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December 2008

Current News

Construction Inactivity Contributes to GDP Decline - December 29, 2008

Real gross domestic product by industry declined 0.1% in October after increasing 0.1% in September says a report released this morning by Statistics Canada.

Declines in wholesale trade, manufacturing and in the output of real estate agents and brokers contributed the most to the October decrease. Residential construction and retail trade also retreated. On the other hand, economic activity advanced in several service industries while the output of the energy sector regained some of the ground lost in the previous two months.

Activity on construction sites fell 0.3% in October. The decline in residential building construction outpaced the increases posted elsewhere in this sector.

Housing construction decreased 1.2% in October. A substantial drop in single-family dwellings and a decline in alterations and improvement work more than offset the rises in the other categories of residential construction. An increase in institutional buildings, particularly hospitals in Ontario and schools across the country, was behind the advance in the construction of non-residential buildings.

Demand for existing houses, which had been weakening since the summer of 2007, fell sharply in October. The drop was widespread, as none of the major markets were spared from the downturn. As a result, the real estate agents and brokers industry fell 14.3% over the month, the largest monthly decline in over a decade.

Third Straight Decline in Consumer Confidence - December 22, 2008

The Index of Consumer Confidence stumbled for the third consecutive month in December, falling 3.3 points to 67.7 (2002 = 100), the Conference Board reported today.

"On a monthly basis, the index has now dropped significantly below early 1990s levels. Only during the recession of 1981-82 have we seen lower levels of confidence," said Glen Hodgson, Senior Vice-President and Chief Economist. "Despite the rapid fall in gasoline prices across the country, consumers continue to be gloomy about their financial situation."

Again this month, consumers indicated that they are financially worse off today than six months ago, and they expect to be worse off still six months from now. Respondents also viewed the job situation in their communities negatively.

There was one bright spot in the survey. For the second consecutive month, an increasing percentage of respondents said it was a good time to make a big-ticket purchase.

Confidence fell in all regions of the country in December, ranging from a marginal decline in the Western provinces to a 7.8 point drop in Atlantic Canada. The survey of 2000 Canadians was conducted between December 4 and 12.

BC Economy to do Better Than Others - December 19, 2008

British Columbia's domestic economy is beginning to feel the weight of its weakened external trade sector, with growth slowing to 0.8 per cent in 2008 and 0.6 per cent in 2009, according to a provincial economic outlook released today by RBC.

"British Columbia's slumping trade sector continues to be a significant drag on provincial growth and now appears to be putting downward pressure on the domestic economy, unsettling the labour market, housing sector and consumer spending," said Craig Wright, senior vice-president and chief economist, RBC. "Despite these challenges, B.C. remains above the national average and the economy should get a meaningful boost when the world gathers in Vancouver for the 2010 Olympic and Paralympic Winter Games."

According to the report, B.C.'s external trade sector is unlikely to improve through 2009, as the U.S. economy wrestles with a recession in the early part of the year. While a lower Canadian dollar will bring some relief, it will not be sufficient to completely offset the weakness in U.S. demand. B.C.'s job market is expected to remain essentially flat, with employment projected to grow marginally by just 0.2 per cent in 2009 - the weakest performance since 2001 - while eroding consumer confidence hits key housing markets in the province.

Despite the challenges facing B.C.'s economy, there are some bright spots - namely, continued heavy capital spending to develop major natural gas deposits in the Northeastern part of the province and construction on infrastructure projects related to the 2010 Winter Games.

The main theme of the RBC Provincial Outlook is that economic performance is expected to be weaker from coast to coast due to the widespread negative implications of the financial market crisis and the global economic downturn. Ontario is expected to be worst hit with the province's economy contracting in both 2008 and 2009, for the first time since 1990-91. While growth will slow for all provinces, the economies of Saskatchewan and Manitoba will continue to lead during 2009.

