metropolitan housing outlook: in-depth housing analysis ... · spring 2013 metropolitan housing...

metropolitan housing outlook Autumn 2013

in-Depth housing analysis for Canada, the provinces, and nine metropolitan areas.

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PrefaceThis report provides an in-depth analysis of the housing market at the national, provincial, and metropolitan lev-els. Covering a wide range of housing market statistics, such as interest rates, housing starts, mortgage approvals, and home prices, this report connects the economy with housing market activity. It also provides insights into the financial situation of consumers.

Nine census metropolitan areas are covered: Québec City, Montréal, Toronto, Ottawa–Gatineau, Winnipeg, Calgary, Edmonton, Vancouver, and Victoria.

Provincial coverage includes the Atlantic provinces, Quebec, Ontario, the Prairies, Alberta, and British Columbia.

This report is completed twice a year.

Metropolitan Housing Outlook: In-Depth Housing Analysis for Canada, the Provinces, and Nine Metropolitan Areasby Alan Arcand, Mario Lefebvre, Jane McIntyre, Greg Sutherland, and Robin Wiebe

Contents

What has Changed? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

executive summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

national overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

provincial overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12Atlantic Canada . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

Quebec . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

Ontario . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

Prairies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

Alberta . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

British Columbia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27

metropolitan overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30Québec City . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30

Montréal. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34

Toronto . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38

Ottawa–Gatineau . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42

Winnipeg . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46

Calgary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50

Edmonton. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54

Vancouver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58

Victoria. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62

Definition and Concepts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66

The Conference Board of Canada

The forecast for Canada’s real gross domes-

tic product is relatively unchanged from our

spring 2013 Metropolitan Housing Outlook,

as the main assumptions supporting the outlook seem

to be holding up. Growth in Canada’s real GDP is

expected to be 1.8 per cent in 2013—a second consecu-

tive year of tepid growth. However, housing markets

have strengthened in some regions over the past couple

of months, and consumer and business confidence

has picked up. As a result, the Canadian economy

is expected to perform better in 2014, expanding by

2.4 per cent. This is still a 0.1 percentage point down-

ward revision from six months ago when we completed

the previous housing outlook publication.

The Canadian dollar lost ground this past summer,

pulled down, in part, by weaker commodity prices,

including heavily discounted crude oil. The loonie is

expected to average US$0.97 this year, much lower

than the US$1.02 forecast in the previous housing out-

look. Despite some pickup in the economy in the com-

ing months, the Canadian dollar is expected to slip to

US$0.96 for 2014, a 7-cent drop from the last housing

outlook publication.

Modest economic growth and tighter mortgage rules

lowered demand in Canada’s new housing market in the

first half of this year. Accordingly, builders are expected

to reduce housing starts by 15.5 per cent in total for

2013, down to 181,400 units. This is an 800-unit

reduction from the previous Metropolitan Housing

Outlook. However, demand has already improved in

some markets, and so modest growth of 1.9 per cent is

anticipated for housing starts next year. In level terms,

housing starts are expected to be 184,900 units in 2014,

up from 184,500 units in the last publication.

Weaker demand in the Canadian housing market in

the past few months has also slowed price growth in

the new home market. The current outlook forecasts

new home prices will rise by 1.8 per cent this year

and 2 per cent in 2014. This is down from the 2.1 per

cent and 2.5 per cent increases anticipated six months

ago. Meanwhile, resale prices have been stronger so

far in 2013. Existing home prices are now expected

to increase 3.1 per cent this year, up from the 0.9 per

cent increase expected in the previous outlook. Resale

price growth will be more moderate next year, how-

ever, at 1.7 per cent, down from the 3.3 per cent

forecast previously.

The number of mortgage approvals is also expected

to be lower in 2013, slipping 2.3 per cent, the second

annual decline in a row. This is a more pronounced

drop than the 1.1 per cent decline expected six months

ago. Next year, with housing markets improving, total

mortgage approvals are anticipated to grow by 2.9 per

cent, an upward revision from the 1.7 per cent expected

in the previous forecast.

What has Changed?


NaTIONal OVerVIeW

Canada’s economic prospects seem to be bright-

ening: housing markets remain decent, con-

sumer and business confidence has picked up,

and the U.S. economy is improving. Accordingly,

Canada’s real GDP is forecast to advance by 2.4 per

cent in 2014, following 1.8 per cent growth this year.

Employment growth is also forecast to pick up from

1.3 per cent this year to 1.4 per cent in 2014, cutting the

unemployment rate from 7.2 per cent to 7 per cent.

Financial markets have calmed recently. While the

European sovereign debt crisis still lurks, the eurozone

has emerged from crisis mode. The U.S. Federal Reserve

continues its policy of quantitative easing, and the Bank

of Canada has said interest rates will stay low as long as

Canada’s economy remains weak and inflation is dormant.

On the currency front, the Canadian dollar is still below

par with its U.S. counterpart, largely a result of the global

flight to the “safe haven” of the U.S. dollar. Meanwhile,

mortgage interest rates are on the rise as yields on

bonds, from which mortgages are funded, increase.

Accordingly, we expect the posted three-year conven-

tional mortgage rate to increase gradually from 3.8 per

cent in 2013 to 4.4 per cent in 2014 and 5.1 per cent in

2015. This, along with ongoing employment gains,

should allow indebted households to adapt gradually to

the resulting higher mortgage payments. There is little

sign of current mortgage stress; default rates are low.

Canadian housing markets remain generally solid, despite

repeated attempts to cool them by tightening mortgage

insurance rules. Housing starts dipped to 175,500 units

at an annual rate during the first quarter of 2013, but

quickly rebounded to 185,500 units in the second quar-

ter. We expect starts to end the year at 181,400 units.

For next year, we expect nearly 185,000 starts. New

home price growth will remain subdued at 1.8 per cent

this year and 2 per cent in 2014, down from gains of

2.2–2.4 per cent between 2010 and 2012. The national

housing market does not seem out of balance with

demographic requirements. Canada’s ratio of housing

starts to absolute population changes has averaged

0.54 over the past 25 years and has been near that each

of the past three years. Meanwhile, the national average

existing home price, which increased by a marginal

0.2 per cent in 2012, is forecast to rise 3.1 per cent to

$372,770 this year and 1.7 per cent in 2014.

In short, Canadian housing markets should land softly.

The economy continues to advance modestly. Interest

rates, although rising, remain low. Recent homebuyers

have locked in low mortgage rates and will have paid

off a relatively large share of their debt when they have

to renegotiate. New construction does not appear out of

line with demographic requirements, even in Toronto,

where concern over inflated condominium supplies

abounds. A crash would require a significant negative

surprise like an interest rate spike or employment col-

lapse. Since none of this is in the cards, a housing crash

like the one in the U.S. is nowhere near a possibility.

PrOVINCIal OVerVIeW

Stronger performance by British Columbia’s goods-pro-

ducing industries will lift GDP expansion to 3 per cent

in 2014, following a disappointing 1.5 per cent in 2013.

This will produce only 0.3 per cent job growth in 2013

but a stronger 1.7 per cent in 2014. Housing markets

are improving in Vancouver and Victoria, although a

subdued Chinese economy could cool offshore demand

for provincial real estate. Housing starts are nonetheless

forecast to decline 8 per cent in 2013, and then jump

over 10 per cent in 2014. Little change is expected in

prices for both new and existing homes in 2013 and

2014, after both dropped in 2012.

Alberta has largely shrugged off the effect of the June

floods, thanks to decent energy sector activity. Provincial

GDP is forecast to rise 3.2 per cent in 2013 and 3 per cent

in 2014. This will lift employment 2.2 per cent in 2013

and 2 per cent in 2014. Housing starts are predicted to

rise 4.3 per cent in 2013, building on a 30 per cent jump

in 2012. They should essentially stabilize in 2014. We

executive summary

Autumn 2013—metropolitan Housing Outlook | 3


expect the average sale price of an existing home to rise

4.5 per cent in both 2013 and 2014; new home price

growth should be closer to 3 per cent in both years.

Healthy GDP growth of 2.5 per cent is forecast in 2013

for Manitoba and Saskatchewan combined and then

2.3 per cent in 2014. This will foster job growth of

2.2 per cent in 2013 and 1.6 per cent in 2014. Economic

momentum will largely come from Saskatchewan’s

goods-producing sector, since Manitoba’s metal mining

and services sectors are expected to be weak. Housing

starts soared 31 per cent in the two provinces combined

in 2012, but should drop 19 per cent in 2013 this year.

But construction volumes will remain very strong, in

line with continued sound population growth, and a

small 4.4 per cent rebound is expected for 2014. The

average resale home price will increase 5.3 per cent in

2013 and 4.7 per cent in 2014, while new home prices

will rise 3.3 per cent and 3.2 per cent.

Continued manufacturing struggles in 2013 will limit

Ontario’s GDP growth to 1.2 per cent, but next year

will see manufacturing improve and GDP advance

2.2 per cent. Employment is forecast to rise 1.3 per cent

in 2013 and 1.6 per cent in 2014. Housing starts are on

track to fall 21 per cent this year, led by a big drop in

multi-family starts. For 2014, we see both single and

multiple construction stabilizing, with total starts rising

by 2.5 per cent. Average existing home price growth is

forecast to slow to 2.8 per cent in 2013 and 1.6 per cent

in 2014. Moderate new home price advances are fore-

cast: 3 per cent this year and 1.8 per cent in 2014.

Quebec’s GDP is forecast to rise only 1.4 per cent this

year but a stronger 2.2 per cent in 2014. Still, employ-

ment will grow 1.4 per cent this year and 1.1 per cent

next. Significant declines in both single-detached and

multi-family construction are forecast to cut total hous-

ing starts by 24 per cent in 2013, the third consecutive

annual decline. Next year is forecast to see both single

and multiple starts stabilize. House price growth will be

modest: 1 per cent this year and 2.7 per cent in 2014 for

existing homes and advances of 1.4 per cent and 1.9 per

cent for new units.

Canada’s four Atlantic provinces will see their com-

bined GDP grow 2.3 per cent in 2013, following a 1.5

per cent contraction in 2012. A 1.9 per cent expansion

is on tap for 2014. Employment advances will remain

sluggish at 0.5 per cent in 2013 and 0.6 per cent in

2014. Housing markets are similarly weak. This year,

we expect double-digit percentage drops in both single-

detached and multi-family construction to cut total

starts by 13.4 per cent. Another 11 per cent drop is on

tap for 2014, as multiples retrench further. The average

existing home price is forecast to dip 1.5 per cent this

year, but rise 2.9 per cent in 2014. The average new

home price is forecast to rise 3.6 per cent this year and

1.7 per cent in 2014.

MuNICIPal OVerVIeW

Most cities are forecast to see somewhat slower GDP

growth in 2013 than in 2012. Victoria’s 0.1 per cent

GDP expansion (down from an already-low 0.3 per cent

in 2012) is predicted to be the slowest among our cities.

Edmonton is forecast to be this year’s leader, although

its GDP growth of 4.2 per cent will be a cooling from

hikes near or above 6 per cent in the previous three

years. For 2014, we expect growth will accelerate in all

cities except Edmonton, where it will slow to a still-

strong 3.2 per cent. Calgary’s 3.4 per cent will be next

year’s fastest advance, while Ottawa’s 1.6 per cent will

be the slowest, as the city grapples with ongoing federal

restraint. Unsurprisingly, the Alberta cities are the only

two cities where GDP growth is expected to average at

least 3 per cent per year between 2015 and 2017. By

contrast, we think Québec City’s GDP expansion will

average only 2 per cent.

For the second consecutive year, sales of existing homes

are forecast to drop everywhere except the Alberta cites in

2013. In the case of Calgary and Edmonton, sales growth,

while positive this year, will slow from the previous

year’s pace. The most notable news elsewhere is the

apparent end of Vancouver’s market correction. Sales

rose briskly during the second quarter of 2013 and

exceeded their year-earlier volume for the first time

since the third quarter of 2011. Nonetheless, sales will

still end 2013 down 2.3 per cent. Sales in Toronto are

also expected to post their second straight annual dip.

This year’s largest forecast drops are in the province of

Quebec—10 per cent in Québec City and 8 per cent in

Montréal. For 2014, we think sales will rise everywhere

except Ottawa, which will suffer a fifth straight annual

4 | metropolitan Housing Outlook—Autumn 2013


sale decline. Increases will be modest elsewhere, with a

3 per cent gain in Winnipeg leading the pack. Between

2015 and 2017, sales will rise at an annual average rate

of roughly 2 to 3 per cent in most places except

Toronto, where growth will be slightly faster.

Quarterly sales-to-new-listings ratio data indicate bal-

anced markets in most cities, although the more volatile

monthly data show Calgary has edged into a sellers’ pos-

ition and Québec City has dipped into buyers’ territory.

Measured by annual data, though, we expect balanced

markets everywhere in 2013. Still, the sales-to-new-

listings ratio will fall in our five easternmost cities, led

by a 7 percentage point drop in Québec City. Vancouver

and Victoria will see 6 and 7 percentage point increases

respectively. For 2014, we expect the ratio to advance

in five cities, the largest gain being another 6 percent-

age point rise in Vancouver. Little movement in most

cities’ sales-to-new-listings ratio is expected between

2015 and 2017. A 2 percentage point increase in

Montréal and a similar decline in Winnipeg are the

only two changes greater than 1 per cent.

The average resale price is poised to rise in all cities in

2013 for the first time since 2010. Last year, the average

resale price fell in Vancouver and Victoria. This year,

prices are forecast to inch higher in both these cities,

but still at the slowest pace among our nine areas.

Unsurprisingly, we expect Calgary will enjoy the fastest

price growth in 2013, at 4.7 per cent. For 2014, we

think price growth will remain the strongest in Alberta,

with prices forecast to rise 4.6 per cent in both Calgary

and Edmonton. But price advances will remain below

2 per cent in both B.C. cities, which are again forecast to

have our nine cities’ slowest price growth. Between 2015

and 2017, price gains will be the strongest in Calgary,

Edmonton, and Winnipeg, which are all forecast to see

advances average at least 4 per cent annually.

Widespread pullbacks in housing starts are expected in

2013. Especially large drops are forecast for our eastern

cities; Montréal, Toronto, and Québec City are all

expected to see starts decline near 30 per cent, while

starts are forecast to fall 21 per cent in Ottawa. Only

Edmonton and Winnipeg are forecast to see increases,

and these will both be less than 10 per cent. Another

uneven year is expected in 2014, with starts forecast to

drop in five cities, led by a 16 per cent decline in

Edmonton. Between 2015 and 2017, we see the fastest

starts growth in Toronto and Winnipeg. During the past

five years, more multi-family units than single-detached

homes were built in six of our nine cities; multiples’

share was over 70 per cent in Québec City, Montréal,

Toronto, and Vancouver. This proliferation of multi-

family units is expected to increase, particularly in for-

mer single-family bastions like Calgary, Edmonton, and

Winnipeg. Vancouver will continue to see the lowest

share of single-detached units; these are forecast to make

up only 20 per cent of starts between 2013 and 2017.

Low and easing interest rates following the 2009 reces-

sion have contained increases in average principle and

interest payments in most cities, despite rising house

prices. Indeed, these payments were lower in 2013 than

in 2008 in Calgary, Edmonton, and Victoria and rose

only 5 to 6 per cent in Montréal, Ottawa, and Vancouver.

But carrying costs did rise in double-digit terms in

Toronto, Québec City, and Winnipeg. Rising mortgage

interest rates in 2014 are predicted to lift average monthly

mortgage payments moderately in all cities; the largest

jump will be 4.8 per cent in Calgary and Edmonton.

Vancouver remains our least affordable city, both abso-

lutely and measured against local incomes. Monthly

principle and interest payments in Vancouver are pro-

jected to average $4,030 in 2014 and consume 41 per

cent of average household income. No other city

approaches these levels.

Financial Indicators (Canada)

2012 2013f 2014f

Exchange rate (U.S./Can.) 1.00 0.97 0.96

Inflation rate 1.5 1.1 1.9

Bank rate 1.3 1.2 1.5

One-year mortgage rate 3.2 3.1 3.7

Three-year mortgage rate 3.9 3.8 4.4

Five-year mortgage rate 5.3 5.2 5.3

Federal bonds: 1–3 years 1.1 1.2 1.5

Federal bonds: 7 years 1.5 2.0 2.3

Federal bonds: long term 2.4 2.9 3.0

f = forecastSources: Bank of Canada; Canada Mortgage and Housing Corporation; Canadian Real Estate Association; Statistics Canada; The Conference Board of Canada.

Autumn 2013—metropolitan Housing Outlook | 5Ec

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1.6

2.7

1.6

2.5

1.6

3.4

3.0

2.5

1.0

1.0

3.6

Prai

ries

106,

366

109,

063

111,

582

1,16

71,

192

1,21

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74.

638

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39,5

7140

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34,7

6635

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36,9

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2.5

2.3

1.5

2.2

1.6

3.7

3.1

2.6

4.6

1.8

4.2

Win

nipe

g33

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33,6

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417

420

426

5.6

5.9

5.5

37,2

3138

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39,0

7810

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10,6

6911

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1.5

1.4

2.1

2.1

0.7

1.5

3.2

2.1

2.8

1.8

3.0

4.6

albe

rta27

6,90

828

5,64

429

4,22

62,

149

2,19

62,

240

4.6

4.7

4.7

51,7

6853

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54,8

5268

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73,0

5776

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3.9

3.2

3.0

2.6

2.2

2.0

5.6

3.4

2.5

6.9

6.7

4.7

Calg

ary

105,

987

109,

485

113,

164

752

770

792

4.8

4.9

4.6

55,5

2456

,602

58,1

7624

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25,2

2426

,531

4.3

3.3

3.4

3.7

2.4

2.8

1.5

1.9

2.8

3.6

4.4

5.2

edm

onto

n78

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81,3

8483

,989

693

710

722

4.7

4.5

4.6

49,1

1050

,187

51,2

2522

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23,6

5924

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5.9

4.2

3.2

3.3

2.5

1.6

2.8

2.2

2.1

4.5

5.3

5.0

Briti

sh C

olum

bia

191,

749

194,

568

200,

473

2,31

32,

320

2,36

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56.

237

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38,7

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61,5

6562

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64,4

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1.5

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1.6

0.3

1.7

3.2

2.5

2.9

1.9

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3.7

Vanc

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8,03

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21,

275

1,28

11,

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6.7

6.5

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38,7

1139

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40,4

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28,9

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2.6

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3.1

1.9

0.5

2.5

3.5

1.3

3.3

3.4

1.2

3.8

Vict

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14,9

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15,3

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418

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55.

65.

240

,656

41,1

6742

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4,18

34,

159

4,28

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0.1

2.2

2.2

–1.2

0.7

3.1

1.3

2.4

1.2

–0.6

2.9

f = fo

reca

stIta

lics

indi

cate

per

cent

age

chan

ge.

