Key Economic Points and Housing Forecasts by CMHC for 2011
Highlights from the recent CMHC Housing Forecast Forum – December, 2010
On November 3rd, 2010, CMHC held its 2011 housing outlook forum. Below are some of the key economic points and housing forecasts made by the CMHC economists:
1. Mortgage interest rates will remain low, more or less where they are now, throughout 2011.
2. Canadian household debt to family income is approximately 145 percent. Although this number appears high, it is much higher in other prosperous countries. For example, Scandinavian countries have household debt to income ratios that exceed 300 percent.
3. Although Canadians are carrying debt it is very low compared to assets per household. Canadian debt per household is about $120,000. Assets are approximately $580,000.
4. Mortgage payments as a percentage of disposable income is about 32 percent. This is a moderate number. For example in 1989 mortgage payments totalled 56 percent of a Canadian family’s dispensable income.
5. Existing home sales are in a balanced market and will remain there into 2011. It was a Seller’s market from 2002 until 2008 with a return to a Seller’s market for a few months in 2009 and 2010. This statistic is based on a sales-to-list ratio of 50 percent. In a Seller’s market the sales-to-list ratio reached highs that exceeded 80 percent.
6. Sales of existing homes are forecasted to begin increasing in the first and second quarters of 2011. CMHC has not made any specific predictions but feels that the increase will be within a broad range depending on how the economy unfolds.
7. MLS prices are also expected to increase nationally. Again CMHC is forecasting a range that could be as high as 6 percent to a low of no or marginal growth.
8. Housing starts nationally will be consistent with Canada’s demographic growth and requirements. A low of 150,000 to a high of 200,000 starts.
9. G.T.A. home sales will stabilize in 2011 at their current levels. This could result in sales ranging from 76,000 to 82,000 properties.
10. G.T.A. average sale prices will stay stable in 2011, at their current levels ($430,000) with a possible modest increase of approximately 1 percent, depending on how the economy performs.
11. G.T.A. housing starts will stabilize at around 30,000.
12. In the G.T.A. only 20 percent of condominium apartments are rented. The rest are home owner occupied. In 1995 32 percent of all condominium apartments in the G.T.A. were rented.
13. We may see a greater demand for rental units in 2011 as the home ownership market stabilizes and the need for buyers to make quick decisions to enter the market place subsides.
14. The economy will be in an expansionist phase in 2011. It will not be lead by real estate. It will be lead by energy, commodities transportation and warehousing.
The economic and real estate picture painted by CMHC was much more positive and favourable than that predicted by other economists. Hope you find this information useful.
In 2010 the average price for a home in the GTA increased nine percent and conservative estimates are predicting a five percent increase for 2011. Central Toronto numbers will be higher. Although Real Estate has proven to be and is a wonderful investment, and five percent (capital gains exempt) is more than you’ll earn on most other investment vehicles, it is my opinion that your decision to buy a home should not be based solely on the overall economic conditions, but more importantly on your own personal reasons and motivation for positive change in your life.
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Vijay Gandhi is an Re/max Real Estate sales Personnel & independent mortgage planner- industry insider & CENTUM Agent. If you are purchasing, refinancing or renewing your mortgage, contact Vijay or apply for a Mortgage Check-up to obtain the best available rates and terms.
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