Housing Market Lowers Leading Index - December 18, 2008

The composite leading index fell by 0.7% in November, its third straight retreat and the largest since January 1991. The decline was dominated by a large drop in the stock market and in the housing index. A report released this morning by Statistics Canada says that the other eight components were about evenly balanced between increases and decreases.

Stock market prices continued to slump in November, the culmination of their worst three-month loss on record back to 1952. Metals suffered the largest declines as global demand tumbled.

The housing index turned down by 5.9%. This reflected both a sudden retreat in existing home sales in the autumn and a drop in housing starts in November. This was the largest decline for the housing index since a similar drop in 1995.

Consumer spending remained supportive of growth. Sales of both furniture and appliances and other durable goods continued to advance in October. However, preliminary data point to lower auto sales in November, at the same time as employment turned down.

The manufacturing indicators remained steady, despite the deepening slump in the US economy. New orders were buoyed by gains in aerospace. Firms were quick to cut production as sales slowed, preventing a decrease in the ratio of shipments to inventories in the last two months. Firms also trimmed the workweek in factories, and laid off workers in November.

The money supply posted the largest increase of any component. This is the most obvious difference between the current slowdown and previous episodes in 2001, 1990, and 1981, when the money supply stalled or contracted. The leading indicator for the United States also showed large gains in the components related to monetary policy. This reflects the substantial stimulus coming from central banks in North America, along with most major nations around the world, in response to the squeeze in credit availability.

Canadians Plan to Renovate Their Homes - December 15, 2008

The current state of the economy may have Canadians tightening their belts on spending, but a recent Angus Reid survey reveals that nearly two-thirds of the population will embark on a home renovation project in the next 12 months. And despite reports of what is happening in the United States real estate market, nine out of 10 Canadians still believe that their home is a more secure investment than the stock markets.

With less spending money available, home improvement trumps travel: half of Canadians are choosing to invest in a home improvement project - compared to one-third who are choosing to spend extra money on a vacation. The stay-at-home vacation is becoming an increasingly popular way to spend time off and 42% of Canadians are planning to take more of these "staycations" in the upcoming year.

By Canadians spending more time at home and committing to renovation projects, they are pledging to invest in their nest and enhance their living space. Home improvements need not be expensive and HGTV is committed to inspiring viewers by offering accessible, do-it-yourself tips and insider advice from the channel's design, real estate and renovation experts. HGTV's winter schedule launches Monday, December 29.

"HGTV has always been the premiere destination for Canadians looking for inspiration and practical advice. Even though the economy is slowing down, Canadians are still committed to investing in their homes," says Anna Gecan, Vice President, Content, HGTV. "At HGTV, we've made some subtle shifts in our programming to encourage our viewers to embrace their space and to love the home they live in. To date, HGTV's fall 2008 schedule has seen a 14% increase in audience over last year which speaks not only to the relevance of the channel, but also to the entertaining nature of its programming. This winter our schedule has something for everyone whether you own or rent," continues Gecan.

Despite not owning their homes, renters are also keen to make their spaces their own, and no less than one-third of renters will undertake a home improvement project this year. Even with 57% of renters reporting that they have less spending money than they had at this time last year, the majority expect to spend up to $1,000 refurbishing their home.

Variable or Fixed Rate Mortgages? - December 12, 2008

Canadian homeowners being lured in by low interest rates could end up paying more in the long run, specialists say. Earlier this week Canadian homeowners rejoiced as interest rates plummeted to a 50-year record low. While the rates are good for the interim, mortgage specialists say taking a variable rate today comes with a higher level of risk than in the past.

"If prime goes back to what we have seen only a year and a half ago, many homeowners in closed variable mortgages at today's prime-plus rates will be in a vulnerable position. What was once prime minus 9/10th of a percent is now prime plus 6/10th at a minimum," said Mike Averbach, of Averbach Mortgages."We recommend seeking out the best possible fixed rate mortgages availableinstead. This will help save homeowners money long term."