Sour

ces:

Ban

k of

Can

ada;

Can

adia

n Re

al E

stat

e As

soci

atio

n; S

tatis

tics

Cana

da; T

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renc

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of C

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Dem

ogra

phic

and

Hou

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Indi

cato

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Popu

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Star

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Pric

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Pric

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2012

2013

f20

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2012

2013

f20

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2012

2013

f20

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2012

2013

f20

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2012

2013

f20

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Cana

da34

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214,

827

181,

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184,

927

180,

646

188,

966

177,

776

361,

494

372,

769

379,

236

413,

730

421,

284

429,

782

1.1

1.1

1.1

10.8

–15.5

1.9

3.0

4.6

–5.9

0.2

3.1

1.7

2.3

1.8

2.0

atla

ntic

pro

vinc

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363

2,36

12,

366

12,6

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9,73

411

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11,3

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142,

756

140,

607

144,

668

339,

660

351,

763

357,

729

0.1

–0.1

0.2

1.0

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8,10

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42,7

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272,

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274,

868

282,

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304,

180

308,

506

314,

380

0.9

0.8

0.8

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0.5

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881

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6,19

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7,82

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4,74

323

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623

5,38

723

9,89

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1.0

0.9

12.6

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2.6

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Mon

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3,95

83,

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4,03

720

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14,3

7615

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9217

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14,8

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6,94

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–3.9

–10.4

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3.5

1.6

2.5

1.4

1.5

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13,6

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76,7

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61,8

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63,8

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381,

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392,

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398,

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517,

813

533,

304

542,

869

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–21.4

2.5

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wa

1,27

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1,29

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9,77

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8,56

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1.8

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Toro

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5,47

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1,16

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1.7

1.7

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13.4

–5.7

14.1

6.4

7.5

2.4

2.0

5.1

2.4

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Prai

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2,34

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378

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3,78

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1.5

1.7

31.2

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6.6

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5.5

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1.3

1.2

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6.9

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2.5

19.4

1.1

5.7

3.3

3.8

4.2

3.8

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albe

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3,97

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33,3

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378,

376

395,

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435,

951

447,

813

462,

468

2.4

2.9

2.0

29.9

4.3

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8.9

20.3

–0.3

2.6

4.5

4.5

1.1

2.7

3.3

Calg

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1,30

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350

1,37

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12,8

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9,59

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0,12

850

9,41

552

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3.1

2.1

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4.8

24.8

26.4

6.5

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3.9

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1,26

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12,7

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346,

581

362,

609

382,

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387,

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399,

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13.7

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2.7

3.7

4.6

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Briti

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bia

4,61

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657

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227

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2,97

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6,75

352

9,04

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4,71

563

4,71

464

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0.9

1.2

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737,

162

750,

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662,

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662,

452

674,

797

1.5

1.5

1.6

6.7

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Vict

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363

365

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591

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434

484,

164

486,

225

492,

802

400,

585

397,

915

403,

822

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0.4

0.6

1.9

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8.7

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1.2

–10.9

–2.8

0.4

1.4

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1.5

f = fo

reca

stIta

lics

indi

cate

per

cent

age

chan

ge.

Sour

ces:

CM

HC H

ousi

ng T

ime

Serie

s Da

taba

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anad

ian

Real

Est

ate

Asso

ciat

ion;

Que

bec

Fede

ratio

n of

Rea

l Est

ate

Boar

ds; S

tatis

tics

Cana

da; T

he C

onfe

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ard

of C

anad

a.



national overview

Canada’s economy is again expected to grow by a modest 1.8 per cent this year, but increase to 2.4 per cent growth in 2014 thanks to the improv-

ing U.S. economy next year. A slower resale housing market and tighter mortgage rules discouraged builders in the new home market through the last half of 2012 and into the first quarter of 2013. Although starts have picked up again in recent months, the outlook calls for total housing starts to decline 15.5 per cent this year and grow by just 1.9 per cent next year.

eCONOMIC OuTlOOk

Canada’s real gross domestic product is set to grow by

1.8 per cent in 2013. For much of the first half of 2013,

economic indicators provided few encouraging signs.

But through the summer, consumer and business con-

fidence picked up and the U.S. economy gained some

speed. Indeed, stronger business investment is expected

to help Canada’s economic growth advance at a reason-

able pace (above 2 per cent) through the second half

of this year, leading to a 2.4 per cent forecast increase

in real GDP for 2014. However, hiring will remain

muted. And, while tight labour markets (especially in

Saskatchewan and Alberta) and subdued inflation will

help lift households’ purchasing power, real consumer

spending will not outpace income as households try to

reduce their debt burdens and increase savings. Public

sector spending will also remain muted this year and

next. Provincial and federal governments are both

targeting balanced budgets, some sooner than others,

resulting in very little contribution to economic growth.

Still, some provinces have avoided cutting back on

much-needed infrastructure, and most provinces are

accommodating modest budgetary increases to health

care spending. Thus, the brunt of the public sector cuts

in 2013–14 will be felt in public administration, educa-

tion, and social programs.

Canada

Housing Starts(000s)

f = forecastSources: The Conference Board of Canada; CMHC Housing TimeSeries Database.

House Price Growth(percentage chage)

f = forecastSources: The Conference Board of Canada; CMHC Housing TimeSeries Database; Canadian Real Estate Association; Quebec Federation of Real Estate Boards.

2010 11 12 13f 14f 15f 16f 17f0

50100150200250

Singles Multiples 20-year average

2010 11 12 13f 14f 15f 16f 17f0

2

4

6

8New Resale



FINaNCIal MarkeTS OuTlOOk

The U.S. Federal Reserve has reiterated that the cur-

rent pace of quantitative easing through major bond

purchases will continue until the unemployment rate

falls below 7 per cent, and that interest rates will remain

essentially at zero until even later, when the unemploy-

ment rate falls to below 6.5 per cent. Equity markets

have been appeased, recovering from an early summer

dive and stabilizing. At the same time, given that the

Canadian economy is not yet at full capacity and that

near-term growth may be choppy, the Bank of Canada

has indicated that monetary conditions will remain

loose until economic growth strengthens or inflation

starts to accelerate. We expect the Bank of Canada will

likely start raising rates gradually by mid-2014, well

ahead of the U.S., largely because the gap between the

economic potential and the current output level is sig-

nificantly smaller in Canada than in the United States.

Therefore, as economic conditions improve south of

the border, excess capacity in Canada will be eaten up

more quickly.

Over the past few months, the loonie has lost ground

vis-à-vis the greenback. In part, the swoon in the

Canadian dollar—from above parity in February to

below US$0.95 in July—was the result of softer com-

modity prices, especially heavily discounted Western

Canadian Select crude oil. But it was also about the

strength in the U.S. dollar, as Canada’s currency

remained steady in comparison with many other curren-

cies. Federal Reserve statements about possibly easing

the pace of bond purchases in its quantitative easing

program made global financial and equity markets nerv-

ous and pushed up the value of the U.S. dollar. Overall,

the Canadian dollar is expected to average US$0.97 this

year and US$0.96 in 2014.

HOuSING OuTlOOk

Canada’s new home market capped an impressive

three-year run of growth last year. From 2010 to

2012, a recovering economy and low interest rates

drove demand for new homes, as builders increased

starts by an average of 13.4 per cent per year, up to

214,800 units in 2012—back above 200,000 units for

the first time since 2008. Growth in multiple-unit starts

was particularly strong over the past two years, thanks

to a wave of condominium development across the

country. But new home price growth remained modest,

at an annual average of 2.3 per cent. Average annual

growth in existing home prices was a much stronger

6.7 per cent in 2010 and 2011, but fell to just 0.2 per

cent last year, signalling a slower resale market. While

housing starts rose nearly 11 per cent in total last year,

developers began to curtail new home construction in

the second half of the year. The new home market was

feeling the effects of the federal government’s decision

to limit rising household debt by steadily lowering the

qualifying period for insured mortgages from 40 years

in 2008 to just 25 years by mid-2012, making it diffi-

cult for some first-time homebuyers to enter the market.

With economic growth tepid, builders continued to

reduce housing starts through the first quarter of 2013.

Starts then increased once again in the second quarter

Mortgage Approval Growth(dollar volume percentage change)

f = forecastSources: The Conference Board of Canada; Genworth MI Canada; CMHC Housing Time Series Database.

Household Net Worth(as a per cent of disposable income)

Sources: The Conference Board of Canada; Statistics Canada.

2010 11 12 13f 14f 15f 16f 17f−15−10

−505

1015

Conventional High-ratio

1998 00 02 04 06 08 10 12500

550

600

650

700



of this year. In part, builders were lured back to the

market by rising sales of existing homes and prices

in the first months of 2013. Still, the Canadian hous-

ing market is expected to stay cool this year and next.

Following the recent run-up in multiple starts in a

number of urban centres, a significant number of new

units will become available over coming months, help-

ing to keep some builders at bay. Overall, housing

starts are forecast to fall by 15.5 per cent to 181,400

units in 2013 and increase by a modest 1.9 per cent

to 184,900 units in 2014. New home price growth is

expected to remain around 2 per cent this year and next.

Meanwhile, resale home prices are set to rise 3.1 per

cent in 2013, because of stronger gains at the beginning

of this year, and a much more moderate 1.7 per cent

next year.

Looking ahead, there is room for more growth in the

new home market. In general, even with the significant

growth in housing starts since 2010, they are still in line

with demographic requirements. Over the past 20 years

on average, 0.47 homes have been started per additional

person in Canada’s population. During the past three

years, this ratio has been 0.46—well within historical

norms. By 2015, better employment gains will also

reignite demand despite the gradual rise in interest

Consumer Finances(left, per cent; right, per 1 million people)

1998 00 02 04 06 08 10 120.10.20.30.40.50.60.7

100125150175200225250

Mortgages in arrears Bankruptcies

1998 00 02 04 06 08 10 120.3

0.4

0.5

0.6

0.7

50

100

150

200

250Mortgages in arrears Bankruptcies

1998 00 02 04 06 08 10 120.1

0.3

0.5

0.7

0.9

200

250

300

350


1998 00 02 04 06 08 10 120.20.30.40.50.60.7

100150200250300350

Mortgages in arrears Bankruptcies

1998 00 02 04 06 08 10 120

0.2

0.4

0.6

0.8

60

100

140

180


1998 00 02 04 06 08 10 120.1

0.3

0.5

0.7

0.9

100

150

200

250


Atlantic Provinces Quebec

Ontario Prairie Provinces

Alberta British Columbia

Sources: The Conference Board of Canada; Canadian Bankers Association; Superintendent of Bankruptcy Canada.



rates. As economic growth accelerates, therefore,

developers will be encouraged to boost housing starts to

about 197,100 units in 2015 and above 210,000 units by

2017. Growth in new home prices is forecast to remain

at 2 per cent on an average annual basis from 2015 to

2017, while resale price growth will be slightly higher,

at 2.5 per cent per year on average.

MOrTGaGe OuTlOOk

Mortgage interest rates are widely expected to increase

in the next year, pushing up carrying costs. Yields on

bonds, from which banks finance mortgages, have already

moved higher. Still, the Bank of Canada is not expected

to start raising its overnight rate before mid-2014, and

even then, the Bank will raise rates only gradually, giv-

ing households time to adapt. Furthermore, employment

and income growth will help to further alleviate some of

the pressure of rising interest rates on households. In fact,

rising mortgage rates could even provide a short-term

boost to the market, as house-hunters with mortgages

pre-approved at low interest rates rush to buy homes

before these contracted rates expire. The current out-

look calls for the three-year conventional mortgage rate

to rise from a record-low 3.8 per cent this year to 4.4

per cent in 2014 and 5.1 per cent in 2015.

The total number of mortgage approvals fell by 0.3 per

cent 2012, as the resale housing market slowed in the

second half of last year. Approvals in the new home

market continued to climb however, rising 2.2 per

cent. Both markets are forecast to see lower levels of

mortgage approvals in 2013, reducing total approvals

by 2.3 per cent. With growth in the new home market

expected to be modest in 2014, the number of new

mortgage approvals will decline once again. However,

thanks to the existing home market, total mortgage

approvals are anticipated to rise in 2014, up by 2.9 per

cent. The dollar volume of mortgage approvals rose

0.7 per cent last year, thanks to price growth in the

new and resale markets. A similar increase is expected

for 2013, with growth in dollar volumes improving to

4.5 per cent next year. Not surprising, tighter mortgage

rules are having a bigger impact on the number of

high-ratio mortgage approvals (set to fall 3.1 per cent

in 2013) than the number of conventional mortgage

approvals (set to drop 1.7 per cent). Growth in high-

ratio approvals will be 1.3 per cent for 2014, while con-

ventional mortgage approvals will rise 4.2 per cent.

Economic Indicators

2010 2011 2012 2013f 2014f 2015f 2016f 2017f

real GDP at market prices 1,593,357 1,633,640 1,661,559 1,690,671 1,730,882 1,775,323 1,817,917 1,857,362(2002 $ millions) 3.4 2.5 1.7 1.8 2.4 2.6 2.4 2.2

Total employment (000s) 17,046 17,309 17,510 17,736 17,986 18,305 18,578 18,8011.4 1.5 1.2 1.3 1.4 1.8 1.5 1.2

unemployment rate (per cent) 8.0 7.5 7.3 7.2 7.0 6.4 6.0 5.7

Personal income per capita ($) 31,625 33,001 34,136 35,028 36,018 37,175 38,292 39,3441.8 4.4 3.4 2.6 2.8 3.2 3.0 2.7

Population (000s) 34,076 34,439 34,827 35,193 35,586 35,992 36,407 36,8261.2 1.1 1.1 1.1 1.1 1.1 1.2 1.2

retail sales ($ millions) 438,525 456,388 468,252 483,438 501,819 523,767 546,047 567,2715.6 4.1 2.6 3.2 3.8 4.4 4.3 3.9

exchange rate (U.S./Can.) 0.97 1.01 1.00 0.97 0.96 0.98 0.98 0.98

Inflation rate (per cent) 1.8 2.9 1.5 1.1 1.9 2.1 2.0 2.0

f = forecastItalics indicate percentage change.Sources: The Conference Board of Canada; Bank of Canada; Statistics Canada.



Financial Indicators(per cent)

2010 2011 2012 2013f 2014f 2015f 2016f 2017f

Bank rate 0.9 1.3 1.3 1.2 1.5 2.3 3.2 3.9

Prime lending rate 2.6 3.0 3.0 3.0 3.3 4.1 5.0 5.7

Three-month Treasury bill 0.6 0.9 1.0 1.0 1.2 2.0 2.9 3.5

One-year conventional mortgage rate 3.5 3.5 3.2 3.1 3.7 4.5 5.4 6.0

Three-year conventional mortgage rate 4.3 4.3 3.9 3.8 4.4 5.1 5.9 6.6

Five-year conventional mortgage rate 5.6 5.4 5.3 5.2 5.3 5.6 6.3 6.9

Federal bonds: 1 year 1.5 1.4 1.1 1.2 1.5 2.1 2.9 3.6

Federal bonds: 5 years 2.4 2.1 1.4 1.7 2.0 2.4 3.0 3.6



Federal bonds: long term 3.7 3.3 2.4 2.9 3.0 3.0 3.4 3.9

f = forecastItalics indicate percentage change.Sources: The Conference Board of Canada; Bank of Canada; Statistics Canada.

Housing Indicators

2010 2011 2012 2013f 2014f 2015f 2016f 2017f

Housing starts 189,930 193,950 214,827 181,446 184,927 197,088 207,126 210,21227.4 2.1 10.8 –15.5 1.9 6.6 5.1 1.5

Singles 92,554 82,392 83,657 76,797 77,530 81,028 84,391 82,60922.3 –11.0 1.5 –8.2 1.0 4.5 4.1 –2.1

Multiples 97,376 111,558 131,170 104,650 107,397 116,060 122,735 127,60332.6 14.6 17.6 –20.2 2.6 8.1 5.8 4.0

Housing completions 186,212 175,431 180,646 188,966 177,776 183,522 195,782 201,2935.3 –5.8 3.0 4.6 –5.9 3.2 6.7 2.8

Singles 90,578 79,976 80,630 79,303 76,330 78,099 82,314 82,29315.7 –11.7 0.8 –1.6 –3.7 2.3 5.4 0.0

Multiples 95,635 95,455 100,015 109,663 101,446 105,423 113,468 119,000–3.0 –0.2 4.8 9.6 –7.5 3.9 7.6 4.9

average price of a new home ($) 395,561 404,247 413,730 421,284 429,782 439,275 447,938 456,4882.2 2.2 2.3 1.8 2.0 2.2 2.0 1.9

average price of a resale home ($) 338,199 360,648 361,494 372,769 379,236 389,163 399,110 408,6576.8 6.6 0.2 3.1 1.7 2.6 2.6 2.4

f = forecastItalics indicate percentage change.Sources: The Conference Board of Canada; CMHC Housing Time Series Database; Canadian Real Estate Association; Quebec Federation of Real Estate Boards; Statistics Canada.



G rowth in the Atlantic Canadian economy is expected to be 2.3 per cent this year and 1.9 per cent in 2014. Rising oil production both in

Newfoundland and Labrador and in Nova Scotia is contrib-uting to these increases. However, housing starts in all four provinces are forecast to decline in 2013 and 2014, having topped 10,000 units for the past 12 years now. Starts will continue to fall in the medium term as well, bringing them back in line with demographic needs.

eCONOMIC OuTlOOk

Atlantic Canada’s real gross domestic product is

expected to grow by 2.3 per cent in 2013, following a

1.5 per cent contraction in 2012. The region’s economy

is then forecast to post a more modest increase in 2014,

rising 1.9 per cent. Much of the decrease in real GDP

last year, and the strength this year, has been driven by

change in the Newfoundland and Labrador economy.

The province’s economy contracted by 4.8 per cent

in 2012, largely because of a 20 per cent drop in oil

production. This year, renewed growth in the oil sec-

tor, along with a booming construction industry, will

allow Newfoundland and Labrador’s economy to grow

by a forecast 5.4 per cent. Meanwhile, after strug-

gling for the past two years, Nova Scotia’s economy

look brighter in the short term as well, thanks to Deep

Panuke’s newly completed offshore natural gas field.

Production at the field is forecast to help lift real GDP

growth from 1.1 per cent 2013 to 2.9 per cent next

year. However, the economy of Prince Edward Island

continues to face a less-than-stellar outlook. Efforts by

the provincial and federal governments to balance their

budgets will continue to weigh on the economy, holding

growth in real GDP to a forecast 1.3 per cent this year

and just 1 per cent in 2014. In New Brunswick, eco-

nomic growth is forecast to accelerate from 0.8 per cent

in 2013 to 1.9 per cent next year, as weakness in the

construction and food processing sectors offsets gains

in the resources and manufacturing sectors.

provincial overview

atlantic Canada



2010 11 12 13f 14f 15f 16f 17f0

5

10

15



f = forecastSources: The Conference Board of Canada; CMHC Housing TimeSeries Database; Canadian Real Estate Association.

2010 11 12 13f 14f 15f 16f 17f−2

0

2

4

6

New Resale



HOuSING OuTlOOk

Atlantic Canada’s new home market came roaring back

after the global recession, as builders increased hous-

ing starts 17.2 per cent in 2010, up to 12,800 units,

their highest level since 2003. Low interest rates and

improved consumer confidence were boosting hous-

ing demand across the region. Buyers of new homes in

Nova Scotia were benefitting from the introduction of

a $7,000 sales tax rebate that year as well. Somewhat

Atlantic Canada: Economic Indicators

2010 2011 2012 2013f 2014f 2015f 2016f 2017f

real GDP at market prices 89,962 91,020 89,660 91,706 93,415 95,654 96,733 97,764(2002 $ millions) 3.7 1.2 –1.5 2.3 1.9 2.4 1.1 1.1




Population (000s) 2,352 2,361 2,363 2,361 2,366 2,374 2,379 2,3830.5 0.4 0.1 –0.1 0.2 0.3 0.2 0.2



f = forecast Italics indicate percentage change.Sources: The Conference Board of Canada; Bank of Canada; Statistics Canada.

