Pascal-Yvan Pelletier Senior EconomistMarket Analyst

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Pascal-Yvan Pelletier Senior EconomistMarket Analyst Powered By Docstoc
					CMHC ottawa housing outlook conference
Understanding Tomorrow’s Market Today




                                Pascal-Yvan Pelletier
                           Senior Economist/Market Analyst
                                Phone: (613) 748-4502

                          Email: pascal.pelletier@cmhc.ca

                                        www.cmhc.ca
Outline



                       •     Overview of Housing Market
                             Drivers
                       •     Housing Forecasts
                       •     Resale Market Outlook
                       •     Challenges
                       •     New Construction Outlook
                       •     Sub-market Trends




          CANADA MORTGAGE AND HOUSING CORPORATION
Housing Market Drivers


                 Impact on Demand for Ownership Housing


                      2006                     2007(F)     2008(F)

Job Growth

Migration

Mortgage Rates

Mortgage
Carrying Costs




                 CANADA MORTGAGE AND HOUSING CORPORATION
Outline



                     •     Overview of Housing Market
                           Drivers
                     •     Housing Forecasts
                     •     Resale Market Outlook
                     •     Challenges
                     •     New Construction Outlook
                     •     Sub-market Trends




          CANADA MORTGAGE AND HOUSING CORPORATION
Housing Outlook

                                      2005             2006       2007F      2008F
Resale Market
Total Sales                          13,300          14,003       14,900     14,750

Average MLS® Price                  $248,358        $257,481     $271,000   $282,000

New Home Market
Total Starts                          4,982           5,875       6,125      6,225

Single-Family Starts                  2,350           2,480       2,750      2,650

 Multi-Family Starts                  2,362           3,395       3,375      3,575


Source: CREA, CMHC
Forecasts by CMHC




                       CANADA MORTGAGE AND HOUSING CORPORATION
Outline



                          •     Overview of Housing Market
                                Drivers
                          •     Housing Forecasts
                          •     Resale Market Outlook
     SOLD
                          •     Challenges
                          •     New Construction Outlook
                          •     Sub-market Trends




            CANADA MORTGAGE AND HOUSING CORPORATION
Sales to Remain High in 2008

Annual MLS® Sales - Ottawa
15,000
            10 year Avg. = 12,178

13,000



11,000



 9,000



 7,000



 5,000
                1997




                                  1999


                                         2000


                                                 2001


                                                        2002


                                                               2003


                                                                        2004


                                                                               2005
         1996




                       1998




                                                                                      2006


                                                                                             2007F


                                                                                                     2008F
Source: CREA
(F) Forecast by CMHC


                              CANADA MORTGAGE AND HOUSING CORPORATION
Ottawa’s Population is Growing
Ottawa’s population

1,000,000




  750,000




  500,000




  250,000




            0
                  1991                    1996                 2001   2006

Source: Statistics Canada

                            CANADA MORTGAGE AND HOUSING CORPORATION
Job Market Supports Housing Demand

Employment (‘000s) SA* - Ottawa

 500
 480
 460
 440
 420
 400
 380
 360
 340
       Jan-96




                         Jan-98




                                                             Jan-02




                                                                                                          Jan-07

                                                                                                                   Jan-08
                Jan-97




                                  Jan-99

                                           Jan-00

                                                    Jan-01




                                                                      Jan-03

                                                                               Jan-04

                                                                                        Jan-05

                                                                                                 Jan-06
Source: Statistics Canada
* Seasonally Adjusted by CMHC
Forecast by CMHC

                                    CANADA MORTGAGE AND HOUSING CORPORATION
Resale Market to Remain Favourable to Sellers
Sales-to-New Listings (SNL) Ratio - Ottawa*
120


100


 80                                                                                                               sellers’ market

 60


 40                                                                                              balanced market


 20
                                                                                                    buyers’ market