The prime rate has dropped 1.5 percent over the last three months, tempting many homeowners to choose variable mortgages, but Averbach encourages homebuyers to first consider all their options. Options such as open variable rate mortgages, one-year fixed terms, or a low five-year fixed term should also be considered and can currently be found at less than 5 percent.

"It's important to talk to your mortgage specialist and ensure the plan you choose fits you as a person," advises Averbach. "Make sure the lender they are working with guarantees the best fixed rate upon conversion from a variable if and when that time comes to lock in."

GENIVAR Acquires Pomeroy Consulting Engineers - December 12, 2008

The GENIVAR Income Fund announced today that it has acquired Pomeroy Consulting Engineers Ltd., of Vancouver, BC. Pomeroy was founded in Vancouver in 1965 and is one of BC's longest established structural engineering companies. The firm has 25 employees and provides comprehensive structural engineering services from concept to commissioning. The firm has extensive experience and has developed economical and pragmatic solutions in seismic upgrades and structural design.

Pomeroy has completed many projects in the healthcare, education, institutional, municipal, commercial and recreational sectors. Pomeroy's clientele includes School Districts, Health Authorities, City and Municipal governments, Architects, and private sector firms.

"These are exciting times for GENIVAR. Indeed, we are on our way to becoming one of B.C.'s most prominent multidisciplinary engineering firms," said J. Rob Harmer, GENIVAR's Vice-President for Western Canada. "Over the past 43 years, Pomeroy has carried out a large number of significant buildings in British Columbia and has a reputation for innovation and the application of leading-edge technologies, including seismic retrofit.

GENIVAR is one of Canada's largest engineering services companies in terms of number of employees with more than 3,500 managers, professionals, technicians, technologists and support staff at more than 80 offices in Canada and abroad.

Rental Vacancy Rate is 1 % in Vancouver - December 11, 2008

The average rental apartment vacancy rate in Canada's 34 major centres decreased to 2.2 per cent in October 2008 from 2.6 per cent in October 2007, according to the Rental Market Survey released today by Canada Mortgage and Housing Corporation (CMHC).

"Demand for rental housing in Canada increased due to high migration levels, youth employment growth, and the large gap between the cost of homeownership and renting,‘' said Bob Dugan, Chief Economist at CMHC's Market Analysis Centre. ‘'Rental construction and competition from the condominium market were not enough to offset growing rental demand.''

Between October 2007 and September 2008, 14,908 rental units and 50,794 condominium units were completed in Canada's 34 major centres. Condominiums are a relatively inexpensive type of housing for renters moving to home ownership. Also, some condominium apartments are owned by investors who rent them out.

In October 2008, provincial vacancy rates decreased in most eastern provinces. Vacancy rates recorded a significant decline from last year in Newfoundland and Labrador (down one percentage point to 1.1 per cent), Prince Edward Island (down 1.5 percentage points to 2.6 per cent), and New Brunswick (down 1.7 percentage points to 3.6 per cent). In Nova Scotia, the rental vacancy rate increased to 3.5 per cent. Vacancy rates were moderately lower in Ontario by 0.6 percentage point to 2.7 per cent, and Quebec by 0.4 percentage point to 2.2 per cent.

Vacancy rates were lowest in Manitoba (0.9 per cent), British Columbia (1.0 per cent), Newfoundland and Labrador (1.1 per cent), and Saskatchewan (1.2 per cent). The strong economies in the western provinces continued to attract workers from the rest of Canada. Many of these newly arrived migrants initially settle in rental housing, keeping rental demand strong. The rental apartment vacancy rate in Alberta rose to 2.5 per cent this year, despite low levels of rental construction and further decline of the rental stock through condominium conversions. CMHC attributes some of the upturn in vacancies to slower net migration into the province and the constraining effect of rent increases in 2007. Competition from the secondary rental market and investor-owned condominium apartments have also contributed to the higher vacancies in the purpose-built commercial rental sector.