Atlantic Canada: Housing Indicators

2010 2011 2012 2013f 2014f 2015f 2016f 2017f

Housing starts 12,772 12,524 12,647 10,950 9,734 9,493 9,415 8,93317.2 –1.9 1.0 –13.4 –11.1 –2.5 –0.8 –5.1

Singles 7,797 6,911 6,865 5,849 5,693 5,500 5,461 4,9765.6 –11.4 –0.7 –14.8 –2.7 –3.4 –0.7 –8.9

Multiples 4,975 5,613 5,782 5,101 4,041 3,992 3,954 3,95841.7 12.8 3.0 –11.8 –20.8 –1.2 –0.9 0.1

Housing completions 11,513 11,376 11,699 11,352 10,109 9,639 9,505 9,2662.7 –1.2 2.8 –3.0 –11.0 –4.6 –1.4 –2.5

Singles 7,698 7,141 6,521 6,184 6,002 5,730 5,634 5,3753.6 –7.2 –8.7 –5.2 –2.9 –4.5 –1.7 –4.6

Multiples 3,815 4,234 5,178 5,169 4,107 3,909 3,871 3,8911.0 11.0 22.3 –0.2 –20.5 –4.8 –1.0 0.5


average price of a resale home ($) 138,432 141,324 142,756 140,607 144,668 147,791 150,978 154,0784.4 2.1 1.0 –1.5 2.9 2.2 2.2 2.1

f = forecast Italics indicate percentage change.Sources: The Conference Board of Canada; CMHC Housing Time Series Database; Canadian Real Estate Association; Statistics Canada.



surprisingly, even though demand was accelerating,

growth in new home prices was slowing, slipping to a

modest 2.3 per cent in 2010, down from 3.1 per cent the

previous year and 10.9 per cent in 2008. In the resale

market, existing home prices did strengthen a little in

2010, rising from 3.7 per cent in 2009 to 4.4 per cent.

Weaker economies hampered demand in the hous-

ing markets in Newfoundland and Labrador and in

New Brunswick in 2011. In turn, builders in those

two provinces reduced housing starts, lowering them

1.9 per cent for the Atlantic region as a whole—even

though starts in Nova Scotia and Prince Edward Island

continued to increase. Indeed, Prince Edward Island’s

new home market was particularly busy in 2011, with

builders raising starts by nearly 25 per cent in response

to stronger international migration numbers as a result

of the province’s nominee program. Builders in Prince

Edward Island held housing starts steady last year as

well. A number of new condominium developments

also increased starts in Newfoundland and Labrador’s

new home market in 2012. But, with real GDP growth

still muted, starts fell in each of Nova Scotia and

New Brunswick, holding the increase in total starts

for Atlantic Canada to just 1 per cent last year. Home

prices in the new and resale markets continued to be

modest over the past two years, increasing 2.7 per cent

on an average annual basis in the new market and an

average of 1.6 per cent in the resale market.

In spite of stronger economic growth overall for

Atlantic Canada in 2013, tighter mortgage rules, the

completion of some condominium projects, and a return

to more modest population growth in Prince Edward

Island have all been lowering demand in the region’s

new home market. In addition, in level terms, housing

starts in Atlantic Canada have been well above demo-

graphic requirements for a number of years now, having

topped 10,000 units annually for more than a decade.

Moreover, with interest rates eventually rising, builders

are expected to lower Atlantic Canada’s housing starts

both this year and through the medium term. Starts are

forecast to fall 13.4 per cent in 2013, 11.1 per cent in

2014, and by an average of 2.8 per cent per year from

2015 to 2017.

Growth in new home prices is expected to rise slightly

in 2013, up to 3.6 per cent, while resale prices are fore-

cast to fall 1.5 per cent, the first annual price decline in

13 years. Over the rest of the forecast, 2014 to 2017,

price growth in the new market is anticipated to aver-

age 1.9 per cent annually, while it is forecast to average

2.3 per cent per year in the resale market.



A soft investment outlook, along with weak external demand, has led to anemic employment growth and unsteady household confidence in Quebec

this year, holding real GDP growth to 1.4 per cent. Quebec’s new home market will also remain weak in 2013, with total starts falling 23.5 per cent. A balanced market and better economic growth in 2014 will encourage builders to raise starts an average of 2.4 per cent annually through 2014 and 2015.

eCONOMIC OuTlOOk

Growth in Quebec’s real gross domestic product is

forecast to accelerate to a still modest 1.4 per cent this

year, following an increase of only 1 per cent in 2012.

A weak investment outlook for both the residential

and non-residential construction sectors, coupled with

weak demand for exports, underpins this year’s soft

prognosis. But the much anticipated recovery in the

U.S. economy and its housing market should improve

export growth and the manufacturing outlook in 2014.

Full production of Bombardier’s CSeries aircraft, to be

assembled near Montréal, will provide an additional

economic boost. Meanwhile, consumer spending is

only slowly improving. Employment is forecast to gain

1.4 per cent in 2013 and 1.1 per cent in 2014, bringing

the unemployment rate down only slightly to 7.6 per

cent next year. Consumers will remain understandably

wary. In all, the provincial economy is forecast to grow

by 2.2 per cent in 2014. The medium term looks decent,

with GDP predicted to rise 2.5 per cent in 2015 and

2 per cent in 2016.

HOuSING OuTlOOk

Builders in Quebec’s new housing market increased

starts by 18.3 per cent in 2010 as the province began

to recover from the global recession. Indeed, demand

for new housing was being driven by improved gains

in employment that year, as well as stronger population

growth and low interest rates. Construction of both sin-

gle-detached and multiple-family housing contributed to

this increase. In level terms, total housing starts topped

Quebec


f = forecastSources: The Conference Board of Canada; CMHC Housing Time Series Database.

2010 11 12 13f 14f 15f 16f 17f0

20

40

60



f = forecastSources: The Conference Board of Canada; CMHC Housing Time Series Database; Quebec Federation of Real Estate Boards.

2010 11 12 13f 14f 15f 16f 17f02468

10

New Resale



51,000 units in 2010, their highest level since 2004.

However, in spite of the higher population growth,

at their 2010 level, starts were above demographic

requirements. As a result, inventories rose, and growth

in new home prices slowed, dropping to 2.4 per cent,

down from 2.9 per cent the previous year and an aver-

age of 5 per cent annually in the five years before that.

Quebec: Economic Indicators

2010 2011 2012 2013f 2014f 2015f 2016f 2017f

real GDP at market prices 295,398 300,275 303,322 307,656 314,389 322,277 328,842 334,565(2002 $ millions) 2.5 1.7 1.0 1.4 2.2 2.5 2.0 1.7




Population (000s) 7,895 7,968 8,043 8,109 8,173 8,236 8,299 8,3621.0 0.9 0.9 0.8 0.8 0.8 0.8 0.8




Quebec: Housing Indicators

2010 2011 2012 2013f 2014f 2015f 2016f 2017f

Housing starts 51,363 48,387 47,367 36,220 36,395 37,907 38,539 37,64518.3 –5.8 –2.1 –23.5 0.5 4.2 1.7 –2.3

Singles 19,549 16,554 16,059 13,796 13,940 14,355 14,568 13,71311.5 –15.3 –3.0 –14.1 1.0 3.0 1.5 –5.9

Multiples 31,814 31,833 31,308 22,424 22,456 23,552 23,971 23,93223.0 0.1 –1.6 –28.4 0.1 4.9 1.8 –0.2

Housing completions 45,798 44,526 44,564 42,758 37,309 36,899 38,291 38,1175.8 –2.8 0.1 –4.1 –12.7 –1.1 3.8 –0.5

Singles 18,738 15,779 15,847 14,228 13,639 13,548 13,962 13,52511.7 –15.8 0.4 –10.2 –4.1 –0.7 3.1 –3.1

Multiples 27,060 28,747 28,716 28,529 23,670 23,351 24,330 24,5922.1 6.2 –0.1 –0.7 –17.0 –1.3 4.2 1.1



f = forecast Italics indicate percentage change.Sources: The Conference Board of Canada; CMHC Housing Time Series Database; Quebec Federation of Real Estate Boards; Statistics Canada.



Higher inventories, a more modest economy, and

increased taxes all led builders to reduce housing starts

through 2011 and 2012. Starts fell 5.8 per cent in

2011 and another 2.1 per cent last year. Much of this

decrease was in the singles market, as multiple starts

were essentially flat in 2011 and declined just 1.6 per

cent in 2012. The multiples market was being boosted

by a number of condominium developments, especially

in Montréal and Québec City. Even with the lower

starts over the past two years, new home price growth

continued to decelerate, slipping to 1.5 per cent for

2012. Growth in resale prices was also slowing during

this time—falling from 8.5 per cent in 2010 to 4.1 per

cent last year—suggesting a weaker resale market

as well.

Builders reduced both single and multiple starts signifi-

cantly in the first quarter of 2013, as economic growth

remained modest and some condominium projects

wound down. The market was also being hampered by

tighter mortgage rules that were introduced last year.

Single starts slowed again in the second quarter of this

year, while multiples recorded a small increase. In all,

total housing starts are expected to decline 23.5 per cent

for 2013, down to 36,200 units, their lowest level since

2001. Price growth, in both the new and resale markets,

is forecast to remain modest in 2013, at 1.4 per cent and

1 per cent, respectively.

With housing starts now closer to demographic require-

ments, an improved economy and steady population

growth should bring builders back to the new home

market starting in 2014. Starts are expected to increase

0.5 per cent next year and 4.2 per cent in 2015. Price

growth is also anticipated to accelerate, albeit slowly,

in the coming years. New home prices are forecast to

grow by 1.9 per cent in 2014 and 2.2 per cent in 2015.

Resale price growth is expected to be just slightly

higher, at 2.7 per cent per year over the same two years.



Ontario’s real gross domestic product will grow just 1.2 per cent in 2013, held back by weakness in both the public and private sectors. However,

growth in the economy is then expected to improve to 2.2 per cent next year. The province’s new home market is expected to see housing starts fall for the first time in four years this year as both single and multiple starts decline. With an improved economy next year, builders will slowly return to the new home market, increasing starts a modest 2.5 per cent for 2014.

eCONOMIC OuTlOOk

Broad-based weakness in demand from households,

government, and businesses (especially during late 2012

and early 2013) will result in real GDP growth of just

1.2 per cent for Ontario this year—the slowest pace

since the recession. This lacklustre pace of economic

growth, along with resulting slow employment growth,

is weighing on consumer spending, which is anticipated

to grow just 1.4 per cent for 2013. However, household

confidence (as measured by The Conference Board of

Canada’s Index of Consumer Confidence) has been

increasing recently, and this will translate into higher

spending on goods and services, especially durable

goods. As a result, real consumer spending is expected

to advance 2.7 per cent next year. Improving business

confidence and demand for exports should also help

overall economic growth pick up steam later this year

and into 2014. Accordingly, real GDP will expand

2.2 per cent next year.

HOuSING OuTlOOk

Ontario’s new home market has been robust for the

past three years. Indeed, stronger demand following the

2009 recession enticed builders to increase total hous-

ing starts an average of 15.1 per cent per year from

2010 to 2012. Demand was being boosted not only by

an improved economy but also by healthy population

gains and lower interest rates. In level terms, Ontario’s

housing starts reached 76,700 units in 2012, their

highest level since 2005. With stronger demand came

ontario



2010 11 12 13f 14f 15f 16f 17f0

20406080

100




2010 11 12 13f 14f 15f 16f 17f02468

10New Resale



increased price growth as well—new home prices rose

an average of 3.8 per cent from 2010 to 2012, after

holding flat in 2009. Growth in resale home prices was

even larger during this time, at 6.7 per cent on an aver-

age annual basis.

The growth in housing starts in 2010 was split between

the singles and multiples markets. However, over

2011–12, all of the increase in starts was due to more

multiple-unit construction, as single-detached starts

declined each year. One of the biggest factors driving

Ontario: Economic Indicators

2010 2011 2012 2013f 2014f 2015f 2016f 2017f





Population (000s) 13,203 13,350 13,489 13,606 13,755 13,917 14,091 14,2701.2 1.1 1.0 0.9 1.1 1.2 1.2 1.3




Ontario: Housing Indicators

2010 2011 2012 2013f 2014f 2015f 2016f 2017f

Housing starts 60,433 67,821 76,742 60,326 61,805 70,458 81,339 86,98520.0 12.2 13.2 –21.4 2.5 14.0 15.4 6.9

Singles 28,089 26,884 25,567 23,282 23,630 26,691 30,789 32,07124.1 –4.3 –4.9 –8.9 1.5 13.0 15.4 4.2

Multiples 32,344 40,937 51,175 37,044 38,175 43,767 50,551 54,91316.6 26.6 25.0 –27.6 3.1 14.6 15.5 8.6

Housing completions 61,419 60,642 58,613 63,886 60,512 62,653 71,303 78,34011.2 –1.3 –3.3 9.0 –5.3 3.5 13.8 9.9

Singles 27,497 24,798 26,351 24,197 23,999 24,852 28,501 30,67011.0 –9.8 6.3 –8.2 –0.8 3.6 14.7 7.6

Multiples 33,922 35,844 32,261 39,688 36,513 37,801 42,802 47,67111.3 5.7 –10.0 23.0 –8.0 3.5 13.2 11.4






multiples construction in recent years has been the

influx of big high-rise condominiums, especially in

Toronto. Apartment condominium starts in Toronto

alone grew more than 70 per cent during 2010 and

2011, and by a further 42.8 per cent last year, to reach

a record 27,400 units in 2012. Province-wide, mul-

tiple starts were 67 per cent of the total starts built

last year, up from a share of 39 per cent just 10 years

ago. Apartment condominiums have become a more

attractive purchase for homeowners for several reasons,

not the least of which is their relative affordability

compared with single-detached homes. In addition,

apartment condominiums are popular with an aging

population, foreign investors, and also those who are

choosing to live closer to the downtown core to avoid

increased traffic flows.

A sluggish economy, tighter mortgage rules, and the

completion of several large developments have all

worked to reduce housing starts in both the singles

and multiples markets in recent months. Both single

and multiple housing starts fell through the second

half of 2012 and into the first quarter of this year.

While multiple starts then increased once more in

the second quarter, single starts continued on their

downward trend. In total, housing starts are forecast

to slip 21.4 per cent for 2013. Modestly rising inter-

est rates will keep demand in check early in 2014 as

well. Builders are forecast to continue to reduce starts

in the first half of next year. But renewed growth in the

economy next year should create additional demand in

the second half of 2014, helping to raise housing starts

by 2.5 per cent for the year as a whole. Growth in new

home prices is expected to decelerate this year and next,

down to 3 per cent and 1.8 per cent respectively. Resale

prices are forecast to grow by similar rates—2.8 in

2013 and 1.6 per cent in 2014.

Steady growth in real GDP and continued increases in

the population should help boost growth in Ontario’s

new home sector through the medium term. We antici-

pate housing starts will reach nearly 87,000 units by

2017. Growth in multiples will be only slightly higher

than that of singles in the coming years. Meanwhile,

price increases in both the new and resale home mar-

kets are anticipated to be modest, at an average of

2.1 per cent per year from 2015 to 2017.



Housing markets in Manitoba and Saskatchewan continue to flourish, thanks to decent economic growth, ongoing job gains, and robust population

advances. Expected interest rate hikes next year are fore-cast to cool these markets only slightly. Housing demand is predicted to remain solid in both 2013 and 2014 and over the following few years. Although last year’s construction spike is unsustainable, housing starts are expected to stay high, even by recent standards, over the next few years. Price increases for both new and existing homes are also predicted to cool, but only a small slowing is expected.

eCONOMIC OuTlOOk

Healthy GDP growth continues in the Prairie provinces

of Manitoba and Saskatchewan, although it throttled

back to the mid-2 per cent range in 2012 from over

3 per cent in 2010 and 2011. Another 2.5 per cent GDP

rise is on tap for this year, but increases will ultimately

cool gradually to 1.6 per cent in 2017. Employment is

also forecast to keep rising, although gains will slow

from 2.2 per cent in 2013 to 1.1 per cent by 2017.

This will cut the unemployment rate from 5.1 per cent

in 2012 to 4.7 per cent this year and to 4.5 per cent

by 2017.

Economic growth in Manitoba will be modest this year

as a result of weakness in the metal mining sector and

subpar advances among services-producing industries.

There will still be decent gains in the manufacturing,

construction, and agriculture sectors. In Saskatchewan,

strong gains in mineral fuels production, as well as con-

struction and manufacturing, will keep the goods-pro-

ducing sector growing at a robust pace. But weakness

in potash production due to low potash prices slightly

clouds the outlook.

prairies



2010 11 12 13f 14f 15f 16f 17f05

10

1520




2010 11 12 13f 14f 15f 16f 17f0

2

4

6

8

New Resale



HOuSING OuTlOOk

Robust economic growth has attracted substantial

in-migration to Manitoba and Saskatchewan and has

spurred healthy housing demand. Not so long ago, these

provinces were losing people. Their combined popula-

tion actually fell between 1999 and 2002. Now, the

number of residents in the two provinces combined has

risen at least 1 per cent in each of the past five years,

including a record 1.6 per cent gain in 2012. Major

Prairies: Economic Indicators

2010 2011 2012 2013f 2014f 2015f 2016f 2017f





Population (000s) 2,276 2,306 2,342 2,378 2,417 2,457 2,496 2,5331.4 1.3 1.6 1.5 1.7 1.6 1.6 1.5




Prairies: Housing Indicators

2010 2011 2012 2013f 2014f 2015f 2016f 2017f

Housing starts 11,795 13,114 17,210 13,870 14,477 15,269 15,113 14,91046.7 11.2 31.2 –19.4 4.4 5.5 –1.0 –1.3

Singles 7,806 7,983 9,340 7,853 8,387 8,831 8,771 8,35233.0 2.3 17.0 –15.9 6.8 5.3 –0.7 –4.8

Multiples 3,989 5,131 7,870 6,018 6,090 6,437 6,343 6,55883.9 28.6 53.4 –23.5 1.2 5.7 –1.5 3.4

Housing completions 10,368 12,077 12,869 14,715 13,513 14,255 14,314 13,9603.7 16.5 6.6 14.3 –8.2 5.5 0.4 –2.5

Singles 7,814 7,701 7,525 8,598 7,783 8,197 8,162 7,77920.4 –1.4 –2.3 14.3 –9.5 5.3 –0.4 –4.7

Multiples 2,555 4,376 5,344 6,117 5,730 6,058 6,152 6,182–27.2 71.3 22.1 14.5 –6.3 5.7 1.6 0.5






centres, particularly Saskatoon and Regina, are experi-

encing even faster growth. By 2017, the population of

Manitoba and Saskatchewan combined is forecast to be

over 2.5 million, up nearly 200,000 people from 2012.

This population growth has electrified residential con-

struction activity. Nonetheless, last year’s combined

volume of 17,210 housing starts, more than twice the

25-year average, was unsustainable and will not be

replicated during our forecast horizon. While both

single-detached and multi-family starts have risen in

recent years, increases in multi-family starts have been

relatively faster. Still, because new home prices are

relatively modest on the Prairies and incomes have risen

strongly, single-family homes continue to dominate the

market. Over the past five years, single homes have

made up a higher proportion of starts in the Prairies

than in any other region. This prevalence of single-

family homes is forecast to continue, but ease.

Indeed, housing starts in the Prairie provinces of

Manitoba and Saskatchewan pulled back to an annu-

alized pace near 14,200 units during the first half of

2013. We think this pace will generally be sustained

through year-end, resulting in a 19 per cent drop in

housing starts to roughly 13,900 units. Single-detached

and multi-family construction should experience similar

declines. A small uptick to nearly 14,500 starts is on tap

for 2014, and then volumes hovering near 15,000 units

between 2015 and 2017. This level of construction may

be slightly below demographic requirements, so there

could be upward surprises in the coming years.