  0
               Jan-92

                        Jan-93




                                                                              Jan-99




                                                                                                                            Jan-04
      Jan-91




                                 Jan-94

                                          Jan-95

                                                   Jan-96

                                                            Jan-97

                                                                     Jan-98




                                                                                       Jan-00

                                                                                                Jan-01

                                                                                                         Jan-02

                                                                                                                   Jan-03




                                                                                                                                     Jan-05

                                                                                                                                              Jan-06

                                                                                                                                                       Jan-07
 Source: CREA
 SNL – Sales to New Listings Ratio calculated by CMHC

                                          CANADA MORTGAGE AND HOUSING CORPORATION
Price Growth Will Remain Above Inflation

Annual MLS® Price Change (%) - Ottawa


15%



10%


         Rate of Inflation(%)*
5%



0%



-5%
      1996


              1997


                      1998


                             1999


                                    2000


                                           2001


                                                  2002


                                                         2003


                                                                2004


                                                                       2005


                                                                              2006




                                                                                             2008F
                                                                                     2007F
Source: CREA, Statistics Canada, CMHC forecast



                             CANADA MORTGAGE AND HOUSING CORPORATION
Average Price to Hit $282,000 in 2008

Annual MLS® Price - Ottawa

$300,000

$275,000




                                                                                                                                   282,000
                                                                                                                         271,000
$250,000




                                                                                                               257,481
                                                                                                     248,358
                                                                                           238,152
$225,000




                                                                                 219,713
$200,000




                                                                       200,711
$175,000



                                                             175,972
$150,000
                                                   159,511
                                         149,626
                               143,914
                     143,866
           140,513




$125,000

$100,000
           1996




                               1998




                                                   2000




                                                                       2002


                                                                                 2003




                                                                                                     2005
                     1997




                                         1999




                                                             2001




                                                                                           2004




                                                                                                               2006


                                                                                                                         2007F


                                                                                                                                   2008F
Source: CREA
(F) Forecast by CMHC

                                  CANADA MORTGAGE AND HOUSING CORPORATION
MLS® Price by Housing Type

        Ottawa                     2006 YTD               2007 YTD   % Change

 Single-Detached                   $287,181               $307,080     6.9

     Bungalow                      $252,901               $268,061     6.0

    Two-Storey                     $318,931               $345,561     8.3

       Row
                                   $231,558               $242,893     4.9
   (Townhouse)
  Semi-detached                    $247,906               $269,046     8.5

      Condo
                                   $203,542               $218,755     7.5
     Apartment
    Condo Row                      $169,998               $174,686     2.8

Source: Ottawa Real Estate Board
YTD – January to September


                          CANADA MORTGAGE AND HOUSING CORPORATION
Ottawa’s Market Tighter Than Average

Jan-Sept Sales to New Listings Ratio

      80%


      70%


      60%


      50%


      40%


      30%
                                        Thunder Bay

                                                      Peterborough




                                                                               ONTARIO
                      SCN

                            Kingston




                                                                     Toronto




                                                                                                           Ottawa

                                                                                                                    Brantford




                                                                                                                                            Guelph




                                                                                                                                                                Sudbury
            Windsor




                                                                                         London




                                                                                                                                Kitchener
                                                                                                  Barrie




                                                                                                                                                     Hamilton
 Source: CREA, CMHC calculations



                                       CANADA MORTGAGE AND HOUSING CORPORATION
How Do Ottawa Prices Compare to Ontario?

Annual MLS® Price - Ottawa

$300,000


                             Ottawa
$250,000
                             Ontario

$200,000



$150,000



$100,000



 $50,000
           1980       1985             1990          1995       2000   2005


Source: CREA


                      CANADA MORTGAGE AND HOUSING CORPORATION
Outline



                      •      Overview of Housing Market
                             Drivers
                      •      Housing Forecasts
                      •      Resale Market Outlook
                      •      Challenges
                      •      New Construction Outlook
                      •      Sub-market Trends




          CANADA MORTGAGE AND HOUSING CORPORATION
  Ownership Costs are Rising Steadily

    Real Carrying Costs SA* - Ottawa

 $2,200

 $2,000                                                    Real P&I SA

 $1,800

 $1,600

 $1,400

 $1,200

 $1,000

   $800

   $600
                            Jan-92
          Jan-88


                   Jan-90




                                         Jan-94


                                                  Jan-96


                                                               Jan-98


                                                                         Jan-00


                                                                                  Jan-02


                                                                                           Jan-04


                                                                                                    Jan-06
* Using average MLS price, 10% down, 25 amort., and 5 year mortgage rate.
Price and carrying costs in $2004, adjusted by National Consumer Price Index (CPI)
Source: CREA, Statistics Canada, Bank of Canada; calculations by CMHC
                                     CANADA MORTGAGE AND HOUSING CORPORATION
Less Working Hours to Own a Home in Gatineau