The centres with the highest vacancy rates in 2008 were Windsor (14.6 per cent), St. Catharines-Niagara (4.3 per cent), and Oshawa (4.2 per cent). On the other hand, the major urban centres with the lowest vacancy rates were Kelowna (0.3 per cent), Victoria (0.5 per cent), Vancouver (0.5 per cent), and Regina (0.5 per cent).

The highest average monthly rents for two-bedroom apartments in new and existing structures were in Calgary ($1,148), Vancouver ($1,124), Toronto ($1,095), and Edmonton ($1,034), followed by Ottawa ($995), Kelowna ($967), and Victoria ($965). The lowest average monthly rents for two-bedroom apartments in new and existing structures were in Trois-Rivières ($505), Saguenay ($518), and Sherbrooke ($543).

Year-over-year comparison of rents in new and existing structures can be slightly misleading because rents in newly-built structures tend to be higher than in existing buildings. However, by excluding new structures, we can get a better indication of actual rent increases paid by most tenants. The average rent for two-bedroom apartments in existing structures increased in all major centres. The largest rent increases in existing structures were recorded in Saskatoon (20.3 per cent), Regina (13.5 per cent), Edmonton (9.2 per cent), and Kelowna (8.4 per cent). Overall, the average rent for two-bedroom apartments in existing structures across Canada's 34 major centres increased by 2.9 per cent between October 2007 and October 2008.

CMHC's October 2008 Rental Market Survey also covers condominium apartments offered for rent in Calgary, Edmonton, Montréal, Ottawa, Québec, Regina, Saskatoon, Toronto, Vancouver, and Victoria. In 2008, vacancy rates for rental condominium apartments were below one per cent in four of the 10 centres surveyed. Rental condominium vacancy rates were the lowest in Regina, Toronto, Ottawa, and Vancouver. However, Calgary and Edmonton registered the highest vacancy rates for condominium apartments at 3.5 per cent and 4.3 per cent in 2008, respectively.

The survey showed that vacancy rates for rental condominium apartments in 2008 were lower than vacancy rates in the conventional rental market in Ottawa, Regina, Saskatoon, and Toronto. The highest average monthly rents for two-bedroom condominium apartments were in Toronto ($1,625), Vancouver ($1,507), and Calgary ($1,293). All surveyed centres posted average monthly rents for two-bedroom condominium apartments that were higher than average monthly rents for two-bedroom private apartments in the conventional rental market in 2008.

CMHC's Rental Market Survey also gathers information on monthly rents in types of dwellings other than private apartments and condominium apartments, such as duplexes, and accessory apartments for 15 major centres.

The Rental Market Report for major centres also includes an affordability indicator for most centres. The rental affordability indicator is used to examine trends in rental affordability within a centre.

New Housing Prices Drop Off - December 11, 2008

The New Housing Price Index increased, year-over-year, by 1.5% in October, a slower pace than the 2.1% advance recorded in September and the smallest annual increase since October 1999 according to a report released this morning by Statistics Canada.

Prices decreased 0.4% between September and October 2008, resulting in a New Housing Price Index of 158.1 (1997=100). This was the first monthly decrease at the Canada level since September 1998.

On the West Coast, prices were down 0.4% in Vancouver on a year-over-year basis, the first annual drop since April 2001. Vancouver was also down 1.1% on a monthly basis. In Victoria, contractors' selling prices decreased 1.1% year-over-year, down from an annual increase of 0.2% in September.

The largest year-over-year increases were in Regina (+22.8%) and St. John's (+22.3%). Both of these cities also registered monthly increases in October. However, both cities were down from record highs in 2008 with Regina down from its peak of 34.0% in April and St. John's down from 24.3% in July.

In Saskatoon, the year-over-year increase was 3.2%, once again confirming a trend of deceleration in this city. On a month-over-month basis, new housing prices decreased 1.6% as Saskatoon builders continued to report difficult market conditions.