Strong housing demand has generated brisk house

price increases. The average price of an existing home

rose 5.5 per cent last year and is expected to advance

a similar 5.3 per cent in 2013. Despite healthy sales

advances, resale markets in both Regina and Saskatoon

have slipped into buyers’ positions because of surging

listings. Winnipeg remains balanced. Accordingly,

we expect the average resale price in Manitoba and

Saskatchewan combined to rise a slower 4.7 per cent in

2014. Growth will continue easing, but stay healthy at

just above 4 per cent per year over the medium term.

The average price for a new home has risen between

3 and 4 per cent annually over the past three years and

is expected to advance similarly in both 2013 and 2014.

Yearly increases near 3 per cent are on tap between

2015 and 2017.



A lberta’s strong economy and rapid population advances are fuelling expectations of a robust provincial housing market, despite Calgary’s

flooding. Housing starts are up this year and are expected to remain decent in 2014, albeit well below pre-recession levels. New home prices are rising gently, and we expect these increases to stay moderate. There could be modest pent-up new home demand in Alberta thanks to a relatively low ratio of housing starts to population changes. Healthy resale markets in Calgary and Edmonton are supporting strong provincial pricing, and solid gains are forecast to continue through the next few years.

eCONOMIC OuTlOOk

While the full effect of floods that hit Calgary and

southern Alberta in June will stretch out over years,

their immediate impact on economic growth will be

moderate; real GDP in the province will increase

3.2 per cent in 2013—the fourth consecutive year in

which Alberta’s performance will exceed the national

average—and a further 3 per cent in 2014. But Alberta

faces risks. Uncertainty surrounding key pipeline pro-

jects to export Alberta’s oil is one of these, as trans-

portation capacity is stretched in the face of rising

oil sands production. A second issue is the expected

competition from rising oil production in the United

States. Still, energy investment is projected to stay

elevated throughout the forecast, with benefits spread

out to many sectors of the Alberta economy. As a result,

employment is forecast to rise 2.2 per cent in 2013

and a further 2 per cent in 2014. This will keep the

unemployment rate at 4.7 per cent in both 2013 and

2014, well below the national average.

HOuSING OuTlOOk

Alberta’s magnetic economy has boosted provincial

population growth to 2.4 per cent in 2012 and an

expected 2.9 per cent this year. This is by far the fastest

growth among the six provinces and regions covered in

this report. While the rate of increase is forecast to slow

alberta



2010 11 12 13f 14f 15f 16f 17f0

1020

3040




2010 11 12 13f 14f 15f 16f 17f−2

0

2

4

6New Resale



in 2014 and subsequently, Alberta’s relative population

gains will continue to outpace those elsewhere. In our

forecast, Alberta is expected to add nearly 300,000 resi-

dents between now and 2017.

Strong population growth remains a driver of demand

for Alberta’s new home markets. Housing starts rose

in both Edmonton and, astonishingly, even in flood-

stricken Calgary during the second quarter of this

year. Provincial starts averaged over 36,000 units at

Alberta: Economic Indicators

2010 2011 2012 2013f 2014f 2015f 2016f 2017f


Total employment (000s) 2,018 2,095 2,149 2,196 2,240 2,288 2,323 2,353–0.4 3.8 2.6 2.2 2.0 2.1 1.6 1.3



Population (000s) 3,716 3,769 3,860 3,973 4,051 4,119 4,187 4,2541.5 1.4 2.4 2.9 2.0 1.7 1.7 1.6




Alberta: Housing Indicators

2010 2011 2012 2013f 2014f 2015f 2016f 2017f

Housing starts 27,088 25,704 33,396 34,823 34,698 32,957 30,847 30,22833.5 –5.1 29.9 4.3 –0.4 –5.0 –6.4 –2.0

Singles 17,851 15,193 17,493 18,044 17,618 16,544 15,458 14,59524.4 –14.9 15.1 3.2 –2.4 –6.1 –6.6 –5.6

Multiples 9,237 10,511 15,903 16,779 17,079 16,413 15,389 15,63355.1 13.8 51.3 5.5 1.8 –3.9 –6.2 1.6

Housing completions 29,447 24,275 26,446 31,811 31,701 30,859 29,227 27,9746.6 –17.6 8.9 20.3 –0.3 –2.7 –5.3 –4.3

Singles 18,096 15,281 15,588 17,348 17,147 16,397 15,374 14,39729.7 –15.6 2.0 11.3 –1.2 –4.4 –6.2 –6.4

Multiples 11,351 8,994 10,858 14,463 14,554 14,462 13,853 13,577–17.0 –20.8 20.7 33.2 0.6 –0.6 –4.2 –2.0

average price of a new home ($) 432,312 431,184 435,951 447,813 462,468 473,976 484,151 494,3430.7 –0.3 1.1 2.7 3.3 2.5 2.1 2.1





an annual rate during the first half of 2013, the high-

est two-quarter average since 2008. This represents a

remarkable increase from volumes that sank as low as

annualized 21,000 units in the first quarter of 2011.

Both single-detached units and multi-family starts rose.

Singles made up over half of all Alberta’s housing starts

in the first half of 2013, a distinction shared only with

Manitoba and Saskatchewan among the regions in this

report. Both areas enjoy high incomes and relatively

few land restrictions, important for single-detached

production.

Accordingly, we expect Alberta’s housing starts to end

2013 up 4.3 per cent near 34,800 units. This would be

the second straight annual gain, but modest compared

with the 30 per cent jump recorded in 2012. Growth in

single-detached starts is forecast to cool slightly, but

still end 2013 up 3.2 per cent, while multiple starts are

forecast to rise 5.5 per cent. Next year, starts are fore-

cast to hover near this level, clocking in at 34,700 units,

but then gradually ease to 30,200 units by 2017. These

volumes remain strong by historical standards: starts

averaged 26,300 units per year between 1988 and 2012.

Demographic demand easily supports these anticipated

volumes, as population growth is expected to remain

healthy. Moreover, there is no sign of overbuilding in

Alberta, as the ratio of housing starts to absolute popu-

lation changes is expected to trail its 25-year average

this year and in 2014.

Healthy resale markets in both Calgary and Edmonton

are underpinning solid provincial price growth. Alberta’s

average existing house price rose 2.6 per cent in 2012

and is expected to climb 4.5 per cent both this year

and in 2014. These would be the fastest gains since the

market corrected in 2009, but nowhere near boom-era

advances. The medium-term outlook includes brisk

increases near or above 4 per cent. By 2017, this fore-

cast implies an average Alberta resale price of nearly

$449,000. New home price growth has been slower; this

year’s 2.7 per cent growth follows a 1.1 per cent ascent

in 2013. For 2014, we expect a 3.3 per cent gain, fol-

lowed by annual increases between 2 and 2.5 per cent.



An improving economy and emergence of bal-anced market conditions in Vancouver and Victoria bode well for British Columbia’s overall

housing market, although the strength of offshore demand remains a wild card. Easing population growth and evidence of modest overbuilding slightly cloud the housing market outlook. All in all, housing markets are expected to post only small gains over the coming years. Resale prices are expected to end 2013 little changed and advance modestly thereafter. Housing starts are forecast to rise gently in the medium term, following a dip this year, but remain below peak levels until 2017. Multiple units dominate provincial construction because of their prevalence in Vancouver.

eCONOMIC OuTlOOk

While British Columbia’s economy has suffered from

weak domestic demand and a soft job market, sluggish-

ness should dissipate by the end of the year. Real GDP

is expected to advance by 1.5 per cent this year and by

a healthy 3 per cent next year. Positive underpinnings

include stronger growth in the primary sector, construc-

tion, and manufacturing.

Following modest growth this year, the province’s for-

estry industry is forecast to enjoy double-digit gains in

2014 as a rebounding U.S. housing market demands

more lumber. The province’s manufacturing sector is

struggling this year, but 2014 looks better thanks to an

improving U.S. economy and the start of work on the

federal shipbuilding program. Strength in metal mining

and in unconventional gas production and drilling will

boost the mining industry in both 2013 and 2014.

Next year’s output growth acceleration among

B.C. goods industries is forecast to lift employ-

ment 1.7 per cent in 2014, improving on this year’s

0.3 per cent advance. This will cut the unemploy-

ment rate to 6.2 per cent in 2014. A stronger employ-

ment picture should improve prospects for B.C.

services-producing industries.

British Columbia



2010 11 12 13f 14f 15f 16f 17f0

1020

3040



f = forecastSources: The Conference Board of Canada; CMHC Housing Time Series Database; Canadian Real Estate Association.

2010 11 12 13f 14f 15f 16f 17f−10

−505

1015

New Resale



HOuSING OuTlOOk

A firmer economy in 2014 should boost provincial

housing prospects, although rising interest rates will

temper gains. A modestly softer economic outlook for

China, an important source of housing investment in

B.C., is also curbing enthusiasm. Still, the market for

existing homes in 2014 will benefit from balanced mar-

ket conditions in the province’s three largest centres,

Vancouver, Victoria, and Abbotsford. The new home

British Columbia: Economic Indicators

2010 2011 2012 2013f 2014f 2015f 2016f 2017f





Population (000s) 4,523 4,572 4,618 4,657 4,712 4,770 4,830 4,8911.6 1.1 1.0 0.9 1.2 1.2 1.3 1.3




British Columbia: Housing Indicators

2010 2011 2012 2013f 2014f 2015f 2016f 2017f

Housing starts 26,479 26,400 27,465 25,257 27,819 31,005 31,871 31,51164.7 –0.3 4.0 –8.0 10.1 11.5 2.8 –1.1

Singles 11,462 8,867 8,333 7,973 8,263 9,107 9,344 8,90245.2 –22.6 –6.0 –4.3 3.6 10.2 2.6 –4.7

Multiples 15,017 17,533 19,132 17,284 19,556 21,898 22,527 22,60983.5 16.8 9.1 –9.7 13.1 12.0 2.9 0.4

Housing completions 27,699 22,549 26,380 25,564 25,425 27,677 29,632 29,587–6.2 –18.6 17.0 –3.1 –0.5 8.9 7.1 –0.2

Singles 10,741 9,279 8,787 8,463 8,013 8,564 9,128 8,91920.8 –13.6 –5.3 –3.7 –5.3 6.9 6.6 –2.3

Multiples 16,958 13,270 17,593 17,101 17,412 19,113 20,504 20,668–17.8 –21.7 32.6 –2.8 1.8 9.8 7.3 0.8

average price of a new home ($) 640,351 637,566 634,715 634,714 644,990 656,562 664,691 672,2932.8 –0.4 –0.4 0.0 1.6 1.8 1.2 1.1

average price of a resale home ($) 505,230 556,713 512,974 516,753 529,046 541,546 550,128 558,8499.8 10.2 –7.9 0.7 2.4 2.4 1.6 1.6




market will remain burdened by high inventories of

unsold units in both Vancouver and Victoria, but these

are forecast to ease in 2014.

Provincial demographics provide an uneven back-

ground for new construction. On one hand, population

growth is forecast to bounce back above 1 per cent in

2014, following a 2013 dip to 0.9 per cent, and then

accelerate gently. But expected population advances

will remain below their 25-year average throughout our

forecast. Moreover, there are slight signs of overbuild-

ing. Following big recessionary dips in 2009 and 2010

in the provincial ratio of housing starts to population

growth, the ratio slightly surpassed its long-term aver-

age in 2012 and is expected to do so again in both 2013

and 2014.

B.C. housing starts are therefore forecast to fall by

8 per cent in 2013, the first significant easing since

the province recovered from recession in 2009. The

decline puts volumes below their long-term average and

nowhere near their 2007 peak. Single-detached starts

are on track to drop for a third straight year in 2013

and, this year, will be accompanied by falling multi-

family construction. For 2014, we expect starts to rise

10 per cent to 27,800 units, lifted by gains among both

single and multiple units. Starts are forecast to rise in

both 2015 and 2016. Total volumes will remain well

below pre-recession peak levels; we expect only about

31,900 units by 2016. Multiple starts will continue to

dominate, accounting for 70 per cent of all provincial

starts between 2013 and 2017, by far the largest propor-

tion among the six regions covered in this report.

Boosted by a recovery in the Vancouver market, British

Columbia’s average resale price has risen for three

straight quarters, moving above its year-earlier level

in the second quarter of 2013. This was the first year-

over-year advance since late 2011. Gains will remain

moderate and produce only a 0.7 per cent annual

increase in 2013. Stronger 2.4 per cent price hikes are

on tap for both 2014 and 2015, and then twin 1.6 per

cent increases are anticipated for 2016 and 2017.

These upticks will leave the province’s average resale

price near $559,000 in 2017, slightly above its 2011

peak. New home prices are expected to be flat in 2013,

following tiny declines in both 2011 and 2012, but

advance 1.6 per cent in 2014. We expect small annual

increases each year thereafter.



Real GDP growth in Québec City is forecast to come in at 1.3 per cent in 2013, up only slightly from 2012, but then accelerate to 2.2 per cent for

2014. In the housing sector, both the resale and new home markets are expected to contract in 2013, with unit sales of existing homes and housing starts forecast to decline this year. A stronger economy in 2014 will help to boost hous-ing demand again, although the new home market will see another year of falling starts as builders will continue to reduce inventories.

eCONOMIC OuTlOOk

Weakness in the important public sector is hampering

Québec City’s economy, largely offsetting the boost

provided by the construction of a new hockey arena

suitable for an NHL team. Local real gross domestic

product is forecast to rise 1.3 per cent this year, fol-

lowing a similar 2012 advance. Economic growth is

expected to improve to 2.2 per cent in 2014, on par

with the annual average during the previous decade.

The job market is still feeling the strain this year, with

employment forecast to rise less than 1 per cent for

the second consecutive year in 2013, although employ-

ment growth is forecast to improve to 2 per cent by

2014. Soft employment has capped the participation

rate, although it remains near an all-time high. This will

limit labour force growth, allowing even the modest

employment advance to trim the unemployment rate to

a record low of 4.6 per cent this year and keep it there

next year as well.

HOuSING OuTlOOk

exISTING HOuSING MarkeT While most other urban centres in Canada and in fact

around the globe were suffering from the impact of

the global recession, unit sales in Québec City’s resale

home market reached a record 7,960 units in 2009.

Growth in resale prices had also been robust for sev-

eral years, with average existing home prices topping

$200,000 in 2009 for the first time ever. However, the

metropolitan overview

Québec City



2010 11 12 13f 14f 15f 16f 17f0

2

4

6

8


New Housing Price and Months’ Supply(dollars)


2010 11 12 13f 14f 15f 16f 17f100,000

150,000

200,000

250,000

300,000

1.0

1.5

2.0

2.5

3.0

Price Months’ supply



city’s resale market was hit the following year, as buy-

ers began to shy away from the resale market, even as

the economy strengthened and interest rates fell. Sales

tumbled by 11.2 per cent in 2010, closer to 7,000 units.

Sellers, meanwhile, now encouraged by higher prices,

increased new listings 4.5 per cent, in turn, reducing the

sales-to-new-listings ratio to 63 per cent, down from

74 per cent in 2009. But with the market still close to

sellers’ territory, resale price growth remained robust in

2010, at 11.3 per cent.

As economic growth improved further, buyers returned

to Québec City’s resale market in 2011, increasing

unit sales 1.8 per cent. At the same time, sellers were

continuing to take advantage of stronger prices; new

listings rose by more than 10 per cent, thereby lower-

ing the sales-to-new-listings ratio to 58 per cent, falling

below 60 per cent for the first time in 11 years. Growth

in resale home prices then moderated to 4.3 per cent,

their smallest annual increase since 2002. Demand for

existing homes fell once more in 2012, as economic

Québec City: Economic Indicators

2010 2011 2012 2013f 2014f 2015f 2016f 2017f


Total employment (000s) 409 419 421 424 433 440 446 4513.7 2.4 0.5 0.8 2.0 1.7 1.3 1.1



Population (000s) 753 761 770 777 784 791 798 8051.0 1.0 1.1 1.0 0.9 0.9 0.9 0.9



f = forecast Italics indicate percentage change.Sources: The Conference Board of Canada; Statistics Canada.

MLS Sales-to-New-Listings Ratio and Price Growth(per cent)

f = forecast; MLS = Multiple Listing ServiceSources: The Conference Board of Canada; Quebec Federation of Real Estate Boards.

2010 11 12 13f 14f 15f 16f 17f0

3

6

9

12

40

50

60

70

80

Price growth Sales-to-new-listings ratio

Affordability(left, dollars; right, per cent)

f = forecastNote: Principle and interest payments assume average resale price, 10 per cent down payment, 25-year amoritization, and 5-year fixed mortgage rate.Sources: The Conference Board of Canada; Canadian Real Estate Association.

2010 11 12 13f 14f 15f 16f 17f500

1,000

1,500

2,000

10

15

20

25

P&I payment P&I/income



growth slowed, and the region was hit by higher taxes

and tighter mortgage rules. Unit sales declined 0.2 per

cent last year. Growth in new listings was more modest

as well, at 2.1 per cent, while resale prices advanced

another 5 per cent.

Sales of existing units declined yet again in the first

quarter of this year, in line with the persistent weak-

ness in the economy. And while they posted a small

improvement through the middle of 2013, they are

expected to decrease in the fourth quarter, limited by

modest employment and income growth. Overall, unit

sales are forecast to contract 9.9 per cent this year,

down to 6,500 units. This will be the first time in nine

years that unit sales in Québec City’s resale market

have fallen below 7,000 units. The sales-to-new-listings

ratio is anticipated to slip to 50 per cent for 2013. This

positions the market in “balanced” territory, keeping

growth in resale prices at 4.5 per cent.

Next year, stronger economic growth is expected to

boost demand in the resale market, although the total

gain for the year will be modest given the forecast

weakness in the fourth quarter of 2013. In total, unit

sales are expected to increase 2.2 per cent in 2014. We

anticipate sellers will take a breather, however, leading

to a small decline in new listings. While the resulting

sales-to-new-listings ratio will increase to 52 per cent,

the market will remain balanced. As a result, resale

home price growth is expected to fall to 2.6 per cent.

With sales still below the long-term sales-to-population

ratio, there is room for additional growth in the resale

housing market through the medium term. Sales are

expected to increase an average of 3.1 per cent per year

from 2015 to 2017, and resale prices will rise by 2.6 per

cent on an average annual basis.

NeW HOuSING MarkeT Strong absorptions kept builders active in Québec

City’s new home market through the 2009 recession

and into 2010. Starts rose nearly 25 per cent in 2010

alone, reaching a six-year high of 6,700 units. Both

single-family and multiple-unit starts contributed to

this increase, although the growth in multiple starts was

much larger than the growth in single starts. However,

even with this significant increase in total housing starts

in 2010, demand outstripped supply, as months’ sup-

ply slipped to 1.7 months. Despite the tighter market,

growth in new home prices eased, falling to 3.2 per cent

for 2010, down from 7 per cent in 2009.

A slowing economy quickly reduced demand in Québec

City’s new home market in 2011. Absorptions fell

by 14.4 per cent, causing months’ supply to jump to

2.7 months. Builders pulled back from the market,

lowering starts by 16.6 per cent, with the decrease split

between singles and multiples. Growth in new home

prices decelerated further as well, easing to a 12-year

low of 1.4 per cent.

