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September 2007

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Canadians Acting More Enviro-Friendly in Garden Care - September 26, 2007

The number of Canadian households using pesticides on their lawns and gardens has edged down, especially in Quebec, but two-thirds of households use polluting gas-powered lawn mowers, according to a new study.

The study examined the prevalence of a number of techniques for lawn and garden care with potential environmental or health impacts, including the use of pesticides, chemical fertilizers, and watering and lawn-mowing devices. The study was published today in Envirostats, Statistics Canada's new quarterly bulletin on environmental and sustainable development statistics.

The proportion of households using pesticides on their lawns and gardens dropped from 31% in 1994 to 29% in 2005. The trend was most pronounced in Quebec, where the proportion of homes using pesticides on their lawns and gardens was cut in half, from 30% in 1994 to 15% in 2005. This likely reflects the municipal pesticide bans put in place in the province in recent years.

Saskatchewan, Manitoba and Alberta led the country in pesticide use in 2005, with about 2 out of every 5 households using them on their lawns and gardens.

Although overall household pesticide use was highest in the Prairie Provinces, Manitoba (41%) and Saskatchewan (42%) had the lowest proportions of households using pesticides as part of a regular maintenance routine in 2005. The remaining households only applied pesticides when a problem arose.

Household use of chemical fertilizers, which can contain nitrogen, phosphorus and potassium, was also highest in the Prairies. Chemical fertilizer use was highest in Saskatoon (57%), Regina (54%), Calgary (49%) and Edmonton (48%), and lowest in Montreal (13%), Saguenay (15%), Sherbrooke (16%) and Trois-Rivières (17%).

Two-thirds of households with lawns and gardens owned a gas-powered lawn mower in 2006. In one year, the average gas-powered mower can emit the same amount of a key smog pollutant as the average car travelling about 3,300 kilometres.

More than 4 out of 5 households watered their gardens in 2005, and over half watered their lawns. While garden watering was relatively consistent across the country, lawn watering varied. In Prince Edward Island and New Brunswick, about 2 in 10 households watered their lawn, compared with 6 in 10 in Alberta, British Columbia, Saskatchewan and Ontario.

In 2005, nearly a quarter of households with lawns or gardens used sprinkler timers, which can reduce water use. Sprinkler usage rates were higher than the national average in only British Columbia and Quebec.

About 14% of households used water-conserving rain barrels and cisterns, a practice that was most common in the Prairie Provinces.

Lawn and garden care is a booming industry in Canada. Sales of related products and equipment hit more than $2 billion in 2006, up by more than $600 million from 2002.

Are Housing Prices Overvalued - September 13, 2007

Continuing tight supply-demand conditions have lifted real housing valuations in Canada above their long-term trend, raising the risk of an eventual softening in prices, according to the latest Real Estate Trends, released today by Scotia Economics.

"The fundamentals underpinning Canada's housing market are still quite good," said Adrienne Warren, Senior Economist, Scotia Economics. "Unemployment is low, immigration is high and apartment vacancy rates are tight. There is little evidence of overbuilding or speculative buying. The industry also has relatively little direct exposure to subprime lending, with these loans accounting for only about five per cent of domestic mortgages in recent years compared with about 20 per cent in the United States.

"Yet, there is little doubt that current trends are unsustainable," added Ms. Warren. "Affordability is becoming increasingly stretched for many would be buyers after almost a decade of rising home prices. More recently, economic risks have increased in the wake of the intensifying financial market turmoil stemming from the U.S. subprime mortgage problems."

Moreover, from a long-term perspective, there is growing evidence of overvaluation in home prices in some parts of the country, a precursor to a period of softening conditions. In all 15 cities examined in the report with the exception of St. John's, current inflation-adjusted price levels are above their long-term trend. The national average deviation at mid-year was roughly eight per cent, however, there are big regional variations, ranging from just one per cent in Ottawa to 25 per cent in Edmonton.

"Some deviation from underlying trends is to be expected at the late stage of a housing boom," said Ms. Warren. "At the peak of the prior two housing cycles in 1976 and 1989, national home prices were 12 per cent and 18 per cent, respectively, above their long-term trend. The smaller degree of overshooting this time around, and the sustainability of price appreciation, may reflect in part an undervaluation of Canadian real estate prices in the late 1990s and into the early part of this decade."

Canada also ranks relatively low in the degree of house price overvaluation relative to other major developed nations. The economist estimates that average real home prices in the United States carried a near-record 14 per cent premium in 2005. U.S. average valuations have since slipped below trend amid a large and growing supply overhang and weakening demand.