Hours of Work Required to Buy an Average Home on the Resale Market

200
              Ottawa
              Gatineau

150




100




 50
       1997     1998     1999     2000      2001     2002     2003   2004   2005   2006


 Source: Statistics Canada, CREA, CMHC calculations


                         CANADA MORTGAGE AND HOUSING CORPORATION
Modestly Priced Housing: Major Attraction Across the River

Net Migration

 16,000

 14,000
                   Ottawa
 12,000
                   Gatineau
 10,000

  8,000

  6,000

  4,000

  2,000

      0

 -2,000
          1997     1998       1999   2000     2001     2002     2003   2004   2005   2006


  Source: Statistics Canada



                          CANADA MORTGAGE AND HOUSING CORPORATION
Outline

                        Overview of Housing –
                      New ConstructionMarket
                      •
                        Drivers
                      Leaning Toward High
                      • Housing Forecasts
                      Density Construction
                      •     Resale Market Outlook
                      •     Challenges
                      •     New Construction Outlook
                      •     Sub-market Trends




          CANADA MORTGAGE AND HOUSING CORPORATION
Home Starts are Above the Historic Average

Number of Housing Starts by Type – Ottawa CMA


9,000
                         Singles                    Multiples
8,000
7,000
                                              15 year Avg. = 5,155
6,000
5,000
4,000




                                                                                                                                             3,375
                                                                                                                                                     3,425
3,000
2,000




                                                                                                                                             2,750
                                                                                                                                                     2,650
1,000
   0
               1989


                             1991
                                    1992
                                           1993
                                                  1994
                                                         1995


                                                                       1997


                                                                                     1999
                                                                                            2000




                                                                                                                               2005
                                                                                                                                      2006
        1988


                      1990




                                                                1996


                                                                              1998




                                                                                                   2001
                                                                                                          2002
                                                                                                                 2003
                                                                                                                        2004




                                                                                                                                                     2008F
                                                                                                                                             2007F
 Source: CMHC
 (F) Forecast by CMHC

                                           CANADA MORTGAGE AND HOUSING CORPORATION
How Do Ottawa Area Prices Compare to Ontario?
Annual Absorption Prices –
Single-detached Homes

 $450,000


 $400,000
                                          Ottawa

 $350,000                                 Ontario


 $300,000


 $250,000


 $200,000


 $150,000
             1990



                           1992

                                   1993

                                           1994

                                                  1995



                                                                1997

                                                                       1998




                                                                                            2001

                                                                                                   2002

                                                                                                          2003

                                                                                                                 2004



                                                                                                                               2006
                    1991




                                                         1996




                                                                              1999

                                                                                     2000




                                                                                                                        2005



                                                                                                                                      2007*
  Source: CMHC
  * Average Jan-Sept

                                  CANADA MORTGAGE AND HOUSING CORPORATION
More Expensive Homes Pull Up Average Price



185
                        NHPI - Ottawa-Gatineau CMA
165                     Average New Home Price
                        National Material Cost Index
145

125

105

 85
      Jan-96


               Jan-97


                           Jan-98


                                     Jan-99


                                              Jan-00


                                                       Jan-01


                                                                Jan-02


                                                                         Jan-03


                                                                                  Jan-04


                                                                                           Jan-05


                                                                                                    Jan-06


                                                                                                             Jan-07
 Source: Statistics Canada, CMHC




                                    CANADA MORTGAGE AND HOUSING CORPORATION
Older Age Groups Growing Faster

Ottawa’s population by Age Group

                                                                              1996
     160,000                                                                  2001
                                                                              2006

     120,000



      80,000



      40,000



            0




                                                                                     65+
                   0-14




                                         25-34



                                                   35-44



                                                              45-54



                                                                      55-64
                              15-24




  Source: Statistics Canada

                          CANADA MORTGAGE AND HOUSING CORPORATION
Multi-Family Homes and High Density Construction
Gain in Popularity