Québec City: Resale Housing Market Indicators

2010 2011 2012 2013f 2014f 2015f 2016f 2017f

unit sales 7,073 7,200 7,186 6,476 6,618 6,890 7,089 7,254–11.2 1.8 –0.2 –9.9 2.2 4.1 2.9 2.3

Dollar volume sales ($ millions) 1,655 1,757 1,841 1,734 1,818 1,940 2,048 2,149–1.1 6.1 4.8 –5.8 4.8 6.7 5.5 5.0

New listings 11,168 12,337 12,601 12,891 12,779 13,002 13,284 13,7114.5 10.5 2.1 2.3 –0.9 1.8 2.2 3.2

Sales-to-new-listings ratio (%) 63 58 57 50 52 53 53 53


f = forecastItalics indicate percentage change.Sources: The Conference Board of Canada; Quebec Federation of Real Estate Boards.



Though economic growth continued to moderate last

year, builders increased housing starts by 12.6 per cent

in 2012, pushing months’ supply up to 2.9 months.

Starts were being fuelled by surging construction of

multiples as single starts eased by 5.3 per cent. With

this growth, the multiples sector appeared to be slightly

oversupplied by demographic standards last year,

although sagging starts of single-family units kept the

overall ratio of housing starts to population growth

slightly below historical norms.

For 2013, with the economy still muted, total hous-

ing starts are forecast to decline 30 per cent. Both

singles and multiples are expected to contract this year.

Multiple starts increased in the first quarter of 2013, but

fell in the second quarter, and are expected to decline

through the rest of the year as well, as builders bring

them more in line with demographics. Meanwhile,

single starts remained on their downward trend in the

first quarter of this year, but have since picked up. With

months’ supply forecast at 2.6 months for 2013, growth

in new home prices is expected to continue to be mod-

est this year, at 1.4 per cent. Builders are expected to

reduce multiple starts again in 2014, down an additional

15.5 per cent, to lower months’ supply further. At the

same time, single starts will begin to increase next year.

Accordingly, total housing starts are forecast to decline

by 5.8 per cent. The tighter market (months’ sup-

ply is forecast to be 2 months for 2014) will lead to a

slightly faster 1.9 per cent increase in new home prices

next year.

Québec City: New Housing Market Indicators

2010 2011 2012 2013f 2014f 2015f 2016f 2017f

Housing starts 6,674 5,564 6,262 4,386 4,134 4,387 4,442 4,36824.7 –16.6 12.6 –30.0 –5.8 6.1 1.2 –1.7

Singles 1,770 1,346 1,275 968 1,244 1,395 1,415 1,3371.6 –23.9 –5.3 –24.1 28.6 12.1 1.4 –5.5

Multiples 4,904 4,217 4,987 3,418 2,889 2,992 3,027 3,03235.8 –14.0 18.3 –31.5 –15.5 3.6 1.2 0.1

under construction 3,158 3,083 3,393 3,665 3,326 3,484 3,603 3,68227.0 –2.4 10.0 8.0 –9.3 4.8 3.4 2.2

Housing completions 6,419 5,667 5,518 4,881 4,007 4,240 4,340 4,30225.4 –11.7 –2.6 –11.5 –17.9 5.8 2.4 –0.9

Singles 1,959 1,354 1,235 1,153 1,176 1,383 1,410 1,35411.5 –30.9 –8.8 –6.6 2.0 17.6 2.0 –3.9

Multiples 4,460 4,313 4,283 3,728 2,831 2,857 2,930 2,94832.6 –3.3 –0.7 –13.0 –24.1 0.9 2.6 0.6

Newly completed and unabsorbed 863 1,219 1,298 1,172 713 622 634 6600.9 41.2 6.5 –9.7 –39.1 –12.8 2.0 4.1

absorptions 6,267 5,362 5,349 5,338 4,347 4,258 4,315 4,27922.8 –14.4 –0.2 –0.2 –18.6 –2.1 1.3 –0.8

Months’ supply 1.7 2.7 2.9 2.6 2.0 1.8 1.8 1.9


f = forecastItalics indicate percentage change.Sources: The Conference Board of Canada; CMHC Housing Time Series Database.



Montréal’s real GDP is expected to rise 1.3 per cent in 2013 and 2.1 per cent in 2014. In line with the modest economic growth, both the

resale and new housing markets will weaken this year, with declines forecast for unit sales and housing starts. But both markets will show renewed signs of life in 2014 and onward thanks to an improved economy and stable population growth.

eCONOMIC OuTlOOk

Montréal’s economy is expected to remain weak by

national standards this year, with forecast real gross

domestic product growth of only 1.3 per cent. Our

anticipation of 2.1 per cent GDP growth for 2014 will

keep the area trailing the nation next year as well.

Weakness has been especially pronounced among the

goods industries; in fact, their expansion has been

slower than that of the services-producing industries for

the past 12 years now. But despite soft output growth,

the job market has been decent. Employment is on track

to rise 2 per cent in 2013, the most since 2010. This

will lift the job count for the year 2013 as a whole to

over 2 million people for the first time ever, and help

to cut the unemployment rate to 8 per cent, down from

8.5 per cent in 2012 and its lowest average level in

five years.

HOuSING OuTlOOk

exISTING HOuSING MarkeT Following a 7.4 per cent decline in 2008, unit sales

in Montréal’s resale housing market increased 5.5 per

cent through 2009 and 2010 as the region’s economy

recovered from the global recession. Stronger popula-

tion growth and low interest rates were also bringing

buyers back to the market at this time. Sellers were a

little slower to react, however. As a result, the sales-to-

new-listings ratio rose to an average of 60 per cent (up

from 54 per cent in 2008), in turn leading to stronger

price growth. Average resale home prices increased

7.8 per cent in 2010, more than double their rate of

increase in the preceding two years.

montréal



2010 11 12 13f 14f 15f 16f 17f05

10152025




2010 11 12 13f 14f 15f 16f 17f200,000

250,000

300,000

350,000

400,000

1.0

1.5

2.0

2.5

3.0Price Months’ supply



Higher taxes, tighter mortgage rules, and more modest

economic growth over the past two years then slowed

Montréal’s resale housing market once again. Unit

sales slipped 4.6 per cent in 2011 and an additional

0.6 per cent in 2012. Combined with moderate growth

in new listings, the sales-to-new-listings ratio fell back

to 52 per cent last year. Still, in spite of the balanced

market, resale price growth remained elevated through

2011–12, at an average of 4.2 per cent, with prices top-

ping $300,000 for the first time ever.

Persistent weakness in Montréal’s economy continued

to hurt the region’s resale housing market in the first

quarter of this year. And while sales did pick up in

the second quarter, likely, in part, thanks to improving

employment numbers, they are still well below year-

ago levels given the declines in the last half of 2012.

Indeed, unit sales of existing homes are forecast to drop

a total of 8 per cent in 2013, falling below 40,000 units

for the first time since 2006. But a stronger economy is

expected to encourage buying again next year, increas-

ing unit sales 2.6 per cent. Meanwhile, thanks to the

Montréal: Economic Indicators

2010 2011 2012 2013f 2014f 2015f 2016f 2017f


Total employment (000s) 1,954 1,952 1,979 2,018 2,031 2,066 2,097 2,1242.6 –0.1 1.4 2.0 0.6 1.8 1.5 1.3



Population (000s) 3,869 3,918 3,958 3,996 4,037 4,080 4,123 4,1681.4 1.3 1.0 1.0 1.0 1.1 1.1 1.1





f = forecast; MLS = Multiple Listing ServiceSources: The Conference Board of Canada; Quebec Federation of Real Estate Boards.

2010 11 12 13f 14f 15f 16f 17f0

3

6

9

45

50

55

60




2010 11 12 13f 14f 15f 16f 17f1,000

1,500

2,000

2,500

20

22

24

26




higher prices, new listings remain on an upward trend

and are anticipated to rise 1.1 per cent this year and

3.2 per cent in 2014. This will push the sales-to-new-

listings ratio to 47 per cent, its lowest rate in 16 years.

With the market getting closer to buyers’ territory,

resale price growth is moderating, forecast to grow just

2.1 per cent per year on average over 2013–14.

In the medium term, a solid economy and stable popu-

lation growth of 1 per cent annually are expected to

lead to further growth in housing demand in the resale

market. Unit sales of existing homes are forecast to

increase by an average of 2.1 per cent annually from

2015 to 2017. Accordingly, the sales-to-new-listings

ratio is anticipated to rise slightly, nearing 50 per cent

by 2017. The balanced market will hold the growth in

resale prices to 2.6 per cent on an average annual basis.

NeW HOuSING MarkeT Montréal’s new home market also strengthened fol-

lowing the 2009 global recession, thanks to spillover

demand from the resale market. In total, builders

increased housing starts by 15.3 per cent in 2010 and

2.1 per cent in 2011. Much of this increase was due

to the multiple-unit market, as single-detached starts

grew in 2010 but then fell again in 2011. Indeed, the

multiples market was benefitting, in large part, from

a number of new condominium projects across the

region—a trend seen in many of Canada’s large urban

centres in recent years. Demand for condominiums

has risen as the population has started to age but also

because people are more and more choosing to live

downtown to avoid long commuting times given rising

traffic flows. Despite the growth in starts in 2010–11,

the demand for new homes was so strong that months’

supply in the new home market declined steadily, fall-

ing to 2.1 months for 2011 after hitting a 13-year high

of 2.8 months in 2009. As a result, growth in new home

prices accelerated slightly, averaging 3 per cent per

year, up from 2.4 per cent in 2009.

With condominium projects wrapping up and economic

growth modest, builders pulled back from both the

singles and multiples markets last year. Total housing

starts dropped by 9.9 per cent. Months’ supply con-

tinued to fall though, slipping to 1.9 months—below

2 months for the first time in seven years. Nevertheless,

new home prices rose by only 1.4 per cent, their small-

est increase since 1998.

Housing starts are poised to fall again in 2013. Single

and multiple starts declined substantially in the first

quarter of the year. Although both picked up in the

second quarter, more weakness is expected going for-

ward, given the slow economy and now rising inventor-

ies, especially of apartment condominiums. In total,

Montréal: Resale Housing Market Indicators

2010 2011 2012 2013f 2014f 2015f 2016f 2017f

unit sales 42,297 40,359 40,114 36,927 37,900 39,038 39,893 40,3741.3 –4.6 –0.6 –7.9 2.6 3.0 2.2 1.2

Dollar volume sales ($ millions) 12,390 12,408 12,766 11,937 12,556 13,311 13,932 14,4419.2 0.1 2.9 –6.5 5.2 6.0 4.7 3.7

New listings 72,138 75,472 77,097 77,946 80,473 81,854 82,077 81,8704.0 4.6 2.2 1.1 3.2 1.7 0.3 –0.3



f = forecastItalics indicate percentage change.Sources: The Conference Board of Canada; Quebec Federation of Real Estate Boards.



housing starts are forecast to decrease 29.6 per cent

this year. New home prices are also expected to remain

muted, increasing just 1.5 per cent.

As economic growth improves next year, steady popula-

tion increases should bring builders back to the market.

Moreover, Montréal does not appear to be overbuilt; the

ratio of housing starts to population growth has been

below its 25-year average in each of the past five years.

Accordingly, total starts are expected to edge higher in

2014 and in 2015, up by 7.1 per cent and 2.7 per cent,

respectively. Lower absorptions this year and next will

raise months’ supply to 2 months. New home price

growth is expected to continue to be modest, reaching

2 per cent in 2014 and 2.2 per cent in 2015.

Montréal: New Housing Market Indicators

2010 2011 2012 2013f 2014f 2015f 2016f 2017f

Housing starts 22,194 22,652 20,420 14,376 15,392 15,809 15,933 15,64015.3 2.1 –9.9 –29.6 7.1 2.7 0.8 –1.8

Singles 5,870 4,672 3,959 3,188 4,574 4,651 4,692 4,4308.2 –20.4 –15.3 –19.5 43.5 1.7 0.9 –5.6

Multiples 16,323 17,979 16,462 11,187 10,818 11,157 11,241 11,21018.1 10.1 –8.4 –32.0 –3.3 3.1 0.7 –0.3

under construction 14,346 16,214 18,567 17,229 16,623 17,050 17,395 17,57411.7 13.0 14.5 –7.2 –3.5 2.6 2.0 1.0

Housing completions 19,922 19,866 19,092 17,110 14,883 15,383 15,663 15,5122.2 –0.3 –3.9 –10.4 –13.0 3.4 1.8 –1.0

Singles 6,034 4,851 4,191 3,463 4,289 4,724 4,762 4,58315.7 –19.6 –13.6 –17.4 23.9 10.1 0.8 –3.7

Multiples 13,888 15,015 14,901 13,647 10,594 10,660 10,901 10,928–2.7 8.1 –0.8 –8.4 –22.4 0.6 2.3 0.3

Newly completed and unabsorbed 3,965 3,390 3,062 2,911 2,566 2,524 2,580 2,568–15.0 –14.5 –9.7 –4.9 –11.8 –1.7 2.2 –0.4

absorptions 21,086 19,833 19,697 17,126 15,208 15,365 15,588 15,5806.9 –5.9 –0.7 –13.1 –11.2 1.0 1.5 –0.1

Months’ supply 2.3 2.1 1.9 2.0 2.0 2.0 2.0 2.0





Toronto’s real GDP is forecast to rise by 1.6 per cent this year, limited by a decline in manufactur-ing output and a weak services sector. Next year,

stronger demand, both at home and south of the border, is expected to help economic growth improve to 2.7 per cent. Although unit sales of existing homes and housing starts are both set to fall in 2013, they are forecast to rise once again next year, albeit at a modest pace, thanks to the improving economy and continued population growth.

eCONOMIC OuTlOOk

Toronto’s economy is expected to grow by 1.6 per cent

in 2013, down from a modest 1.9 per cent increase in

2012. Although the construction sector is forecast to

grow at a faster pace this year, thanks to a host of non-

residential projects, many other sectors are expected

to post much slower growth or even declines. Indeed,

weaker demand for manufactured products in late 2012

is expected to lead to a lower manufacturing output in

2013—the first annual drop for this sector since the

2009 global recession. And despite stronger forecast

gains for employment in 2013—2.5 per cent versus

1.6 per cent in 2012—consumers have remained cau-

tious. As a result, wholesale and retail trade output is

expected to be flat this year, following a muted 0.4 per

cent increase last year. By 2014, with global economic

conditions expected to improve, overall economic activ-

ity will strengthen, leading consumers to open their

purse strings once more. In total, real gross domes-

tic product growth is forecast to reach 2.7 per cent

next year.

toronto



2010 11 12f 13f 14f 15f 16f 17f0

1020304050




2010 11 12f 13f 14f 15f 16f 17f400,000

500,000

600,000

700,000

0.4

0.5

0.6




HOuSING OuTlOOk

exISTING HOuSING MarkeT Unit sales of existing homes in Toronto rose by 18 per

cent in 2009, nearly offsetting the decline from the

previous year when demand fell as a result of the onset

of the global recession in late 2008. Buyers were being

enticed not only by an improving economy in 2009 but

also by lower interest rates. Sellers were not as keen,

however—new listings slipped 16.5 per cent, thereby

raising the sales-to-new-listings ratio to 66 per cent. In

turn, growth in resale homes prices began to acceler-

ate, increasing to 4 per cent, up from just 1 per cent

the previous year. However, renewed uncertainty in

the economy meant buyers pulled back from the resale

market again in 2010, lowering unit sales 1.5 per cent.

And, while additional new listings helped to push the

sales-to-new-listings ratio back down to 57 per cent (in

balanced territory), resale home prices increased at an

even faster pace, up by 9.4 per cent.

Toronto: Economic Indicators

2010 2011 2012 2013f 2014f 2015f 2016f 2017f





Population (000s) 5,741 5,841 5,941 6,042 6,147 6,261 6,379 6,5001.8 1.7 1.7 1.7 1.7 1.9 1.9 1.9





f = forecast; MLS = Multiple Listing ServiceSources: The Conference Board of Canada; Canadian Real Estate Association.

2010 11 12f 13f 14f 15f 16f 17f0

4

8

12

50

55

60

65




2010 11 12f 13f 14f 15f 16f 17f1,5002,0002,5003,0003,5004,000

152025303540




Continued low interest rates led buyers to return to

Toronto’s resale market in 2011, as sales increased by

4.3 per cent, to top 80,000 units for only the second

time on record. Accordingly, the sales-to-new-listings

ratio jumped to 62 per cent, keeping resale price

growth elevated, at 8 per cent for the year. Resale

prices grew another 7.5 per cent in 2012 as well, top-

ping $500,000—good news for sellers, who, in turn,

increased new listings by 8.7 per cent last year.

Notwithstanding the large increases in prices, exist-

ing homes remain relatively affordable in Toronto,

largely thanks to low interest rates. Indeed, the rela-

tionship of carrying costs to incomes and rents is still

well within historical norms. Specifically, principle

and interest payments on the average Toronto Multiple

Listing Service house consumed 26 per cent of aver-

age household incomes in 2012—the same percentage

as in 1991–92. This relative affordability, in the face of

soft economic growth and tighter mortgage rules, kept

existing home sales relatively high in 2012. True, they

declined by 5 per cent, but from an almost record high

in 2011.

Another round of interest rate cuts early in 2013 led to

a rebound in Toronto’s resale housing market through

the first half of this year, in spite of a still modest econ-

omy. Unit sales rose by an annual average of 4.1 per

cent in each quarter. Still, given the slowdown in the

fourth quarter of last year, unit sales are expected to

fall 3.6 per cent for the year 2013 as a whole. With

interest rates anticipated to slowly move up in the com-

ing months, sales growth is expected to be modest but

positive: unit sales of existing homes are forecast to

grow by 0.8 per cent next year. A stable economy and

solid population growth should keep unit sales on the

upswing, growing by 3.7 per cent on an average annual

basis from 2015 to 2017.

Meanwhile, sellers have been taking a breather lately,

and so new listings are expected to fall by 1.4 per cent

per year on average over this year and next. Better

economic conditions will bring sellers back to the

market by 2015, increasing new listings by an average

of 3.1 per cent over 2015–17. This will be enough to

keep the resale housing market in balanced territory.

As a result, growth in existing home prices will slow to

2.4 per cent this year, and then hover around the 2 per

cent mark from 2014 onward.

NeW HOuSING MarkeT Builders in Toronto’s new home market increased

housing starts nearly 70 per cent from 2010 to 2012,

to reach a record 48,400 units last year. Through 2010

and 2011, the growth in Toronto’s housing starts was

due to increases in both single-detached and multiple-

unit starts. While multiple starts rose once again in

2012, thanks to the continued development of a number

of large high-rise condominium developments across

the city, tighter mortgage rules lowered single starts

Toronto: Resale Housing Market Indicators

2010 2011 2012 2013f 2014f 2015f 2016f 2017f

unit sales 78,707 82,084 77,960 75,182 75,766 79,514 82,313 84,378–1.5 4.3 –5.0 –3.6 0.8 4.9 3.5 2.5

Dollar volume sales ($ millions) 35,273 39,744 40,591 40,075 41,176 44,109 46,564 48,6777.7 12.7 2.1 –1.3 2.7 7.1 5.6 4.5

New listings 137,939 132,217 143,784 141,872 139,867 144,925 149,298 152,94914.2 –4.1 8.7 –1.3 –1.4 3.6 3.0 2.4



f = forecastItalics indicate percentage change.Sources: The Conference Board of Canada; Canadian Real Estate Association.



by 4.3 per cent. Generally, over the past three years,

new home demand has been driven by increased for-

eign investment, the recovering economy, low inter-

est rates, and healthy population growth. In addition,

demand for affordable dwellings and for downtown

accommodation was further boosting the proportion of

multi-family starts.