Edmonton recorded a 12 month drop of 7.7%, which was the largest annual decline since May 1985, while Calgary recorded a year-over-year decrease of 1.6%; the largest annual decline for this metropolitan area since November 1991. Prices declined by 1.7% in Edmonton and 0.6% in Calgary from September to October 2008.

Compared with October 2007, contractors' selling prices were 4.3% higher in Ottawa–Gatineau and 3.0% higher in Toronto and Oshawa.

In Québec, the 12-month growth rate was 5.8%, while in Montréal, prices increased 4.8%.

CMHC Calls for Entries for 2009 HSAA - December 10, 2008

The Honourable Diane Finley, Minister of Human Resources and Skills Development and Minister Responsible for Canada Mortgage and Housing Corporation (CMHC), today launched the call for entries for the 2009 CMHC Housing Studies Achievement Award (HSAA).

Under this program, up to six awards of $10,000 each will be given to students who have completed their graduate studies at the master’s or doctoral level in fields related to housing.

“Our government is committed to improving housing across Canada, and this national award program recognizes excellence in academic work that advances our understanding of housing in this country,” said Minister Finley. “It complements CMHC’s important work in promoting housing innovation in Canada, including affordable housing, housing finance, and sustainable, healthy communities.”

The awards will be presented at a ceremony in Ottawa in November 2009. Candidates must be Canadian citizens or permanent residents of Canada. The applicant’s thesis or major research paper must have been completed and accepted by the School of Graduate Studies at any accredited university in Canada or abroad, between April 30, 2006 and April 30, 2009. Canadian master’s or doctoral students studying anywhere in the world are eligible to submit their thesis or major research paper dealing with housing in any discipline (economic, social, design or technical).

These awards are presented every second year. The first winners of the HSAA were announced in November 2007. Summaries of the 2007 winning theses are available on the CMHC website and copies of the winning theses are available through CMHC’s Canadian Housing Information Centre.

Applications must be received by 5 p.m. local Ottawa time on May 8, 2009. Guidelines, application forms and contact information are available at the CMHC website (search keyword: HSAA).

Victoria LTSA Plans to Move in 2010 - December 10, 2008

The Land Title and Survey Authority of British Columbia (LTSA) announced today that it has leased space in Jawl Investment Corporation's 800 Yates Street office building in Victoria. The premises will allow the LTSA to consolidate its Victoria Land Title Office, the Surveyor General Office and corporate office staff in a single downtown location. Occupancy is expected in the summer of 2010.

The 800 Yates Street premises will have convenient walk-in facilities for in-person land title applications and inquiries, access to the Surveyor General's records, and a work area for independent registry agents.

"The LEED Gold 800 Yates Street premises will dramatically improve the working environment for our employees, and provide modern, climate-controlled vault facilities for both land title and the Surveyor General's records, ensuring the long-term preservation of valuable historic documents," stated Godfrey Archbold, President and CEO of the LTSA.

The LTSA also has Land Title Offices in Kamloops and New Westminster. As part of the LTSA's commitment to create an innovative customer-centered organization, plans are being developed to improve the working environments for employees in these locations. Work areas for independent registry agents are also included in these planning efforts.

Bank of Canada Lowers Interest Rates - December 9, 2008

The Bank of Canada today announced that it is lowering its target for the overnight rate by three-quarters of a percentage point to 1 1/2 per cent. The operating band for the overnight rate is correspondingly lowered, and the Bank Rate is now 1 3/4 per cent.

The outlook for the world economy has deteriorated significantly and the global recession will be broader and deeper than previously anticipated. Global financial markets remain severely strained. Measures taken by major governments are beginning to encourage credit flows, although it will take some time before conditions in financial markets normalize. In addition, a series of recently announced monetary and fiscal policy actions will also support global economic growth.