Despite the deviation in the level of Canadian home prices from long-term trends, price growth remains consistent with short-term supply-demand dynamics. Most major markets in Canada are still categorized as sellers' territory in which prices would be expected to rise faster than inflation. By and large, those cities enjoying the biggest price increases are also facing the tightest supply-demand conditions, including Regina and Saskatoon.

"The further domestic home prices climb above underlying economic fundamentals, the greater the risk of an eventual correction," said Ms.Warren. "The 1976 and 1989 housing peaks were both followed by some adjustment in real prices. In the past, this adjustment has normally occurred though a period of inflation erosion as opposed to nominal price declines."

Housing Affordability a Problem in BC - September 12, 2007

British Columbia's housing affordability deteriorated even further across all four housing segments in the second quarter of 2007, according to the new report released today by RBC Economics.

"Housing conditions across the province continued to erode affordability as rising mortgage rates and house prices squeezed out prospective home-buyers," said Derek Holt, assistant chief economist, RBC. "The relief seen in the two-storey home segment earlier this year was reversed this quarter."

The RBC Affordability measure captures the proportion of pre-tax household income needed to service the costs of owning a home. A detached bungalow in British Columbia during the second quarter stood at 65 per cent while a standard condo was 34 per cent. The index for a standard townhouse was 48 per cent and the standard two-storey at 68 per cent.

RBC notes that the arrival of long amortization products is changing the cyclical dynamics of the housing market. For example, opting for a 40-year mortgage instead of the more traditional 25-year term, sees the affordability level for a two-storey B.C. home drop from 68 per cent of income to 61 per cent.

According to the report, although the Vancouver market has loosened, it remains a seller's market and continues to support strong price gains. Rising mortgage rates and price gains eroded affordability in all housing segments in Vancouver. "Even though trends for Vancouver are shifting to a slower pace and moving towards moderation, the near-term result is another hit to already stretched affordability conditions," added Holt.

RBC's Affordability measure for a detached bungalow in Canada's largest cities is as follows: Vancouver 71 per cent, Toronto 45 per cent, Calgary 45 per cent, Montreal 36 per cent and Ottawa 31 per cent.

Also included in the report are housing affordability conditions for a broader sampling of cities across the country including Victoria. For these smaller cities, RBC has used a narrower measure of housing affordability that only takes mortgage payments relative to incomes into account.

The Housing Affordability measure, which RBC has compiled since 1985, is based on the costs of owning a detached bungalow, a reasonable property benchmark for the housing market. Alternative housing types are also presented including a standard two-storey home, a standard townhouse and a standard condo. The higher the reading, the more costly it is to afford a home. For example, an Affordability reading of 50 per cent means that homeownership costs, including mortgage payments, utilities and property taxes, take up 50 per cent of a typical household's monthly pre-tax income.

"Green" Housing Discussed at Research Conference - September 12, 2007

Protecting the future of our environment - this was the topic of discussion for housing experts who joined forces today in Calgary. The 2007 Research Conference, hosted by Canada Mortgage and Housing Corporation (CMHC), offered a unique opportunity for industry professionals to collaborate and share their visions. Experts showed how they turn ideas into action - from the design of a house to the planning of entire communities.

"It's time to bring the industry together and set the foundations for sustainable growth for the years to come," said CMHC's Anand Mishra. "Canadians are one of the largest consumers of energy and resources per capita in the world, and our housing and lifestyle plays a major role in this substantial environmental burden."

Speakers at the event presented revolutionary endeavours being put into effect in Canada's own towns and cities. Participants heard about homes that reduce greenhouse gas emissions, conserve resources and produce as much energy as they use. They learned of whole communities built to be sustainable, with their own agriculture, rainwater management and energy systems.

"At home and internationally, evidence suggests that as a society we need to seriously adjust our lifestyles to a more sustainable model, "said Mishra. "As a Federal Crown Corporation it's our goal at CMHC to encourage neighbourhood design and land use planning approaches that reduce costs and environmental impacts, while maintaining a vibrant community."

The conference, tagged "True Balance: Sustainability in Action," featured a roster of notable speakers. Presenters included: Lisa Prime, Director of Sustainability for Waterfront Toronto; Fanis Grammenos, CMHC Senior Researcher; Anand Mishra, CMHC Research Advisor; Vinay Bhardwaj, CMHC Manager of Market Analysis and Research Information Transfer; and Roger Bayley, Principal for Merrick Architecture and involved in Vancouver's Olympic Village.

This was CMHC's first annual Research Conference. The event attracted more than 120 builders, developers, architects, engineers, planners and researchers from throughout the Prairie Provinces.