Initially, the increase in demand kept up with the

increases in supply. Absorptions rose nearly 20 per cent

over 2010–11. But buyers backed away from the new

home market last year, lowering absorptions by 7.7 per

cent, and causing months’ supply to begin to creep

up. At the same time, a number of big condominium

projects were being completed. Accordingly, builders

reduced multiple starts considerably over the first half

of 2013. All told, total housing starts are expected to

slip 29.4 per cent this year, down to 34,100 units. But

the downturn will be short-lived. Although the ratio

of housing starts to population growth significantly

exceeded its historical average last year, this followed

several years of below-average readings. As a result,

a healthier economy and continued solid popula-

tion growth are expected to increase housing demand

again by next year. In turn, builders are expected to

return to the market, increasing total starts by 13.4 per

cent in 2014 and by an annual average of 6.1 per cent

from 2015 to 2017. By 2017, starts are forecast to be

46,200 units. This will keep months’ supply just under

0.5 months, a decent reading for the Toronto market.

Growth in new home prices also picked up speed in

recent years. New home prices rose by 4.1 per cent

on an average annual basis from 2010 to 2012, top-

ping $600,000 last year. Price growth in the new home

market is forecast to slow to 2.4 per cent in 2013 and

1.8 per cent in 2014, in line with the softer demand, and

then average 2.1 per cent per year over 2015–17.

Toronto: New Housing Market Indicators

2010 2011 2012 2013f 2014f 2015f 2016f 2017f

Housing starts 29,413 39,745 48,368 34,133 38,717 42,558 45,643 46,15412.5 35.1 21.7 –29.4 13.4 9.9 7.2 1.1

Singles 10,236 11,187 10,702 10,181 10,997 12,277 12,802 12,30829.3 9.3 –4.3 –4.9 8.0 11.6 4.3 –3.9

Multiples 19,177 28,557 37,666 23,951 27,721 30,281 32,840 33,8465.2 48.9 31.9 –36.4 15.7 9.2 8.5 3.1

under construction 47,581 49,424 60,964 66,156 65,290 65,229 65,316 65,381–0.8 3.9 23.3 8.5 –1.3 –0.1 0.1 0.1

Housing completions 31,393 33,831 31,907 36,403 38,748 42,580 45,638 46,00410.7 7.8 –5.7 14.1 6.4 9.9 7.2 0.8

Singles 9,804 9,106 11,036 10,109 10,814 12,397 12,769 12,15310.8 –7.1 21.2 –8.4 7.0 14.6 3.0 –4.8

Multiples 21,589 24,725 20,871 26,293 27,934 30,183 32,869 33,85110.7 14.5 –15.6 26.0 6.2 8.1 8.9 3.0

Newly completed and unabsorbed 1,698 1,382 1,628 1,356 1,469 1,651 1,804 1,85946.2 –18.6 17.8 –16.7 8.3 12.4 9.3 3.0

absorptions 30,668 34,222 31,588 36,807 38,575 42,420 45,484 45,9988.0 11.6 –7.7 16.5 4.8 10.0 7.2 1.1

Months’ supply 0.7 0.5 0.6 0.4 0.5 0.5 0.5 0.5





O ttawa–Gatineau’s economy is on track to expand by a modest 0.8 per cent in 2013, while employ-ment is poised to tumble by 1.8 per cent, the

biggest decline in 18 years. Fortunately, things are expected to improve next year, with both real GDP and job growth forecast to reach 1.6 per cent. However, the resale and new housing markets are expected to continue to weaken this year and next, with declines forecast for unit sales of exist-ing homes and housing starts.

eCONOMIC OuTlOOk

Ottawa–Gatineau’s economy continues to feel the pinch

of federal government cutbacks. Real GDP expanded

by only 0.8 per cent last year and is projected to grow

at the same lacklustre rate this year. The public admin-

istration sector, which accounts for about 30 per cent

of overall economic activity, is headed for its biggest

drop in employment on record this year. In fact, we

expect that about 12,800 public administration jobs

will be eliminated in Ottawa–Gatineau over 2013 and

2014, with the vast majority of these cuts coming in

2013. Fortunately, public administration employment

is expected to start stabilizing in 2014, allowing over-

all economic growth to improve to 1.6 per cent next

year. The economy will also continue to benefit from

robust non-residential construction activity, thanks to

several major ongoing projects, including the largest

construction project in Ottawa’s history—the $2.1-bil-

lion light-rail transit (LRT) project—and the $291-mil-

lion redevelopment of Lansdowne Park.

HOuSING OuTlOOk

exISTING HOuSING MarkeT Demand in Ottawa–Gatineau’s resale home market has

been decreasing for the past three years. After reaching

a near-record 19,300 units in 2009, unit sales of existing

homes declined an annual average of 1.7 per cent from

2010 to 2012. Although interest rates were very low

during this time, buyers were discouraged, in part, by

robust price growth. Indeed, existing home prices rose

ottawa–gatineau



2010 11 12f 13f 14f 15f 16f 17f02468

10




2010 11 12f 13f 14f 15f 16f 17f200,000250,000300,000350,000400,000450,000500,000

1.11.21.31.41.51.61.7




by 7.1 per cent per year on average over the 10-year

period from 2000 to 2010, topping $300,000 in 2009.

Through 2011 and 2012, fiscal restraint in the public

sector, and the resulting layoffs, weakened Ottawa–

Gatineau’s economy, further hampering demand in the

resale market.

At the same time, sellers were enticed by this strong

growth in resale prices. New listings increased by an

annual average of 6.4 per cent from 2010 to 2012. As

a result, the sales-to-new-listings ratio fell from 65 per

cent in 2009 to 51 per cent last year. In turn, resale

price growth finally began to slow, slipping to 5.9 per

cent in 2011 and 2.5 per cent in 2012. This was the

smallest increase in resale home prices in the Ottawa–

Gatineau region in 14 years.

Unit sales of existing homes fell again in the first

quarter of this year, and then increased in the second

quarter. However, given the persistent weakness in the

economy in 2013, reduced employment, the introduc-

tion of tighter mortgage rules last year, and rising

interest rates, demand is expected to remain muted

through the last half of this year and into next year

Ottawa–Gatineau: Economic Indicators

2010 2011 2012 2013f 2014f 2015f 2016f 2017f


Total employment (000s) 687 694 712 699 710 723 734 7442.4 1.0 2.5 –1.8 1.6 1.9 1.5 1.3


Personal income per capita ($) 42,481 43,787 45,137 44,816 46,226 47,787 49,213 50,5791.9 3.1 3.1 –0.7 3.1 3.4 3.0 2.8

Population (000s) 1,239 1,256 1,273 1,286 1,294 1,304 1,316 1,3301.6 1.4 1.4 1.0 0.7 0.7 0.9 1.1






2010 11 12f 13f 14f 15f 16f 17f0

2

4

6

8

45

50

55

60

65




2010 11 12f 13f 14f 15f 16f 17f500

1,000

1,500

2,000

2,500

15

17

19

21

23




as well. Unit sales of existing homes are expected to

decline again in 2013 and 2014, down 5.2 per cent and

4.1 per cent, respectively. New listings have continued

to increase so far this year, although at a more moder-

ate pace. Accordingly, the sales-to-new-listings ratio is

forecast to drop to 47 per cent in 2013, thereby slow-

ing price growth further, down to 1.4 per cent. Sellers

are expected to take a breather in 2014, lowering new

listings by 9 per cent. However, the sales-to-new-

listings ratio will remain at just under 50 per cent, and

resale price growth will remain subdued at a forecast

1.8 per cent.

Over the following few years, as the economy stabil-

izes, demand in Ottawa–Gatineau’s resale market is

expected to pick up once more. Unit sales are forecast

to grow by 1.9 per cent per year on average from 2015

to 2017. New listings are anticipated to rise at a similar

pace, holding the market in a balanced state, with the

sales-to new-listings ratio hovering around 50 per cent.

Accordingly, growth in existing home prices is expected

to remain modest over 2015–17, at an annual average

rate of 2.1 per cent.

NeW HOuSING MarkeT Unlike the resale market, Ottawa–Gatineau’s new home

market has been more volatile over the last couple

of years, with starts at times increasing and at others

decreasing. Specifically, housing starts grew 2 per cent

in 2010, following a 13.7 per cent decline the previous

year. Builders were being drawn back to the market

in 2010 by rising absorptions, as buyers enjoyed a

healthier economy and low interest rates. This increase

in starts was entirely driven by the multiple-unit mar-

ket, as single-detached starts continued to fall. A small

decline in months’ supply, from 1.5 months to 1.3

months helped to boost growth in new home prices for

2010 as well, raising it to 4 per cent, up from 1.5 per

cent in 2009.

The threat of public sector layoffs lowered demand in

the new home market again in 2011, as absorptions

dropped more than 13 per cent. Builders pulled back

from the market as a result, reducing starts 8.7 per cent,

with the decline split between the singles and multiples

markets. In turn, price growth in the new home market

slowed to 3 per cent.

Absorptions continued to decline in 2012, in line with

the still weak economy. But a number of new condo-

minium and multi-family home developments saw the

light of day last year. In the end, while single starts

fell by 20.8 per cent last year, multiple starts increases

21.1per cent, raising total starts by 6.3 per cent overall.

The combination of lower absorptions and higher starts

raised months’ supply to 1.6 months in 2012, its high-

est level since 1998. As a consequence, growth in new

home prices decelerated further, down to 2.6 per cent.

Still, average new home prices reached $400,000 for

the first time last year.

Ottawa–Gatineau: Resale Housing Market Indicators

2010 2011 2012 2013f 2014f 2015f 2016f 2017f

unit sales 18,827 18,411 18,307 17,363 16,649 17,164 17,498 17,627–2.2 –2.2 –0.6 –5.2 –4.1 3.1 1.9 0.7

Dollar volume sales ($ millions) 5,709 5,912 6,026 5,795 5,657 5,950 6,201 6,3805.1 3.6 1.9 –3.8 –2.4 5.2 4.2 2.9

New listings 31,935 32,939 35,888 36,824 33,497 34,130 34,754 35,0897.1 3.1 9.0 2.6 –9.0 1.9 1.8 1.0






In spite of the persistent lull in the economy and even

lower absorptions, builders increased starts again

through the first half of 2013, raising both single and

multiple starts. But, with tighter mortgage rules, slow-

ing population growth, and expected increases in inter-

est rates in the coming months, demand is forecast to

remain on a downward trend. Builders are therefore

forecast to reduce starts in the second half of this year

and into 2014. Total starts are anticipated to decline by

20.7 per cent in 2013 and 11.5 per cent next year, slip-

ping below 7,000 units for the first time since 1999.

Months’ supply will fall to 1.3 months as a result,

allowing growth in new home prices to strengthen from

1.1 per cent this year to 2 per cent in 2014. Builders are

then expected increase starts by a modest 3.1 per cent,

per year, on average, over 2015 to 2017 as the economy

improves. A stable months’ supply will lead to a 2.2 per

cent average annual increase in new home prices.

Ottawa–Gatineau: New Housing Market Indicators

2010 2011 2012 2013f 2014f 2015f 2016f 2017f

Housing starts 9,138 8,344 8,873 7,034 6,225 6,309 6,522 6,8292.0 –8.7 6.3 –20.7 –11.5 1.4 3.4 4.7

Singles 3,304 2,945 2,333 2,089 2,048 2,037 2,028 2,041–5.9 –10.9 –20.8 –10.5 –2.0 –0.5 –0.4 0.6

Multiples 5,834 5,399 6,539 4,945 4,177 4,272 4,493 4,7897.0 –7.5 21.1 –24.4 –15.5 2.3 5.2 6.6

under construction 6,167 5,646 6,523 6,582 6,077 5,940 5,953 6,0141.2 –8.5 15.5 0.9 –7.7 –2.2 0.2 1.0

Housing completions 9,539 8,356 8,122 6,838 6,631 6,329 6,495 6,7491.0 –12.4 –2.8 –15.8 –3.0 –4.6 2.6 3.9

Singles 3,721 2,935 2,548 2,080 2,060 2,036 2,026 2,030–1.0 –21.1 –13.2 –18.4 –0.9 –1.2 –0.5 0.2

Multiples 5,818 5,421 5,574 4,759 4,571 4,294 4,469 4,7192.4 –6.8 2.8 –14.6 –3.9 –6.1 4.1 5.6

Newly completed and unabsorbed 1,086 1,073 1,096 872 763 659 668 726–1.8 –1.2 2.1 –20.4 –12.5 –13.6 1.4 8.7

absorptions 9,676 8,394 8,097 7,039 6,803 6,379 6,460 6,6789.6 –13.2 –3.5 –13.1 –3.4 –6.2 1.3 3.4

Months’ supply 1.3 1.5 1.6 1.5 1.3 1.2 1.2 1.3





A strengthening economy in 2014 should lift Winnipeg resale housing volumes following a small downtick this year. Price growth is also

expected to edge higher next year as sales pick up. The new home market should be rock-solid thanks to healthy new-unit absorptions, but a slight pullback in housing starts is expected for 2014 as multiple-family construction dips. Still, the medium-term outlook features a decent economy and brisk population growth that will underpin continued resale transaction and price advances, along with buoyant housing starts. Excellent ownership affordability and evi-dence of slight pent-up demand for new construction are additional positive factors.

eCONOMIC OuTlOOk

Moderate GDP growth of 1.4 per cent is on tap for

Winnipeg in 2013, with a slight acceleration to 2.1 per

cent in 2014. A strengthening services sector under-

pins the faster 2014 advance. Employment is forecast

to rise 1.5 per cent in 2014, more than doubling this

year’s projected 0.7 per cent increase. These job gains

will cut the local unemployment rate to 5.5 per cent in

2014, following a projected 16-year high of 5.9 per cent

this year. The outlook over the subsequent few years

features moderate gains in output and employment, but

ongoing sound population growth.

HOuSING OuTlOOk

exISTING HOuSING MarkeT Winnipeg’s resale market is balanced and is expected

to remain in this state throughout our forecast. Still,

the market is cooling slightly; easing sales demand and

rising listings supply point to moderating price growth

this year. Thereafter, rising sales will support slightly

stronger price advances.

Existing home sales averaged just over 11,700 units at

an annualized pace during the first half of 2013. This

was down modestly from the pace in the second half

Winnipeg



2010 11 12f 13f 14f 15f 16f 17f012345




2010 11 12f 13f 14f 15f 16f 17f300,000

350,000

400,000

450,000

500,000

0.5

1.0

1.5

2.0




of 2012 and from last year as a the whole. We expect

sales to pick up slightly in the second half of 2013, but

still end the year below 11,900 units. While this volume

is a three-year low, it remains above the past decade’s

average. Moreover, transactions are forecast to rise 3

per cent in 2014 and 2.7 per cent annually on average

between 2015 and 2017. The 13,200 sales we expect by

2017 would be a record high for this market.

New listings have edged higher recently, averaging

nearly 17,000 units at an annual rate in the latest two

quarters, the most since 1998. But increases have been

gradual—between 1.8 and 3.2 per cent annually over

the past three years—suggesting that potential home

sellers believe a healthy market will value their units

fairly. Another moderate listings rise is on tap for 2013

as a whole. Generally easing sales and rising listings

cut the sales-to-new-listings ratio below 70 per cent in

the second quarter, the lowest since the first quarter of

2009, but still signalling a balanced market. For all of

2013, we expect the ratio to average 69 per cent, the

lowest since 2000. This still points to a balanced market

and will be the highest ratio among the cities covered

Winnipeg: Economic Indicators

2010 2011 2012 2013f 2014f 2015f 2016f 2017f


Total employment (000s) 408 409 417 420 426 435 442 4481.9 0.1 2.1 0.7 1.5 2.0 1.7 1.4



Population (000s) 753 766 778 789 798 808 818 8271.5 1.7 1.6 1.3 1.2 1.2 1.2 1.2






2010 11 12f 13f 14f 15f 16f 17f0

3

6

9

12

60

65

70

75

80




2010 11 12f 13f 14f 15f 16f 17f500

1,000

1,500

2,000

10

15

20

25




in this report next year. By 2017, we expect slightly

faster gains in listings than in sales to trim the ratio to

63 per cent.

The easing market balance has prompted quarterly

drops in the average resale price during three of the

latest four quarters, although it remains above its year-

earlier level. These dips will trim annual price growth

to 3.3 per cent this year, the lowest since 2000 and

only about half the 20-year average of nearly 6 per cent

per year. Slightly faster growth of 3.8 per cent is on

tap for 2014 and then annual increases slightly above

4 per cent between 2015 and 2017. Notwithstanding

price gains and expected interest rate hikes, Winnipeg

housing will remain relatively affordable. Principle

and interest charges on the city’s average resale unit

are forecast to consume only 16.6 per cent of average

household income in 2014, above only Calgary and

Edmonton among the nine cities in this report.

NeW HOuSING MarkeT New home absorption has averaged a brisk 3,400 units

at an annual rate during the latest four quarters, exceed-

ing any annual figure on record and also the 20-year

average near 2,100 units. We expect absorptions to end

2013 above 3,700 units and exceed 4,000 units in 2014.

Further gains are expected through the medium term

thanks to solid local demand underpinnings. Despite

such strong absorptions, builders’ unsold stocks at the

end of the second quarter were nearly twice those dur-

ing the first quarter of 2012 because the completion of

new units had exceeded their take-up for five straight

quarters. Such inventories of completed and unoccupied

units are forecast to rise further during the second half

of 2013, but decline during 2014 as absorptions begin

to outpace completions. Although these inventories will

remain relatively high through 2017, they will shrink

from roughly 17 per cent of recent absorptions this year

to only 12 per cent of absorptions in 2017.

Strong demand for new homes lifted housing starts to

an annual pace of roughly 4,700 units in the first half

of 2013, the highest two-quarter average in 25 years.

This built on large jumps in starts in two of the past

three years, including last year’s 20.5 per cent increase.

Big increases in multi-family construction have largely

driven gains, although single-family starts have also

risen. Total starts are expected to ease slightly in 2014,

mainly because of a pullback in multiple construction,

then rise steadily. In 2017, we expect over 4,800 total

starts in the Winnipeg area, the most since 1987.

Despite recent large increases among multiple starts,

Winnipeg: Resale Housing Market Indicators

2010 2011 2012 2013f 2014f 2015f 2016f 2017f

unit sales 11,573 12,298 12,093 11,883 12,234 12,711 12,966 13,2390.6 6.3 –1.7 –1.7 3.0 3.9 2.0 2.1

Dollar volume sales ($ millions) 2,647 2,969 3,085 3,131 3,345 3,624 3,851 4,09210.9 12.2 3.9 1.5 6.8 8.3 6.3 6.3

New listings 15,976 16,385 16,675 17,295 18,249 19,367 20,128 20,8893.2 2.6 1.8 3.7 5.5 6.1 3.9 3.8






good affordability will keep single-family construction

dominant; this is the only city among the nine covered

in this report in which single starts make up more than

half of the forecast total between 2013 and 2017.

Local demographics continue to be supportive.

Population growth is forecast to remain above 1 per

cent through 2017, despite cooling from recent annual

gains of above 1.5 per cent. Moreover, the ratio of

housing starts to absolute population growth has

recovered only slowly from the 2009 recession and was

below its 25-year average in each of the past four years,

hinting at potential pent-up housing demand.