While Canada's economy evolved largely as expected during the summer and early autumn, it is now entering a recession as a result of the weakness in global economic activity. The recent declines in terms of trade, real income growth, and confidence are prompting more cautious behaviour by households and businesses.

All of these factors imply a lower profile for core inflation than had been projected at the time of the last Monetary Policy Report in October. Several factors are helping to counterbalance the negative drag from the global economic and financial developments. The depreciation of the Canadian dollar will continue to provide an important offset to the effects of weaker global demand and lower commodity prices. As well, money markets and overall credit conditions in Canada are responding to significant and ongoing efforts to provide liquidity to the Canadian financial system.

In light of the weakening outlook for growth and inflation, the Bank of Canada lowered its policy interest rate by a total of 75 basis points in October and by an additional 75 basis points today. These monetary policy actions provide timely and significant support to the Canadian economy. The Bank will continue to monitor carefully economic and financial developments in judging to what extent further monetary stimulus will be required to achieve the 2 per cent inflation target over the medium term.

Housing Starts Moderate in November - December 8, 2008

The seasonally adjusted annual rate of housing starts was 172,000 units in November, down from 211,800 units in October, according to Canada Mortgage and Housing Corporation (CMHC).

“The decrease in November housing starts can be attributed in part to the volatile multiple starts segment,” said Bob Dugan, Chief Economist at CMHC’s Market Analysis Centre. “Still, housing starts in November remain consistent with our forecast which calls for more moderate activity of 212,000 units this year and 178,000 units next year. Note that at the beginning of the new millennium, Canada posted strong housing start levels given a pent-up demand that existed then. Over the last few years, this excess demand gradually decreased and our forecast for 2008 and 2009 reflects this new reality with housing starts, more aligned with long run demographic demand.”

The seasonally adjusted annual rate of urban starts decreased 21.6 per cent to 144,800 units in November. Urban multiple starts moderated 29.1 per cent to 81,700 units, while urban single starts eased 9.0 per cent to 63,100 units in November.

November’s seasonally adjusted annual rate of urban starts moderated in all regions of Canada. Urban starts declined to 17,900 units in British Columbia, 23,500 units in the Prairies, 54,700 units in Ontario, 41,100 units in Quebec, and 7,600 units in the Atlantic region.

Rural starts were estimated at a seasonally adjusted annual rate of 27,200 units in November.

For the first 11 months of 2008, actual starts in rural and urban areas combined moderated by an estimated 7.6 per cent, compared to the same period last year. Year-to-date actual starts in urban areas have decreased by an estimated 3.9 per cent over the same period in 2007. Actual urban single starts for the January to November period of this year were 18.4 per cent lower than they were a year earlier while urban multiple starts were up by 8.6 per cent over the same period.

Housing Prices Dropping in BC Markets - December 8, 2008

According to the latest housing report released today by RBC Economics, British Columbia's housing affordability conditions have started to improve in that last two quarters but home ownership costs are still the most inflated of all provinces.

"The situation is unraveling fast in British Columbia," said Robert Hogue, senior economist, RBC. "After extremely tight conditions built up during the boom and drove home prices sky high, the province's housing markets are now entering a correction phase that will see prices reverse recent gains, with greater affordability being restored."

The RBC Affordability measure for British Columbia, which captures the proportion of pre-tax household income needed to service the costs of owning a home, improved moderately across all housing segments in the third quarter of 2008 as the detached bungalow moved to 69.7 per cent, the standard townhouse to 53.8 per cent, the standard condo to 38.7 per cent, and the standard two-story home to 77.7 per cent.

By the first quarter of 2008, RBC's Affordability measures for the province ranged from 38 and 50 per cent above long term averages - levels that were clearly unsustainable. Elevated housing prices attracted more sellers onto the markets but eroded demand, shifting the pricing power to buyers. Prices began to decline in the spring - a trend that has gathered momentum through to early fall, helping to improve housing affordability in British Columbia.

