures Designations ! Buyer Representation ! President’s FAQs on Ad Campaign TMLS ! Increased ! Member Forums Representation at OREA ! Name Change Awareness ! Sample PSC and DIS cases ! Competition Settlement/Litigation ! Increased Election participation ! Possible Bar Coding solution