Number of Multi-family Starts - Ottawa


4,500
                                                         Townhouses
4,000
                                                         Apartment
3,500                                                    Semi-detached
3,000
2,500
2,000
1,500
1,000
  500
    0
        1989




                             1992




                                                          1996




                                                                                      2000




                                                                                                           2003
                                                                                                                  2004
               1990
                      1991


                                    1993
                                           1994
                                                  1995


                                                                 1997
                                                                        1998
                                                                               1999


                                                                                             2001
                                                                                                    2002




                                                                                                                         2005
                                                                                                                                2006
                                                                                                                                       2007F
                                                                                                                                               2008F
 Source: CMHC
 F : forecast


                                    CANADA MORTGAGE AND HOUSING CORPORATION
…Especially Condominiums

Number of Townhomes and Apartment Condo Starts - Ottawa

1,600

1,400

1,200
                                                   Apartment
1,000
                                                   Townhomes
 800

 600

 400

 200

   0
        1989




                             1992
                                    1993




                                                         1996




                                                                                            2001




                                                                                                                 2004
               1990
                      1991




                                           1994
                                                  1995


                                                                1997
                                                                       1998
                                                                              1999
                                                                                     2000


                                                                                                   2002
                                                                                                          2003


                                                                                                                        2005
                                                                                                                               2006
                                                                                                                                      2007F
                                                                                                                                              2008F
Source: CMHC
F : forecast


                                    CANADA MORTGAGE AND HOUSING CORPORATION
Inventories Lower Compared to Activity

Number of Unsold Townhome and Apartment Condos - Ottawa


700

600                                        Unsold at completion

500                                       Unsold

400

300

200

100

  0
                           1992




                                                1995

                                                       1996




                                                                                                 2002

                                                                                                        2003
      1989

             1990

                    1991



                                  1993

                                         1994




                                                              1997

                                                                     1998

                                                                            1999

                                                                                   2000

                                                                                          2001




                                                                                                               2004

                                                                                                                      2005

                                                                                                                             2006

                                                                                                                                    2007*
  Source: CMHC
  *October


                                  CANADA MORTGAGE AND HOUSING CORPORATION
A Good News Story



• Home sales to remain strong
• Starts reach a plateau
• Home price growth easing but still faster than inflation
• Condominiums and higher density housing popular




                CANADA MORTGAGE AND HOUSING CORPORATION
CMHC ottawa housing outlook conference
Understanding Tomorrow’s Market Today




                                   Dana Senagama
                                    Market Analyst
                                 Phone: (416) 218-3329

                             Email: dsenagam@cmhc.ca

                                        www.cmhc.ca
Housing Outlook Conference – Ottawa PART II



  • Resale Market in Different Submarkets

  • New Construction and Census Data

  • Opportunities




             CANADA MORTGAGE AND HOUSING CORPORATION
 Orleans – Sales and Average Price

                                                                           Average Price by Year
                                                                $300,000
                                            Orléans             $275,000
                                                                $250,000
                                                                $225,000
                                                                $200,000                    Ottawa
                                                                                            Orléans
                                                                $175,000
                                                                $150,000
                                                                             2005   2006 YTD 2007 YTD


                                                                                    Sales   % change

                                                                    2007 YTD        1,635      7.5

                                                                    2006 YTD        1,521

                                                                      2005          1,774      -4.7

                                                                      2004          1,863

Source: Ottawa Real Estate Board
YTD – Year-to-date, January to September


                          CANADA MORTGAGE AND HOUSING CORPORATION
 East End – Sales and Average Price

                                                                                 Average Price by Year
                                                                    $300,000

                                                                    $250,000
                               East         Orléans
                               End                                  $200,000

                                                                    $150,000                       Ottawa
                                                                                                   East End
                                                                    $100,000
                                                                                 2005   2006 YTD   2007 YTD




                                                                                        Sales      % change

                                                                        2007 YTD         813          2.3

                                                                        2006 YTD        795

                                                                          2005          895           -1.6

                                                                          2004           910

Source: Ottawa Real Estate Board
YTD – Year-to-date, January to September


                          CANADA MORTGAGE AND HOUSING CORPORATION
 South-east – Sales and Average Price

                                                                             Average Price by Year
                                                                $300,000