Winnipeg: New Housing Market Indicators

2010 2011 2012 2013f 2014f 2015f 2016f 2017f

Housing starts 3,218 3,342 4,025 4,304 3,953 4,576 4,793 4,84859.8 3.9 20.5 6.9 –8.2 15.8 4.7 1.1

Singles 1,915 1,993 2,123 2,272 2,220 2,546 2,641 2,59926.8 4.1 6.5 7.0 –2.3 14.7 3.8 –1.6

Multiples 1,303 1,349 1,903 2,032 1,733 2,031 2,152 2,249158.8 3.5 41.1 6.8 –14.7 17.2 6.0 4.5

under construction 1,847 2,383 2,904 3,570 3,672 3,700 3,727 3,75913.9 29.0 21.9 22.9 2.9 0.8 0.7 0.8

Housing completions 2,388 3,179 3,258 3,891 3,933 4,546 4,764 4,819–10.6 33.1 2.5 19.4 1.1 15.6 4.8 1.2

Singles 1,790 1,863 1,911 2,731 2,201 2,494 2,620 2,59310.5 4.1 2.6 42.9 –19.4 13.3 5.1 –1.0

Multiples 598 1,316 1,347 1,160 1,732 2,052 2,144 2,226–43.0 120.1 2.4 –13.9 49.4 18.4 4.5 3.8

Newly completed and unabsorbed 347 318 371 602 537 551 580 581–36.3 –8.2 16.7 62.1 –10.8 2.7 5.1 0.2

absorptions 2,523 3,176 3,089 3,732 4,050 4,506 4,735 4,827–10.2 25.9 –2.7 20.8 8.5 11.2 5.1 1.9

Months’ supply 1.6 1.2 1.4 1.9 1.6 1.5 1.5 1.4





Calgary’s economy and housing demand continue to thrive as energy sector activity remains healthy. Rising GDP is spurring employment growth.

On the resale housing market front, solid sales will lead to sound price gains this year and next. The new hous-ing market is benefitting from strong absorptions, which are trimming unsold stocks of new units and fostering new construction. The medium term also looks decent. Ongoing economic growth will continue to produce gains in resale sales and prices and keep housing starts above their 20-year average. Good housing affordability, measured against local incomes, is an ongoing benefit to this market and allows single-family starts to maintain a high market share compared with other cities covered in this report.

eCONOMIC OuTlOOk

Summertime flooding in Calgary captured national

attention. The resulting hit to third-quarter output will

limit Calgary’s GDP to 3.3 per cent growth in 2013,

modest by recent standards. Output will rise a slightly

faster 3.4 per cent in 2014, spurred by government-

funded rebuilding efforts. The job market will continue

to expand, with annual growth of 2.4 per cent this

year and 2.8 per cent in 2014 cutting the unemploy-

ment rate from 4.9 per cent this year to 4.6 per cent in

2014. Economic health should continue between 2015

and 2017, with GDP expanding roughly 3 per cent and

employment rising about 2 per cent each year.

HOuSING OuTlOOk

exISTING HOuSING MarkeT Calgary’s strong economic fundamentals allowed its

resale market to largely shrug off the floods. Seasonally

adjusted sales and the average resale price actually rose

during June, the flood month, and have subsequently

advanced. The market remains in “balanced” territory,

but is approaching sellers’ conditions. Price growth

is accelerating, although increases remain far below

boom-era advances. We expect the market to remain

balanced and price growth to stay healthy in 2014 and

over the following few years.

Calgary



2010 11 12f 13f 14f 15f 16f 17f0369

1215




2010 11 12f 13f 14f 15f 16f 17f400,000

450,000

500,000

550,000

600,000

0.8

1.0

1.2

1.4

1.6




Despite the flooding, transactions accelerated during

the second quarter, building on a 19 per cent increase

in 2012 and approaching an annualized 30,000 units,

the most since 2007. We expect sales to ease slightly

through year-end, but still end 2013 up 5.5 per cent

at 28,100 units. Calgary’s healthy economy should

produce a 2.4 per cent sales gain in 2014, then simi-

lar annual advances between 2015 and 2017. Sales

volumes will remain below peak levels throughout

our forecast.

The solidifying market has yet to attract a sustained

increase in new listings. These fell 4 per cent to

42,138 units in 2012, the second straight small annual

decline. The supply of listings hovered near this level

during the first half of 2013 and is expected to end the

year little changed. Continued gains in sales are ultim-

ately forecast to encourage potential vendors, lifting

listings 5 per cent in 2014 and modestly thereafter.

Calgary: Economic Indicators

2010 2011 2012 2013f 2014f 2015f 2016f 2017f


Total employment (000s) 705 725 752 770 792 809 824 837–1.3 3.0 3.7 2.4 2.8 2.1 1.9 1.6



Population (000s) 1,244 1,269 1,309 1,350 1,378 1,404 1,431 1,4591.8 2.0 3.2 3.1 2.1 1.9 1.9 2.0






2010 11 12f 13f 14f 15f 16f 17f0

2

4

6

40

50

60

70




2010 11 12f 13f 14f 15f 16f 17f500

1,0001,5002,0002,5003,0003,500

13151719212325




Last year’s listings drops and rising sales lifted the

sales-to-new-listings ratio to 63.2 per cent for the full

year, the highest since 2006. The ratio remained ele-

vated in the first half of 2013 and will end the year

averaging 67 per cent. This is squarely within our

estimate of a balanced market, which ranges between

48 per cent and 71 per cent for this market. We expect

the ratio to average a similar 65 per cent in 2014, then

dip very slightly.

Unsurprisingly, Calgary’s resale prices are rising

briskly. Year-over-year growth has averaged a solid

4.6 per cent in the latest four quarters, including a first-

quarter jump near 8 per cent. These increases will lift

Calgary’s average price 4.7 per cent in 2013, the largest

gain since 2007 and finally exceeding that year’s peak

value. Similar price growth is expected between 2014

and 2016, with a slight tapering in growth to 4 per

cent in 2017. These increases will slightly erode local

housing affordability. Principle and interest charges on

Calgary’s average resale home were under 16 per cent

of average household income the last two years and are

expected to remain there in 2013. But house prices will

rise faster than incomes, pushing the ratio to roughly

20 per cent by 2017. This remains decent, as affordabil-

ity is better only in Edmonton, Ottawa, and Winnipeg

among the cities in this report.

NeW HOuSING MarkeT Buoyant housing demand is also energizing the new

home market. Absorption of new units averaged

11,200 units in the four quarters to the second quar-

ter of 2013, up 25 per cent from a year earlier. This

included a surge to an annualized 15,000 units in the

second quarter, the most since 2008. This strength will

lift absorptions to a full-year total of 12,140 units in

2013, up 25 per cent from 2012. Another increase of

nearly 6 per cent in absorptions is expected for 2014,

which will nonetheless leave them trailing the peak of

13,700 units reached in 2008. Solid new-unit take-up

trimmed the number of completed and unoccupied new

units in 2012 and is forecast to further shave them in

2013. While an increase in builder inventories is on tap

for 2014, we expect persistently strong absorptions to

limit the impact of these stocks on the market. Indeed,

forecast 2014 inventories will, on average, be equiva-

lent only to 7.8 per cent of the year’s absorptions—

below the 9.7 per cent average of the 18 years of data

available to us. We expect this share to remain stable

through 2017.

Healthy new-unit take-up fuelled a big jump in hous-

ing starts to 13,186 units in 2012, more than double the

recessionary trough in 2009, but well off peak levels

of the last decade. We expect starts to ease a modest

2.7 per cent in 2013 as an 11 per cent dip in multiple

starts slightly outweighs a 7 per cent gain in single-

detached starts. For 2014, rebounding multiple starts

Calgary: Resale Housing Market Indicators

2010 2011 2012 2013f 2014f 2015f 2016f 2017f

unit sales 20,996 22,466 26,634 28,112 28,793 29,418 30,027 30,620–15.6 7.0 18.6 5.5 2.4 2.2 2.1 2.0

Dollar volume sales ($ millions) 8,372 9,050 10,982 12,138 13,009 13,929 14,928 15,831–12.8 8.1 21.3 10.5 7.2 7.1 7.2 6.1

New listings 46,276 43,782 42,138 42,219 44,484 46,181 47,411 48,48111.1 –5.4 –3.8 0.2 5.4 3.8 2.7 2.3






will fuel a 5 per cent increase in total starts despite rela-

tively unchanged single-detached construction. In the

medium term, we expect housing starts to ease slightly,

as both single-family and multiple construction dip. By

2017, we expect 11,400 units to get under way; this

would slightly outpace the 20-year average of housing

starts. While multiple starts are expected to increase

their market share, they are forecast to make up only

52 per cent of total starts between 2013 and 2017. Only

Winnipeg is forecast to have a lower share of multiple

starts during this period. This speaks to Calgary’s rela-

tively good housing affordability.

Brisk population advances underpin this solid construc-

tion outlook. Calgary’s population rose 3.2 per cent in

2012, the fastest jump since 2006, and is forecast to

rise similarly in 2013. Population growth of roughly

2 per cent annually is expected between 2014 and 2017.

Moreover, Calgary’s ratio of housing starts to absolute

population hikes was below its 25-year average in both

2011 and 2012, hinting at the possibility of pent-up

housing demand.

Calgary: New Housing Market Indicators

2010 2011 2012 2013f 2014f 2015f 2016f 2017f

Housing starts 9,233 9,190 13,186 12,834 13,444 12,578 11,654 11,37848.9 –0.5 43.5 –2.7 4.8 –6.4 –7.3 –2.4

Singles 5,835 5,083 5,970 6,382 6,280 5,988 5,714 5,55723.7 –12.9 17.4 6.9 –1.6 –4.7 –4.6 –2.7

Multiples 3,398 4,107 7,217 6,452 7,164 6,590 5,941 5,821129.0 20.9 75.7 –10.6 11.0 –8.0 –9.9 –2.0

under construction 8,535 7,569 10,279 11,577 12,721 12,821 12,634 12,556–8.8 –11.3 35.8 12.6 9.9 0.8 –1.5 –0.6

Housing completions 10,991 7,689 9,593 12,129 12,912 12,608 11,888 11,34333.4 –30.0 24.8 26.4 6.5 –2.4 –5.7 –4.6

Singles 6,364 4,824 5,371 6,021 6,323 6,089 5,834 5,65448.3 –24.2 11.3 12.1 5.0 –3.7 –4.2 –3.1

Multiples 4,627 2,865 4,222 6,108 6,589 6,519 6,055 5,68817.2 –38.1 47.4 44.7 7.9 –1.1 –7.1 –6.0

Newly completed and unabsorbed 1,030 1,055 929 865 998 955 901 8781.5 2.4 –12.0 –6.9 15.4 –4.3 –5.7 –2.5

absorptions 10,753 7,816 9,687 12,140 12,811 12,676 11,934 11,34828.7 –27.3 23.9 25.3 5.5 –1.1 –5.9 –4.9

Months’ supply 1.1 1.6 1.2 0.9 0.9 0.9 0.9 0.9

average price of a new home ($) 482,596 482,091 490,128 509,415 526,002 539,089 549,821 560,7681.7 –0.1 1.7 3.9 3.3 2.5 2.0 2.0




Edmonton’s housing markets continue to benefit from the area’s sound economy, low interest rates, and ongoing population growth, although the city’s

economic exposure to energy markets introduces risk. The resale market is balanced and is delivering steady gains in sales and the average price. We expect this balance to persist over the next few years—despite rising interest rates—thanks to the market’s favourable underpinnings. Strengthening new home demand has spurred construction, particularly of multi-family units. Starts will pull back in 2014, as multiples retrench, then stabilize.

eCONOMIC OuTlOOk

Edmonton’s economy is forecast to remain healthy.

While local GDP growth is expected to slow to 3.2 per

cent in 2014 from 4.2 per cent in 2013 and 5.9 per cent

in 2012, forecast advances remain above the national

average. Employment will rise 2.5 per cent in 2013 and

1.6 per cent in 2014, a more sustainable pace follow-

ing larger post-recession rebounds in 2011 and 2012.

This will trim the unemployment rate to 4.5 per cent

in 2013 and keep it low at 4.6 per cent in 2014. The

medium term also looks solid, with GDP advancing

roughly 3 per cent annually between 2015 and 2017 and

ongoing employment growth trimming the unemploy-

ment rate to 4.1 per cent by 2017.

HOuSING OuTlOOk

exISTING HOuSING MarkeT Edmonton’s resale market has recovered from the 2009

downturn and has hit a sustainable pace. Transactions

have remained relatively stable over the latest five quar-

ters, and new listings are also coming on the market

steadily. Moderate carrying costs and decent employ-

ment growth are giving consumers confidence to main-

tain this buying pace. The market’s currently balanced

state is projected to persist through the medium term,

fostering moderate sales and price growth.

edmonton



2010 11 12f 13f 14f 15f 16f 17f0

5

10

15




2010 11 12f 13f 14f 15f 16f 17f300,000

350,000

400,000

450,000

1.0

1.5

2.0

2.5




Annualized sales of existing homes have hovered

slightly above 18,000 units since the second quarter of

2012, apart from a brief dip during the fourth quarter of

2012. A modest easing is also expected during the final

quarter of 2013 as slightly rising mortgage rates cool

demand. Still, transactions for all of 2013 are expected

to be up 3.4 per cent after a 4 per cent increase in 2012.

The pace of gains will slow to 1.5 per cent in 2014,

but rebound to average 2.3 per cent annually between

2015 and 2017 as the local economy remains sound and

interest rates rise only moderately. We expect nearly

19,800 sales in 2017, well above the 20-year average,

but still below the 2006 peak of almost 22,000 units.

Fresh supplies of existing homes are also being deliv-

ered regularly. New listings edged higher in the first

half of 2013 following a late 2012 dip, but their annual-

ized volume near 30,250 units remained slightly below

the 31,400 units in 2012. We expect listings to dip

slightly along with sales later this year, ending 2013

at 30,100 units, down 4 per cent. For 2014, continued

sales increases will keep potential home sellers con-

fident of a good market for their units, boosting new

listings 2.7 per cent. Broadly similar gains are on tap

between 2015 and 2017 as market balance persists.

Edmonton: Economic Indicators

2010 2011 2012 2013f 2014f 2015f 2016f 2017f


Total employment (000s) 633 671 693 710 722 739 751 761–0.7 5.9 3.3 2.5 1.6 2.4 1.6 1.3



Population (000s) 1,176 1,197 1,230 1,264 1,289 1,311 1,334 1,3581.6 1.7 2.8 2.8 1.9 1.7 1.8 1.8






2010 11 12f 13f 14f 15f 16f 17f−2

0

2

4

6

45

50

55

60

65




2010 11 12f 13f 14f 15f 16f 17f1,000

1,500

2,000

2,500

3,000

14

16

18

20

22P&I payment P&I/income



This year’s slight listings drop, combined with the

sales uptick, will lift the sales-to-new-listings ratio to

60.6 per cent, the highest since a pre-recession reading

of 62 per cent in 2009, but still signalling a balanced

market. Similar movements in sales and listings during

the medium term are expected to keep the ratio near

60 per cent.

This well-performing housing market is producing

healthy price increases. Last year, Edmonton’s average

resale price rose 2.7 per cent, following a slight 2011

dip. Gains accelerated slightly during the first two quar-

ters of 2013. We expect ongoing strength in the second

half of 2013 to lift the average resale price for the full

year by 3.7 per cent, putting it at $346,580—above the

boom-era peak of $338,653 in 2007. The average price

is expected to rise an even faster 4.6 per cent in 2014,

but hikes will subsequently ease.

NeW HOuSING MarkeT New home demand has also improved against

Edmonton’s healthy economic backdrop. The take-up

of new units rose 16 per cent in 2012. Absorptions

jumped again during the first half of 2013, exceeding

12,600 units at an annual rate during the second quarter

of 2013. This was the most since 2009 and up 18 per

cent from a year earlier. We expect new unit demand

to strengthen further during the second half of 2013

and end the year up 26 per cent from the average 2012

level. But absorptions will essentially plateau at this

level, then ease in the medium term.

While absorptions have been strong, the completion of

new units has been even larger, so the number of com-

pleted and unoccupied units has edged higher. These

inventories are expected to average nearly 1,560 units

this year, but ease slightly in 2014 as absorptions out-

weigh completions. Inventories are forecast to stay

above 1,300 units through the medium term as comple-

tions generally exceed absorptions. This is slightly

high by historical standards, since such stocks averaged

roughly 1,230 units over the previous 20 years.

This solid demand environment lifted housing starts to

12,758 units in 2012, up nearly 40 per cent from the

2011 level. The jump was led by a 66 per cent increase

in starts of multi-family units, although single-detached

activity also rose. A further uptick in singles starts and

another big jump in multi-family construction propelled

total starts to an annualized rate near 16,500 units in the

first half of 2013, the highest two-quarter average on

record. Although this surge is unsustainable, starts will

finish 2013 at 14,000 units, the most since 2007.

Edmonton: Resale Housing Market Indicators

2010 2011 2012 2013f 2014f 2015f 2016f 2017f

unit sales 16,403 16,963 17,642 18,236 18,514 19,037 19,411 19,794–14.3 3.4 4.0 3.4 1.5 2.8 2.0 2.0

Dollar volume sales ($ millions) 5,393 5,523 5,898 6,320 6,713 7,201 7,639 8,064–12.0 2.4 6.8 7.2 6.2 7.3 6.1 5.6

New listings 33,130 31,721 31,408 30,109 30,930 31,734 32,334 32,9707.9 –4.3 –1.0 –4.1 2.7 2.6 1.9 2.0


average price of a resale home ($) 328,803 325,595 334,300 346,581 362,609 378,281 393,529 407,4052.6 –1.0 2.7 3.7 4.6 4.3 4.0 3.5




For next year, easing starts of single-detached homes

and a significant pullback of multi-family construc-

tion will cut total starts to near 11,700 units. Volumes

will hover near this historically elevated level between

2015 and 2017. Nonetheless, there is some evidence

that Edmonton remains slightly under-built. Even the

2012 construction uptick left the area’s ratio of housing

starts to absolute population growth below its 25-year

average; this will persist throughout the forecast per-

iod, suggesting that housing starts could surprise on

the upside.

Edmonton: New Housing Market Indicators

2010 2011 2012 2013f 2014f 2015f 2016f 2017f

Housing starts 10,004 9,226 12,758 14,006 11,734 11,401 10,973 11,15062.4 –7.8 38.3 9.8 –16.2 –2.8 –3.8 1.6

Singles 6,150 4,957 5,663 6,026 5,904 5,671 5,448 5,33262.2 –19.4 14.2 6.4 –2.0 –4.0 –3.9 –2.1

Multiples 3,854 4,269 7,095 7,979 5,830 5,731 5,525 5,81862.8 10.8 66.2 12.5 –26.9 –1.7 –3.6 5.3

under construction 8,654 8,552 10,164 12,571 11,385 11,563 11,648 11,9411.8 –1.2 18.8 23.7 –9.4 1.6 0.7 2.5

Housing completions 9,443 8,941 10,166 13,114 12,442 11,195 10,915 10,6822.3 –5.3 13.7 29.0 –5.1 –10.0 –2.5 –2.1

Singles 5,433 5,308 5,299 5,554 5,711 5,565 5,382 5,25274.9 –2.3 –0.2 4.8 2.8 –2.6 –3.3 –2.4

Multiples 4,010 3,633 4,867 7,560 6,731 5,630 5,533 5,431–34.5 –9.4 34.0 55.3 –11.0 –16.4 –1.7 –1.9

Newly completed and unabsorbed 1,394 1,550 1,476 1,559 1,511 1,326 1,348 1,415–12.4 11.1 –4.7 5.6 –3.1 –12.3 1.7 5.0

absorptions 9,603 8,835 10,222 12,903 12,769 11,206 10,884 10,5834.6 –8.0 15.7 26.2 –1.0 –12.2 –2.9 –2.8

Months’ supply 1.7 2.1 1.7 1.5 1.4 1.4 1.5 1.6

average price of a new home ($) 375,844 379,327 382,809 387,803 399,334 409,062 418,608 427,950–0.8 0.9 0.9 1.3 3.0 2.4 2.3 2.2




Vancouver’s resale housing market is in recovery following a sharp 2012 correction that cut both transactions and prices significantly. The resale

market is now balanced, and we expect this state to persist through the medium term. This will limit increases in the average resale price, keeping it below its pre-downturn level through 2015. The new home market is reasonably healthy, although builders do hold relatively high stocks of unsold units. Housing starts will dip this year and again in 2014. Economics and demographics are generally supportive: gross domestic product, employment, and the population are all projected to advance throughout the forecast. The strength of offshore housing demand remains a wild card.

eCONOMIC OuTlOOk

Vancouver’s economy is decent. GDP is on track to

rise only 2.2 per cent this year, down from 2.6 per

cent in 2012, but advance 3.1 per cent in 2014 and an

annual 2.9 per cent on average between 2015 and 2017.