In Vancouver, homeownership costs remain the highest in the country. Despite price declines since the first quarter of 2008, home prices are roughly double the national average for most housing types, with standard condos the lone exception at only 70 per cent above average. With the median family income estimated to exceed the Canadian norm by only eight per cent, and qualifying incomes roughly at more than $150,000 for a standard two-storey and $135,000 for a detached bungalow, the vast majority of Vancouver families are effectively shut out of those market segments. The condo segment remains the only option for many, as homeownership costs are not as steep, the RBC report said.

"Price drops so far this year have brought some minor relief to the Vancouver market, but more is likely to come in 2009 as the correction continues," said Hogue.
RBC's Affordability measure for a detached bungalow for Canada's largest cities is as follows: Vancouver 74.8 per cent, Toronto 53.3 per cent, Calgary 47.3 per cent, Ottawa 43.3 per cent and Montreal 40.4 per cent.

The report also looked at mortgage carrying costs relative to incomes 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 income 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.

Construction Intentions Drop Over 15% - December 4, 2008

The total value of building permits decreased 15.7% to $5.4 billion in October. Construction intentions fell in both the residential and non-residential sectors, and in all provinces except Quebec and Newfoundland and Labrador says a report filed by Statistics Canada earlier this morning. (See Chart)

The value of non-residential permits declined 23.9% to $2.4 billion following a 41.0% increase in September. October's decrease occurred mainly as a result of a decline in non-residential components in Ontario, Saskatchewan and Alberta.

Municipalities issued $3.0 billion in permits for the residential sector in October, down 7.8%. It was the third consecutive monthly drop, and was a result of declines in both single and multiple dwellings. Provincially, British Columbia registered the largest decrease, as a result of declines in the value of multi-family permits.

On a year-to-date (January to October) basis, the total value of building permits issued by municipalities reached $60.9 billion, down 2.3% from the same period in 2007. The residential sector decreased by 6.5%, while the non-residential sector was 4.2% higher.

Non-residential sector: Declines in all three components

The value of permits declined in all three components of the non-residential sector.

The value of institutional permits fell by 27.7% to $731 million after more than doubling (+114.0%) in September. The decrease came mostly from lower construction intentions for medical projects in Ontario and educational projects in Saskatchewan. Despite the decline, the value of institutional permits in October was 27.5% higher than the average monthly level of 2007.

In the industrial component, contractors took out permits worth $388 million, down 41.5% from September. This followed a 60.9% increase the month before. The decrease came mostly from maintenance buildings in Ontario and utility buildings in Alberta.

In the commercial component, the value of permits decreased 13.4% to $1.3 billion, after a 9.7% increase in September. The lower demand for permits associated with office and recreation buildings in both Ontario and Alberta was behind this decline.

On a year-to-date basis, the institutional and industrial components experienced increases of 16.1% and 5.8% respectively. On the other hand, the largest component (the commercial) was down 0.9% from the same period in 2007.

Residential sector: Declines in both single- and multi-family permits

The value of single-family permits decreased 6.0% to $2.0 billion, the fourth consecutive monthly retreat. All provinces, except Manitoba and Newfoundland and Labrador, recorded a decline in the value of single-family permits in October. The largest declines (in dollars) occurred in Alberta and British Columbia.

Municipalities issued $1.0 billion worth of permits for multi-family dwellings in October, down 10.9% from September and the third consecutive monthly decrease. Although seven provinces reported a decrease in October, British Columbia accounted for most of the decline at the national level. Alberta and Saskatchewan registered increases.

Municipalities approved 14,454 new dwellings in October, down 9.8% from September. Of these, 7,376 were multi-family units, down 12.4%, while 7,078 were single-family units, a 6.9% decline. (See Chart)

Permits down in most provinces

The value of building permits fell in eight provinces in October. The most significant decreases occurred in Ontario, (-24.8% to $1.8 billion), Saskatchewan (-58.7% to $138 million) and Alberta (-17.5% to $844 million). The decreases came mainly from the non-residential sector. In contrast, all three provinces recorded increases of at least 10% in September.