Single Detached Housing Starts Decline in BC - September 11, 2007

The seasonally adjusted annual rate of housing starts was 226,500 units in August, up from 215,600 units in July, according to Canada Mortgage and Housing Corporation (CMHC). While multiple unit housing starts increased substantially in British Columbia, single detached house construction starts declined by 4.7 per cent.

“The rise in August housing starts reflects a rebound in the volatile multiple starts segment,” said Bob Dugan, Chief Economist at CMHC’s Market Analysis Centre. “In particular, the strong results achieved this past month can be attributed to multiple starts in the Atlantic region, British Columbia and the Prairies. Despite the increase in August, the pace of housing starts remains consistent with our view that residential construction will decrease gradually between now and the end of 2008.”

The seasonally adjusted annual rate of urban starts increased 6.0 per cent to 192,700 in August, compared to July. Urban singles were up 1.8 per cent to 91,300 units in August, while multiple starts increased 10.1 per cent to 101,400 units.

In August, seasonally adjusted urban starts increased in four out of five regions. Urban starts registered an increase of 18.4 per cent in the Atlantic region, 10.8 per cent in the Prairies, 7.9 per cent in British Columbia, and 4.4 per cent in Ontario, while in Quebec, urban starts declined by less than one per cent. Urban single starts were up in all regions except British Columbia, where single starts declined 4.7 per cent. The Atlantic region, the Prairies, and British Columbia all saw double-digit increases in urban multiple starts, while Ontario increased by 4.9 per cent. Quebec saw a decline in multiple starts of 1.2 per cent.

Rural starts were estimated at a seasonally adjusted annual rate of 33,800 units in August.

Actual starts, in rural and urban areas combined, were down an estimated 4.5 per cent in the first eight months of 2007 compared to the same period in 2006. In urban areas, actual total starts also fell an estimated 4.5 per cent year-to-date with both single and multiple starts declining by 6.1 per cent and 2.9 per cent respectively.

BC Residential Construction Intentions Slack Off - September 6, 2007

The total value of residential construction permits in British Columbia dropped of by 11.3 per cent to $718 million in July according to figures released by Statistics Canada today. Country wide, construction intentions cooled down in July as the value of building permits declined, halting two months of record-setting performances. Municipalities issued building permits worth $6.2 billion, down 11.3% from $6.9 billion in June.

Still, July was one of only a handful of months in which permits exceeded the $6-billion mark. At $6.9 billion in both May and June, the total value of permits was at its highest level on record. Losses occurred in both the residential and non-residential sectors. The value of residential permits fell 6.3% to $3.8 billion, with declines in both the single-family and multiple-family components.

Contractors took out $2.3 billion in permits in the non-residential sector, down 18.6%. The value of institutional and commercial permits decreased, while industrial permits rose to their second-highest value in just over a year. The value of permits increased in only three provinces: Newfoundland and Labrador, Prince Edward Island and New Brunswick.

Housing sector: Multi-family permits recede

Intentions in both components of the housing sector eased down in July. Municipalities issued $2.4 billion worth of single-family permits, a 3.1% decline from June. Still, it was the third-highest value on record. A total of 9,553 single-family units were approved, a 2.4% decline.

The value of multi-family permits tumbled 11.1% to $1.5 billion, the first decline in five months. Municipalities approved 11,041 multi-family units, a 5.8% decline. Even so, the demand for new multi-family dwellings has been on an upward trend since the beginning of the year.

The high price tag associated with the purchase of single-family dwellings has contributed to an increasing shift in housing demand towards multi-family units. So far this year, 51.4% of the new units approved have been multi-family dwellings. The last time such a high proportion was observed for a whole year was in 1982.

Strength in employment, growth in disposable income, tight apartment vacancy rates in several centres and attractive financing options continued to have a positive impact on housing demand.

Residential permits declined in four provinces. The significant drops in Alberta, British Columbia and Ontario more than offset modest increases in permit values elsewhere. The largest decline (in dollars) occurred in Alberta, where the value of permits fell 15.3% to $827 million, the result of decreases in both single- and multi-family permits. Despite the decline, Alberta's level was still 8.0% above its average value of residential permits for the first six months of 2007.

The drops in total residential permit values in British Columbia (-11.3% to $718 million) and Ontario (-5.8% to $1.2 billion) were mainly precipitated by falling levels of multi-family permits. On the other hand, strength in the multi-family component led to increases in the total values of residential permits in Quebec (+4.2% to $718 million) and Nova Scotia (+29.6% to $75 million).