Employment gains will also slow to 0.5 per cent in

2013, but accelerate to 2.5 per cent in 2014 and remain

above 1 per cent annually thereafter. This year’s mod-

est job growth will still be enough to help trim the

unemployment rate to a five-year low of 6.5 per cent,

with a dip to 6.2 per cent forecast for 2014. The popula-

tion will continue to rise between 1.5 and 1.7 per cent

annually, just below its 20-year average, throughout the

forecast period.

HOuSING OuTlOOk

exISTING HOuSING MarkeT The correction in Vancouver’s resale market appears

over, but recovery is likely to be modest. Sales are

rising gently, although a significant listings drop

appears equally responsible for recently firming prices.

The market became balanced during the spring and

appears set to remain there through the medium term.

Vancouver’s poor ownership affordability likely results

from years of offshore investment, but the market could

correct again if this money is withdrawn.

Vancouver



2010 11 12f 13f 14f 15f 16f 17f0

5

10

15

20Singles Multiples 20-year average



2010 11 12f 13f 14f 15f 16f 17f500,000550,000600,000650,000700,000750,000

1.01.52.02.53.03.5




Sales of existing homes surged in the second quarter

of 2013, finally exceeding their year-earlier level after

six quarterly drops. But volumes are expected to ease

slightly in the second half of 2013 and end the year

down roughly 2 per cent. Still, this is a much better

outcome than the 23 per cent sales decline in 2012.

We expect transactions to rise 2 per cent in 2014 and

moderately thereafter but remain well below their pre-

correction level.

The weak market cut new listings during four of the

latest five quarters; these were off 12 per cent from a

year earlier in the second quarter of 2013. We expect

listings to keep edging lower until late 2014; annual

volumes will be off nearly 15 per cent this year and

another 10 per cent in 2014. Rising sales and falling

listings boosted the sales-to-new-listings ratio to 50 per

cent in the second quarter of 2013 and will continue to

push it higher next year, although it will remain in the

lower end of Vancouver’s balanced market range.

The firming market lifted Vancouver’s average resale

price above its year-earlier level in the second quarter

of 2013, although recent quarterly changes have been

Vancouver: Economic Indicators

2010 2011 2012 2013f 2014f 2015f 2016f 2017f





Population (000s) 2,389 2,426 2,464 2,501 2,541 2,584 2,628 2,6732.3 1.6 1.5 1.5 1.6 1.7 1.7 1.7






2010 11 12f 13f 14f 15f 16f 17f−10

0

10

20

40

50

60

70




2010 11 12f 13f 14f 15f 16f 17f2,0002,5003,0003,5004,0004,5005,000

38404244464850




volatile. Many buyers appear to have taken advantage

of the slower market to snap up pricey single-detached

units; their sales rose briskly over the summer. Their

slightly higher market share has boosted the market’s

average price. Accordingly, we expect this value to end

2013 up 1 per cent, a big improvement from its 6 per

cent drop in 2012. Slightly firmer growth near 2 per

cent is on tap for 2014, and moderate annual gains

thereafter. We do not expect Vancouver’s average price

to regain its 2011 pre-downturn level until 2016.

Falling prices have slightly improved affordability.

Principle and interest charges on the average-priced

resale home are expected to end 2013 unchanged, fol-

lowing a 7.5 per cent drop last year. This year’s bite

will be 41 per cent of average household income.

Although this is down from a high of 46 per cent in

2011, it remains the highest among the cities covered

in this report. The local burden is forecast to remain

stable, at 41 per cent next year, but hit a new high of

46.7 per cent by 2017 as interest rates rise.

NeW HOuSING MarkeT The solidifying recovery in Vancouver’s resale market

is mirrored in its new home market. The absorption

of new dwellings, a proxy for new home demand, is

up significantly from 2011 and was set to average a

solid 17,200 units at an annual rate in the third quarter.

We expect absorptions to remain strong and end 2013

up 8 per cent. Another 4 per cent increase is on tap

for 2014. Despite the higher new-unit take-up, even

stronger completions have pushed the number of com-

pleted and unoccupied dwellings above 4,000 units

this year for the first time since 1998. While high by

recent standards, unsold inventories were significantly

larger in the late 1990s, exceeding 5,000 units in 1995

and 4,000 units in three of the next four years. We

expect further strong absorptions in 2014 to finally out-

weigh completions and trim these vendor backlogs to

3,700 units. These stocks are forecast to fall to roughly

2,400 units by 2017.

Continuing recovery of multi-family construction from

the 2009 downturn lifted total starts above 19,000 units

in 2012, the most since 2008. But multiples have pulled

back this year as unsold stocks have risen. This is out-

weighing a brisk upturn among the relatively small

number of single-detached homes started locally and

will cut total starts 9 per cent to just under 17,400 units.

For 2014, we expect dips in both single and multiple

construction to trim total starts another 5 per cent.

In the medium term, we see starts hovering between

17,500 and 18,000 units. Such volumes are slightly

above the 25-year average of roughly 16,200 units.

Vancouver: Resale Housing Market Indicators

2010 2011 2012 2013f 2014f 2015f 2016f 2017f

unit sales 31,143 32,936 25,445 24,853 25,389 26,616 27,161 27,529–14.1 5.8 –22.7 –2.3 2.2 4.8 2.0 1.4

Dollar volume sales ($ millions) 21,049 25,681 18,576 18,320 19,064 20,480 21,190 21,777–2.0 22.0 –27.7 –1.4 4.1 7.4 3.5 2.8

New listings 59,818 61,305 60,015 51,219 46,314 47,575 48,042 48,9979.1 2.5 –2.1 –14.7 –9.6 2.7 1.0 2.0


average price of a resale home ($) 675,874 779,730 730,063 737,162 750,861 769,468 780,184 791,06414.1 15.4 –6.4 1.0 1.9 2.5 1.4 1.4




Vancouver’s new home market does not appear hugely

overbuilt. Despite expensive houses, annual popula-

tion growth here has exceeded the national average in

23 of the past 25 years, underpinning steady residen-

tial demand. Moreover, although the ratio of housing

starts to absolute population growth slightly exceeded

its 25-year average in both 2011 and 2012, such an

overshoot was inevitable as Vancouver’s economy, and

housing market, recovered from the 2009 recession.

Easing construction this year and next will leave starts

near demographic requirements.

Vancouver: New Housing Market Indicators

2010 2011 2012 2013f 2014f 2015f 2016f 2017f

Housing starts 15,270 17,868 19,071 17,357 16,536 17,855 17,945 17,54985.2 17.0 6.7 –9.0 –4.7 8.0 0.5 –2.2

Singles 4,603 3,658 3,397 3,864 3,294 3,522 3,549 3,34562.1 –20.5 –7.1 13.8 –14.7 6.9 0.8 –5.7

Multiples 10,667 14,210 15,674 13,493 13,241 14,333 14,396 14,20497.3 33.2 10.3 –13.9 –1.9 8.2 0.4 –1.3

under construction 14,977 18,547 22,263 22,704 21,632 21,708 21,680 21,245–27.2 23.8 20.0 2.0 –4.7 0.3 –0.1 –2.0

Housing completions 16,474 12,919 16,958 18,073 17,339 17,490 18,217 18,072–1.9 –21.6 31.3 6.6 –4.1 0.9 4.2 –0.8

Singles 3,935 3,554 3,585 4,375 3,502 3,524 3,632 3,51417.9 –9.7 0.9 22.0 –19.9 0.6 3.1 –3.3

Multiples 12,539 9,365 13,373 13,698 13,837 13,966 14,585 14,558–6.8 –25.3 42.8 2.4 1.0 0.9 4.4 –0.2

Newly completed and unabsorbed 2,813 3,164 3,603 4,319 3,689 2,966 2,626 2,40228.4 12.5 13.9 19.9 –14.6 –19.6 –11.5 –8.5

absorptions 14,796 13,175 16,315 17,576 18,274 18,035 18,491 18,257–13.9 –11.0 23.8 7.7 4.0 –1.3 2.5 –1.3

Months’ supply 2.3 2.9 2.7 2.9 2.4 2.0 1.7 1.6

average price of a new home ($) 667,719 665,695 662,097 662,452 674,797 686,439 694,796 702,5493.3 –0.3 –0.5 0.1 1.9 1.7 1.2 1.1




V ictoria housing markets continue to suffer from a tepid local economy, which is limiting the city’s appeal to potential newcomers and constraining

income growth. The resale market has recently moved into a balanced position, after a lengthy spell in a buyers’ state. Sales and prices are forecast to end 2013 little changed and grow only modestly in coming years. The new home market is also soft, held back by high inventories of unsold units. Housing starts will fall sharply this year, and rebound only partially in 2014. Ownership affordability has improved as the market has softened, but remains poor compared with most other cities in this report.

eCONOMIC OuTlOOk

Sluggish GDP growth of only 0.1 per cent is forecast

for Victoria in 2013, following a weak 0.3 per cent

increase in 2012. But GDP growth should pick up

to 2.2 per cent in 2014 and remain above 2 per cent

between 2015 and 2017. Last year, employment still

managed to rise 2.2 per cent, a four-year high, but it

is forecast to drop 1.2 per cent this year and gain only

0.7 per cent next year. Still, the unemployment rate

will remain below 6 per cent throughout our forecast,

including a six-year low of 5.2 per cent in 2014. The

weak economy shaved population growth to below

1 per cent in both 2011 and 2012, and advances will

continue to be soft.

HOuSING OuTlOOk

exISTING HOuSING MarkeT A weak economy, tepid population growth, and poor

housing affordability continue to undermine Victoria’s

resale market. The market moved into a balanced pos-

ition during the spring, but remains unsettled. Despite

rising slightly during the spring, sales are on track to

fall for a fourth consecutive year in 2013. Moreover,

this year’s forecast sales volume of 5,300 units is well

below the annual average of above 7,000 units during

the previous decade. Accelerating economic growth and

rising employment will lift sales 2.6 per cent to roughly

5,400 units in 2014. Sales are forecast to increase an



2010 11 12 13f 14f 15f 16f 17f0

0.51.01.52.02.5




2010 11 12 13f 14f 15f 16f 17f250,000

300,000

350,000

400,000

450,000

2

3

4

5

6Price Months’ supply

Victoria



average of 3.2 per cent between 2015 and 2017, suffi-

cient to keep the market balanced, but we do not expect

volumes to exceed 6,000 units, even by 2017.

The soft market cut listings 5 per cent in 2012, and

large drops in the first half of 2013 point to a 17 per

cent decline for the year as a while. Another 7 per cent

drop is on tap for 2014, given the muted market recov-

ery, and then gains averaging nearly 3 per cent annually

are expected between 2015 and 2017.

The recent sales uptick, combined with the listing dip,

lifted the sales-to-new-listings ratio to nearly 52 per

cent in the second quarter of 2013. This is the highest

level since 2009 and indicates a balanced market. The

ratio is forecast to keep rising through the end of 2013,

but still average only 50 per cent for the year, since it

was low during the first quarter. The sales advances

and listings declines we expect for 2014 will push

the ratio to roughly 55 per cent, where it will hover

through 2017.

Victoria: Economic Indicators

2010 2011 2012 2013f 2014f 2015f 2016f 2017f


Total employment (000s) 183 182 186 184 185 188 191 1920.1 –0.7 2.2 –1.2 0.7 1.7 1.2 0.9


Personal income per capita ($) 38,344 39,439 40,656 41,167 42,169 43,594 44,915 46,273–0.6 2.9 3.1 1.3 2.4 3.4 3.0 3.0

Population (000s) 359 362 363 365 367 369 372 3741.4 0.7 0.4 0.4 0.6 0.6 0.7 0.7

retail sales ($ millions) 4,068 4,133 4,183 4,159 4,280 4,427 4,561 4,6873.5 1.6 1.2 –0.6 2.9 3.4 3.0 2.8





2010 11 12 13f 14f 15f 16f 17f−4−2

02

46

3540

4550

5560




2010 11 12 13f 14f 15f 16f 17f1,500

2,000

2,500

3,000

3,500

30

32

34

36

38




Persistence of a buyers’ market has softened residential

values. Victoria’s average resale price fell 1.3 per cent

in 2011 and 2.8 per cent last year, to a 2012 average of

$484,164. But a strengthening market this year should

produce a tiny price gain. Continued market firm-

ing will produce a 1.4 per cent price advance in 2014

and annual gains of 2 per cent thereafter. The recently

weak pricing has improved poor local affordability.

Principle and interest charges on Victoria’s average

resale home are forecast to drop 1 per cent in 2013,

following decreases of 3 to 4 per cent during the two

previous years. This still means such charges will con-

sume nearly 31 per cent of average household income

in 2013 and 2014, the most among any of the cities

in this report except Vancouver. Rising house prices

and increasing interest rates will lift these costs above

35 per cent by 2017, although this will still be below

their 2007 peak bite of 38 per cent.

NeW HOuSING MarkeT The new home market is also soggy. Demand for new

homes, measured by their absorptions, is on track to fall

for the third year of the past four, with all these drops

by double-digit rates. This year’s 12 per cent decline

would leave annual absorption at 1,400 units, a solid

1,000 units below their 2009 peak. Unsurprisingly,

builder inventories are swelling; the volume of unsold

new homes is forecast to average 600 units in 2013,

an 18-year high and up sharply from roughly 490

units in 2012. But the picture should start to improve

in 2014. Absorptions are forecast to rise gently, while

completions should drop. This will slightly trim builder

stocks that year. Inventories are forecast to drop further

in 2015, while remaining above their 20-year average.

We expect additional modest dips in 2016 and 2017.

Developers remain unsurprisingly cautious in light of

these high inventories. Housing starts are on track to

decline nearly 20 per cent in 2013. The drop will be led

by a 25 per cent drop in starts of multiple-family struc-

tures, which are particularly risky for builders. Single-

detached starts are expected to drop a comparatively

modest 6 per cent. This will put total starts near 1,350

units in 2013, roughly half the peak levels of the previ-

ous decade and well below the average near 1,720 units

during the past 20 years. For 2014, we expect small

increases in both single-detached and multi-family con-

struction to lift total starts to 1,465 units, with the num-

ber of starts hovering at about this level through 2017.

Multiple starts’ market share has soared. Between 2008

and 2012, these made up 61 per cent of total starts,

compared with 46 per cent a decade earlier.

Victoria’s soft population growth is coupled with evi-

dence of slight demographic oversupply. The ratio of

housing starts to absolute population changes exceeded

its historical average by a wide margin in 2012 and

is forecast to be slightly above it again this year. The

ongoing adjustment in the supply of new homes will,

however, bring this ratio back to its historical norm

in 2014.

Victoria: Resale Housing Market Indicators

2010 2011 2012 2013f 2014f 2015f 2016f 2017f

unit sales 6,168 5,773 5,460 5,264 5,403 5,704 5,848 5,940–19.5 –6.4 –5.4 –3.6 2.6 5.6 2.5 1.6

Dollar volume sales ($ millions) 3,113 2,877 2,644 2,560 2,663 2,867 2,998 3,106–14.7 –7.6 –8.1 –3.2 4.0 7.7 4.6 3.6

New listings 13,250 13,428 12,766 10,566 9,880 10,273 10,519 10,72212.8 1.3 –4.9 –17.2 –6.5 4.0 2.4 1.9


average price of a resale home ($) 504,642 498,300 484,164 486,225 492,802 502,600 512,650 522,8926.0 –1.3 –2.8 0.4 1.4 2.0 2.0 2.0




Victoria: New Housing Market Indicators

2010 2011 2012 2013f 2014f 2015f 2016f 2017f

Housing starts 2,174 1,632 1,663 1,347 1,465 1,544 1,509 1,421112.6 –24.9 1.9 –19.0 8.7 5.4 –2.2 –5.9

Singles 843 609 553 518 562 605 611 57732.3 –27.7 –9.3 –6.3 8.5 7.6 0.9 –5.5

Multiples 1,331 1,023 1,110 829 902 938 899 844245.5 –23.2 8.5 –25.3 8.9 4.0 –4.2 –6.1

under construction 1,917 1,856 1,768 1,573 1,504 1,534 1,515 1,450–8.2 –3.2 –4.7 –11.1 –4.4 2.0 –1.2 –4.3

Housing completions 1,784 1,642 1,591 1,610 1,434 1,520 1,552 1,500–27.6 –8.0 –3.1 1.2 –10.9 6.0 2.1 –3.3

Singles 851 716 570 592 576 605 622 60234.0 –15.9 –20.4 3.8 –2.7 5.1 2.9 –3.2

Multiples 933 926 1,021 1,018 858 916 930 898–49.0 –0.8 10.3 –0.3 –15.7 6.7 1.5 –3.4

Newly completed and unabsorbed 393 455 494 603 595 455 364 304–12.8 15.7 8.6 22.0 –1.2 –23.6 –19.9 –16.4

absorptions 1,811 1,551 1,601 1,409 1,584 1,641 1,628 1,551–24.6 –14.3 3.2 –12.0 12.4 3.6 –0.8 –4.7

Months’ supply 2.6 3.5 3.7 5.1 4.5 3.3 2.7 2.4

average price of a new home ($) 418,664 412,040 400,585 397,915 403,822 414,833 421,115 427,492–2.8 –1.6 –2.8 –0.7 1.5 2.7 1.5 1.5




Terminology used in the Metropolitan Housing Outlook:1

Housing starts—Refers to the beginning of construction

work on a building, usually when the concrete has been

poured for the entire footing around the structure, or at

an equivalent stage where a basement will not be part

of the structure.

Multiple starts—The sum of semi-detached starts, row

starts, and apartment and other non-single-detached

starts. These starts are distributed among five tenures:

homeownership, rental, condominium, co-op, and other.

under construction—Units started but not completed.

Completions—Refers to units where all the proposed

construction work has been performed or, in some cases,

where 90 per cent of construction work has been com-

pleted and the structure is fit for occupancy.

1 Sources: The Conference Board of Canada; Canada Mortgage and Housing Corporation; Canadian Real Estate Association; Quebec Federation of Real Estate Boards.

Newly completed and unabsorbed—Refers to inventories

of newly completed units that remain unoccupied.

absorptions—Newly completed units sold or rented.

Units pre-sold or pre-leased are not included until the

completion stage.

Months’ supply—The number of months needed to

absorb unoccupied units. It is defined as the ratio

between unoccupied units and absorbed units (average

for the last 12 months).

unit sales—The number of existing homes sold on the

Multiple Listing Service (MLS).

New listings—The number of homes listed for sale on the

MLS during the year.

Sales-to-new-listings ratio—The number of homes sold

divided by the number of homes newly listed.

Definitions and Concepts

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