Canadian real estate markets remain remarkably buoyant, especially in light of the deepening housing downturn in the United States and the generally softening conditions in most other advanced economies globally, according to experts who presented today at Scotiabank’s Canadian Real Estate Outlook and Trends Forum 2008. During the forum, which was held in Toronto, keynote speaker Phil Soper, President and CEO of Brookfield Real Estate Services commented, “Our expectations are that balanced conditions will prevail throughout 2008, which will mark a return to a more ‘normal’ environment than the highly skewed seller’s market that we have experienced over the better part of this decade. A stumbling American economy will impact us, slowing growth here at home, yet the solid foundation that supports the contemporary Canadian economy should prevent the housing market here from retracting.” Also speaking at the conference was Adrienne Warren, Senior Economist, Scotiabank. “We expect construction, sales and price gains to moderate in 2008 due to decreasing affordability, especially for first-time buyers, and some softening in domestic economic conditions associated with the intensifying U.S. slowdown,” remarked Ms. Warren while presenting the findings of her latest Real Estate Trends Report. “Housing starts will likely ease to around 204,000 units, still firmly above underlying household formation, with the more affordable multiple-family segment holding up better than single-detached
construction.”Ms. Warren added that more balanced resale market conditions, as sales volumes edge down and more listings come on stream, should bring average price increases back into the mid-single digit range. Renovation activity, which lags the trend in home resales by one to three years, will outperform new construction.
Commercial real estate in Canada is strong and outperforming commercial real estate in the United States, Moody’s Investors Service says.
In its latest Red-Yellow-Green report, Moody’s said each of the five market sectors are green or strong for Canada, showing greater strength than the U.S.
“There are no red or weak markets in Canada, compared to a small number of red markets in U.S. office, industrial and multifamily markets,” Elena Pankoff, Moody’s associate analyst, said.
Overall, the composite score for all property types in Canada dropped slightly from the previous six-month period, declining to 85 from 87, still well positioned in “green” territory, Moody’s said.
Moody’s Canadian Red-Yellow-Green report assesses the strength of the Canadian commercial real estate markets that support commercial mortgage-backed securities. The new report is based on data through June 30, 2007, the latest available.
The past decade has been one of the best on record for residential real estate in the Toronto area.
While the question remains whether the next decade will even come close, historically, home buyers have never had such a prolonged period of rising home prices, according to a study released yesterday by ReMax.
Prices of resale homes from 1997 to 2007 increased by 78 per cent for a 5.9 per cent compounded annual rate of return, according to the real estate firm. Unit sales were also 61 per cent higher in 2007 over 1997.
“The Canadian real estate market has surprised a lot of people, especially given the challenges we’ve faced from a high-tech meltdown, the 9/11 crisis, SARS and a credit crunch south of the border,” says ReMax spokeperson Christine Martysiewicz. “Over the past 10 years, real estate has shown incredible resilience.”
The run-up in prices is the longest sustained increase in house prices in recent history, the realtor says.
The average price of a home sold in Toronto in 1997 was $211,307. That has risen steadily every year, reaching $376,236 at the end of 2007.