                               East        Orléans
                                                                $250,000
                               End

                                                                $200,000                     Ottawa
                                                                                             South East

                                                                $150,000

                              South-                                         2005    2006 YTD 2007 YTD
                              east
                                                                                    Sales   % change

                                                                    2007 YTD        1,608      7.8

                                                                    2006 YTD        1,491

                                                                      2005          1,754      1.1

                                                                      2004          1,735

Source: Ottawa Real Estate Board
YTD – Year-to-date, January to September

                          CANADA MORTGAGE AND HOUSING CORPORATION
 Downtown – Sales and Average Price


                                                                                 Average Price by Year
                                                                    $400,000

                                   East        Orléans              $350,000
                Downtown           End                              $300,000
                                                                                                  Ottawa
                                                                    $250,000                      Downtown


                                                                    $200,000
                                                                                 2005     2006 YTD 2007 YTD
                                  South-
                                  east
                                                                                        Sales   % change

                                                                        2007 YTD        860        6.0

                                                                        2006 YTD        811

                                                                          2005          858        -5.1

                                                                          2004          904

Source: Ottawa Real Estate Board
YTD – Year-to-date, January to September


                              CANADA MORTGAGE AND HOUSING CORPORATION
 West End – Sales and Average Price

                                                                             Average Price by Year
                                                                $300,000
                              East         Orléans
              Downtown        End                               $250,000
            West End                                                                Ottawa
                                                                                    West End
                                                                $200,000


                                                                $150,000
                             South-
                                                                             2005     2006 YTD 2007 YTD
                             east

                                                                                     Sales     % change

                                                                    2007 YTD          1,162      13.3

                                                                    2006 YTD         1,026

                                                                      2005           1,357       3.7

                                                                      2004           1,308
Source: Ottawa Real Estate Board
YTD – Year-to-date, January to September


                          CANADA MORTGAGE AND HOUSING CORPORATION
 Nepean – Sales and Average Price

                                                                                 Average Price by Year
                                                                    $300,000
                                  East         Orléans
               Downtown           End                               $250,000
            West End
                                                                                                 Ottawa
                                                                    $200,000
                                                                                                 Nepean


                                                                    $150,000
               Nepean            South-                                          2005   2006 YTD 2007 YTD
                                 east
                                                                                        Sales   % change

                                                                        2007 YTD        919       14.9

                                                                        2006 YTD        800

                                                                          2005          1,008     -2.8

                                                                          2004          1,037


Source: Ottawa Real Estate Board
YTD – Year-to-date, January to September

                              CANADA MORTGAGE AND HOUSING CORPORATION
 Barrhaven – Sales and Average Price

                                                                             Average Price by Year
                                                                $300,000

                              East         Orléans
                                                                $250,000
              Downtown        End
           West End                                                                           Ottawa
                                                                $200,000
                                                                                              Barrhaven


                                                                $150,000
              Nepean         South-                                          2005      2006    2007 YTD
                             east
                                                                                    Sales     % change
              Barrhaven
                                                                    2007 YTD        821          7.9

                                                                    2006 YTD        761

                                                                      2005          836         -10.4

                                                                      2004          933


Source: Ottawa Real Estate Board
YTD – Year-to-date, January to September

                          CANADA MORTGAGE AND HOUSING CORPORATION
    Kanata-Stittsville – Sales and Average Price

                                                                                   Average Price by Year
                                                                      $300,000

                                    East         Orléans
                                                                      $250,000
                    Downtown        End
                West End                                              $200,000                    Ottawa
                                                                                                  Kanata-Stittsville

                                                                      $150,000

                    Nepean                                                         2005   2006 YTD 2007 YTD
                                   South-
                                   east
                                                                                          Sales       % change

                    Barrhaven                                             2007 YTD        1,380              6.5
      Kanata-
      Stittsville                                                         2006 YTD        1,296

                                                                            2005          1,566            4.1

                                                                            2004          1,504


Source: Ottawa Real Estate Board
YTD – Year-to-date, January to September
                                CANADA MORTGAGE AND HOUSING CORPORATION
  Central West Leads Sales Growth…