Ontario's decline in multi-family permits was largely the result of a decrease in the average value of such units approved.

Non-residential sector: Decline halts two strong months

Contractors took out $2.3 billion in non-residential permits in July, an 18.6% decline. This followed two very strong months, as non-residential permits totalled $3.1 billion in May and $2.8 billion in June. Despite the decline, July's level was still nearly 10% above the average monthly level in 2006. Furthermore, the value of non-residential permits has been generally on an upward trend since the beginning of 2006.

In the commercial component, the value of permits totalled $1.2 billon, down 29.4% from June. Lower construction intentions were spread across a wide variety of buildings, such as office buildings, hotels, warehouses, shopping malls and retail stores. Intentions fell in seven provinces.

July's level was the lowest in five months. Despite the decline, the value of commercial permits has been on an upward trend since October 2005.

In the institutional sector, the value of permits dropped 16.9% to $592 million following gains of 14.6% in June and 78.6% in May. Lower construction intentions in educational buildings and nursing homes contributed to this decline.

Overall, seven provinces and two territories recorded declines. However, Ontario and British Columbia registered the most significant drops (in dollars), offsetting a strong gain in Alberta.

In the industrial component, the value of permits jumped 23.8% to $503 million, after a 6.6% drop in June.

The gain was based mainly on strong construction intentions for manufacturing buildings in Ontario and Alberta. In contrast, after five consecutive monthly increases, Quebec recorded the largest decline as a result of lower construction intentions in the utility and manufacturing building categories.

Several factors are consistent with the strength in the non-residential sector in recent months. These include strength in the retail and wholesale sectors, high corporate profits, and declining vacancy rates for office buildings in certain major urban centres.

Among the provinces, British Columbia and Ontario recorded the greatest decreases in the non-residential sector. In British Columbia, the $269 million worth of permits issued in July was the lowest level since the beginning of the year.

Metropolitan areas: July's decline widespread across the country

Among the 34 census metropolitan areas, 24 posted declines in the total value of building permits in July.

The largest decreases (in dollars) occurred in Vancouver, Toronto and Calgary. In each area, retreats occurred in both the residential and non-residential sectors, and were preceded by a strong showing in June. A strike in the city of Vancouver contributed to the decline in the total value of permits for the Vancouver area.

Despite the declines in July, Vancouver, Toronto and Calgary showed the strongest year-to-date advances (in dollars) among the metropolitan areas compared with the same period in 2006.

Record Broken Again for Residential Construction - September 4, 2007

Residential construction investment achieved a new record in the second quarter of 2007, reaching $22.8 billion, an increase of 7.0% over the same quarter in 2006 according to figures released this morning by Statistics Canada. Increases in the values of both renovations and new housing made strong contributions to this growth. Acquisition costs also increased, but moderately.

Investment in new residential construction climbed 6.1% to $11.0 billion over the second quarter of 2006. At $6.8 billion, single-family investment was up 3.8% and made the most significant contribution (in dollars) to the overall increase. Apartment/condominium construction increased 9.1% to $2.5 billion. Investment in double and row housing also rose significantly, with respective gains of 19.8% and 9.3%.

The rising levels of investments for single and apartment/condominium dwellings were brought about by significant cost increases over the second quarter of 2006 for new units.

In constant dollars, investment in new units only rose for semi-detached dwellings (+6.9%), while it declined for single-family (-7.2%), apartment/condominium (-1.4%), and row housing (-1.6%).

The housing sector has been positively affected by Western Canada's dynamic economy, still attractive mortgage rates, appealing financing possibilities, strength in employment, and growing disposable incomes. Strong immigration more evenly distributed across the country and inter-provincial migration have also been beneficial. Increased housing cost was important in the rise in investment figures, though it would have tended to limit demand.

Renovation spending grew 9.1% to $9.9 billion, the highest quarterly level on record. This accounted for 43.5% of total residential investment. Acquisition costs increased 2.2% to $1.9 billion.

The largest increase (in dollars) occurred in Quebec, where a strong rise in renovations and a sturdy increase in new construction pushed spending up 11.5% to $5.8 billion. Despite renovations increasing markedly in Ontario, investment declined slightly (-1.1% to $7.5 billion).

Strength in the four westernmost provinces represented about two-thirds of the increase in residential investment. In Alberta, construction for new units drove investment up 16.9% from the same quarter in 2006 to $3.6 billion.

Vigorous renovation spending led investment growth in British Columbia (+8.0% to $3.6 billion), while Saskatchewan's sharp 28.3% increase to $479 million was attributable to an upsurge in new construction.

 

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