Quebec reported an 8.5% increase to $1.3 billion, as a result of higher construction intentions in industrial and institutional buildings. Newfoundland and Labrador also reported an increase as a result of gains in commercial intentions.

Metropolitan areas: Large decreases in Toronto and Saskatoon

Of the 34 census metropolitan areas, 19 recorded decreases in the value of building permits in October. The largest declines occurred in Toronto, followed by Saskatoon and Edmonton, mostly as a result of drops in the non-residential sector.

The value of permits rose in Guelph as a result of increases in non-residential permits. After two consecutive monthly declines, Calgary registered increases in both the residential and non-residential sectors.

Recession Threatens Home Sales - December 3, 2008

Global economic uncertainty weighed heavily on residential real estate activity in most major Canadian centres during the latter half of 2008. Although the forecast for 2009 promises more of the same, most markets are expected to weather the storm, says RE/MAX.

The RE/MAX Housing Market Outlook for 2009 examined residential real estate trends in 22 markets across the country and found that average price held up remarkably well in 2008, despite 13 centres reporting double-digit declines in home sales. Solid gains earlier in the year likely served to prop-up housing values at year-end. The prognosis for housing activity in the first six to nine months of 2009 is somewhat static, given continued volatility in financial markets and the threat of recession, but as stability returns to the financial sector, housing markets are expected to recover.

Nationally, 440,000 homes are expected to change hands in 2008, down 15 per cent from record 2007 levels. Canadian housing values are expected to hover at $300,000, a nominal three per cent decline from last year's historic peak. By year-end 2009, unit sales should match 2008 levels, while average price is forecast to fall another two per cent to $293,000.

"Canada's real estate environment is considerably more complex than it has been in recent years," says Elton Ash, Regional Executive Vice President, RE/MAX of Western Canada. "The landscape is definitely changing - with most markets shifting into either balanced or buyer's territory. The shut out is over. Sellers no longer rule the roost. Opportunities exist for purchasers like never before, including lower interest rates, greater inventory levels, the luxury of time to make decisions, and the upper-hand at the negotiating table. Motivated vendors will need to take note of the new mindset and set their prices accordingly."

Major markets are evenly split in terms of housing performance in 2009, with 11 centres forecast to match or exceed 2008 home sales and 11 expected to slide from 2008 levels. The highest percentage increase in unit sales is anticipated in Saskatoon, where the number of homes sold is forecast to climb three per cent in 2009. Housing values are expected to hold the line in 2009, with St. John's, Montreal, Kingston, London, Winnipeg, Saskatoon, and Regina posting modest gains in average price in 2009.

"Housing market performance will clearly be contingent on economic performance at a local, provincial, and national level in 2009," says Michael Polzler, Executive Vice President and Regional Director, RE/MAX Ontario-Atlantic Canada. "Issues affecting the overall economy are impacting housing markets across the country and the situation is not expected to be remedied until consumer confidence is restored. That said, we could see a bounce back as early as spring - if inventory levels remain stable, pent-up demand kicks into gear, and lower interest rates stimulate home-buying activity."

Canadian sellers are slowly adjusting to new realities. For most markets, 2008 started in balanced territory and moved into buyer's market conditions during the latter half of 2008. The year ahead will prove challenging, especially for vendors. "While the economy will dictate real estate performance next year, it's important to remember that demand still exists in the marketplace," says Sylvain Dansereau, Executive Vice President, RE/MAX Quebec. "In the midst of stock market turmoil, sold signs continue to appear on lawns across the country. With affordable lending rates and increased selection, first-time and move-up buyers with good credit may choose to play their investment strategy safe and purchase a home. The comfort of a tangible investment like real estate goes a long way in tough times."

 

 

 

 

 

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