Mortgage Rates: Mortgage rates are expected to rise gradually during the rest of 2010 and into 2011, but they will remain low in a historical context.
Employment: Most of the jobs lost during the economic downturn of 2009 have been recovered. Continued employment growth in 2010 and 2011 will support the housing market.
Income: In contrast to previous years, 2009 experienced a softer labour market. This caused growth in wages and incomes to moderate. In 2010 and 2011, income growth will strengthen, in line with economic activity.
Net Migration: Net migration is forecast to remain at record levels in 2010 and 2011. An improving job market will push net migration up in 2010 and 2011.
Natural Population Increase: The low birth rate is the major factor in the slowing of growth in the natural population (births minus deaths). This will lessen the demand for additional housing stock in the medium and longer term.
Resale Market: Sales on the existing home market rebounded in 2009, which caused markets to move from buyers’ to sellers’ conditions. In late 2010 and 2011, markets are expected to exhibit balanced conditions because of moderating sales of existing homes.
Vacancy Rates: Increased competition from the condo market and modest rental construction will be partly offset by strong rental demand due to high immigration. As a result, vacancy rates across Canada’s metropolitan centres will remain relatively stable this year and next.
Measures Announced for Government-Backed Mortgage Insurance: These measures will moderate housing activity. Some potential home buyers will have to save a larger down payment to offset higher qualifying mortgage rates and thus postpone their purchase. Some may buy smaller, less expensive homes. Other buyers wishing to invest in rental housing of up to 4 units will also have to save larger down payments.
-CMHC Canadian Housing Market Outlook- Third Quarter 2010
Trends at a Glance