                                   East         Orléans
              Downtown             End
             West End
                                                                         Sales by sub-market
                                                                                2006      2007    % Chg.
                                                                                YTD       YTD
                 Nepean           South-                      Nepean            800       919      14.9
                                  east
                                                             West End          1,026      1,162    13.3
                 Barrhaven
                                                             Barrhaven          761       821      7.9
   Kanata-
   Stittsville                                               Southeast         1,491      1,608    7.8

                                                              Orleans          1,521      1,635    7.5

                                                          Kanata-Stittsville   1,296      1,380    6.5
                                                             Downtown           811       860      6.0
                                                              East End          795       813      2.3
Source: Ottawa Real Estate Board
YTD – Year-to-date, January to September                    Ottawa CMA         8,501      9,198    8.2



                               CANADA MORTGAGE AND HOUSING CORPORATION
  … And Also Price Growth


                                   East          Orléans
                Downtown           End
            West End

                                                                       MLS® Price by sub-market
                                                                              2006 YTD    2007 YTD    %
                Nepean                                                                               Chg.
                                  South-
                                  east                       West End          $277,352   $299,589   8.0

                                                              Nepean           $248,761   $267,796   7.7
                Barrhaven
                                                              Orleans          $246,264   $262,809   6.7
  Kanata-
  Stittsville                                               Barrhaven          $256,178   $271,843   6.1
                                                            Downtown           $359,389   $379,064   5.5
                                                            Southeast          $268,095   $282,703   5.4
                                                         Kanata-Stittsville    $275,306   $286,397   4.0
                                                             East End          $219,995   $224,953   2.3
Source: Ottawa Real Estate Board                           Ottawa CMA          $267,730   $283,300   5.8
YTD – Year-to-date, January to September

                               CANADA MORTGAGE AND HOUSING CORPORATION
Housing Outlook Conference – Ottawa PART II



• Resale Market in Different Submarkets

• New Construction and Census Data

• Opportunities




             CANADA MORTGAGE AND HOUSING CORPORATION
Prices Relatively Uniform in 2001

     Average Single-Detached
     Home Price – 2001




              CANADA MORTGAGE AND HOUSING CORPORATION
High-Priced Localities Develop by 2006

   Average Single-Detached
   Home Price – 2006




              CANADA MORTGAGE AND HOUSING CORPORATION
Population Growing Outside the Green Belt
    Population Change 2001-2006




                                                                  (%)



Source: Statistics Canada
(Census), CMHC calculations


                        CANADA MORTGAGE AND HOUSING CORPORATION
Single Starts Growth Mainly Far From Core

 Single-Detached Starts 2001-2006




                                                         (%)




Source: CMHC
               CANADA MORTGAGE AND HOUSING CORPORATION
     Income Lower Near the Centre and East

          Average Income - 2006




Source: Estimated
by CMHC
according to 2001
Census Data




                       CANADA MORTGAGE AND HOUSING CORPORATION
Suburbs Remain Most Accessible

 Increase in Price/Income Ratio 2001-2006




Source: CMHC
                 CANADA MORTGAGE AND HOUSING CORPORATION
Condos Most Popular in the Core

   Condominium Starts – 2001




 Source: CMHC
                CANADA MORTGAGE AND HOUSING CORPORATION
More Condos, Same Areas

    Condominium Starts – 2006




Source: CMHC
                CANADA MORTGAGE AND HOUSING CORPORATION
Housing Outlook Conference – Ottawa PART II



• Resale Market in Different Submarkets

• New Construction and Census Data

• Opportunities




              CANADA MORTGAGE AND HOUSING CORPORATION
      Opportunities and Challenges


Vendors          Still a seller’s market – Price will outpace the
                              inflation rate in all areas



 Buyers       An influx of new listings will limit the prices increase



Investors &
  Lenders                Some areas offer more potential




Builders                 More high density construction


                      CANADA MORTGAGE AND HOUSING CORPORATION
CMHC ottawa housing outlook conference
Understanding Tomorrow’s Market Today




                      Pascal-Yvan Pelletier & Dana Senagama

                                 Phone: (613) 748-4502

                          Emails: pascal.pelletier@cmhc.ca
                                 dsenagam@cmhc.ca

                                        www.cmhc.ca