The Canadian Housing and Mortgage Corporation (CMHC) conducts detailed studies twice a year on the London housing and mortgage market. The studies are usually quite accurate and compliment other local housing and mortgage reports quite nicely. The article, which is summarized here, is broken down in to London's housing trends, economic trends, and mortgage trends.
Housing Trends
According to the report, new home construction will moderate throughout the end of 2008, and into 2009. Specifically, 2000 homes will begin construction versus 2600 a year earlier. Housing starts are a sound leading indicator for future demand.
As such, demand for NEW home purchases is indeed moderating as sales are off by 29% for the first half of 2008 when compared to the year before. This slowing of new home demand can be attributed to two factors: First, there are more listings in the resale market than there were in preceeding years, which means that buyers are increasingly finding what they want in the resale market, thus creating less demand for new home sales. Second, the average price of a new single detached home is expected to reach $306,000 in London versus an average selling price of $230,000 for an existing single detached home in London.
This said, the resale market too will moderate in 2008 by 10% and by another 6% in 2009. The study goes on to explain though that the resale market will remain healthy in 2009. Home ownership remains an attractive and accessible option in London which will help hold demand for resale. Low mortgage pricing will also certainly create an environment for purchasing in London and St. Thomas.
Importantly, home values are expected to continue to increase, but will moderate to the rate of inflation growth. Accordingly, housing values on average are forcasted to increase by 2.5% in 2009.
Economic Trends
Employment will lower by 1% in London before stabilizing in 2009. The contraction is due to continued moderation in the manufacturing sector, which is offset by London's service sector which continues to expand. Full time positions continue to increase in London which is an important indicator for attaining a mortgage and purchasing a home.
Net in migration is increasingly a factor in the growth of London's population. New Canadians account for much of this net migration, followed by inter provincial migrants. Combined with low mortgage rates, this will help to sustain housing prices over the long term.
Mortgage Trends
Mortgage rates are expected to remain at all time lows for the end of 2008 and for most of 2009. This said, eventual increases in bond prices will have the affect of pushing up fixed rate mortgages. Thus we should see increasing fixed mortgage going into 2010.
For any questions for further details on this report, leave a post or contact me at brent@brentrichardson.ca.
He is a good friend that speaks well of us behind our backs.
*_*
Posted by: Taobao English | 01/10/2011 at 04:28 AM
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