Latest CMHC and CREA Data on Starts and Existing Home Sales

December 31, 2008

The Major City Housing Outlook
By major city, Toronto will see a marked decline in its new condo market next year. Ottawa will hang in relatively well, since it is the epitome of a government town and employment is relatively assured. Montréal is the major urban centre in a regional economy that is suffering along with the U.S. recession.

Edmonton has recorded a greater than 50% drop in starts in 2008 and should level out next year. Calgary’s new housing market will be held back by an energy sector that is struggling with oil prices at only one-third of their peak value. Vancouver is the major player in a provincial economy that, through its forestry sector, will pick up in activity faster than any other region in Canada, once U.S. housing starts show some signs of life.



The Canadian Press: Buyer’s Market, Prices to Decline 09 (Good Report)

December 31, 2008

VANCOUVER, B.C. —  The drop is weighed heavily by cities such as Vancouver, Canada’s most expensive housing market, where prices have also fallen almost 13 per cent since May. Across Canada, prices have dropped 10 per cent since November 2007, when the average home cost $311,485. Sales slipped 42 per cent year-over-year.

With consumer confidence at 25-year lows and the economy in recession, potential home buyers are staying on the sidelines until prospects brighten. Banks are also more reluctant to lend money to finance home purchases in markets where prices have been falling.

The puncturing of the real estate bubble in 2008 has happened before. In the early 1990s, property values fell between 10 per cent and 20 per cent in many Canadian markets. In the 1980-81 recession, interest rates of more than 20 per cent in Canada squeezed inflation out of the economy but also caused thousands of homeowners to lose their houses because they couldn’t afford their new payments when they refinanced their mortgages.

In both cases, recessions were followed by a runup in house prices when economic recovery came.
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Province: Canada’s office market still in good shape

December 31, 2008

Office space in Canada’s major cities is still relatively tight, putting the market in good shape to weather the recession, though Calgary and Toronto face more challenging times than others, according to a report yesterday by the Canadian arm of a global real-estate firm.

“Canada’s office market is well positioned going into the projected recession, thanks to its strong performance during recent years that drove vacancy rates down to historically low levels and continued to drive rents higher through 2008,” said Colliers International in Canada in its report on office space in six major Canadian cities — Montreal, Ottawa, Toronto, Calgary, Edmonton and Vancouver.

“These strong market indicators, coupled with a limited supply of new office space in most markets, will help the office market to weather the current economic slowdown,” the report said.

Without any significant new projects planned in Vancouver’s downtown area until at least 2012, that market is in a good position to mitigate challenging economic conditions, the report said, noting that another positive factor is the 2010 Olympic Games, which has created demand for office space.

However, because of the long lead time on new real-estate developments this means that several million square feet of new office space will be coming on the market in difficult times in Toronto and Calgary, posing additional challenges in those markets, cautioned Ian MacCulloch, vice-president, research with Colliers International in Canada.


CBC News: Toronto, Calgary office markets to sag in ’09: Colliers

December 31, 2008

Office vacancy rates in Toronto and Calgary will jump in 2009 as new buildings open during an economic downturn, according to a study released by Colliers International.

The commercial real estate service company said that while many of Canada’s business rental markets should fare well, property owners in the country’s biggest city and its economic juggernaut both will face financial woes in the coming months.

Calgary and Toronto will feel the fallout of the global economic slowdown as these two markets share the same short-term oversupply issues, with several million square feet of new office space completed in 2009 and 2010,” Colliers said in its most recent study of the rental markets in six major Canadian cities.

In these two urban areas, new office towers built when economic conditions were buoyant and business vacancy rates were falling are set to open just as these two crucial factors are forecast to change direction.

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Slowdown hits Whistler ahead of Olympics

December 31, 2008

WHISTLER, British Columbia: Despite being a year from hosting the 2010 Winter Olympics, Canada’s Whistler ski resort is experiencing the same drop in business that has hurt ski resorts elsewhere.

Part of it is the lack of snow so far, but officials and businesses in Whistler are also pointing to the global economic downturn. Most cities experience a boom ahead of the Olympics, but Whistler is showing it isn’t immune to the global recession.

Spending is down by about 10 percent for the season compared to last year, Tourism Whistler’s Casey Vanden Heuvel said. He added that the resort had prepared for a slowdown.

But Douglas said the lack of snow this season has more to do with the slowdown.  However, the local real estate market has also cooled with prices falling eight percent. Real estate agent Steve Legge blames the global slowdown for the decline, but said Whistler’s decline isn’t as precipitous as those in other markets.

The winding, slow and sometimes dangerous Sea to Sky Highway has undergone a nearly $500 million upgrade to ensure it can handle all the traffic expected between Vancouver and Whistler during the Olympics. The planned upgrade of the highway was a major factor in the International Olympic Committee’s decision to award the Games to Vancouver and Whistler.


US Commercial: This could be beginning of end of financial crisis

December 31, 2008

After a brief increase stimulated by tax rebate checks, consumer spending fell in June and July and was flat in August. And that was before the dramatic corporate mergers, bailouts, buyouts and bankruptcies that started in September. Since then, credit has been further curtailed, prompting consumer spending to slow significantly.

Cushman & Wakefield is confident that credit availability will improve in the months ahead.

Already, many cities are experiencing higher vacancy rates and downward pressure on rents due to the combination of declining employment and tight credit. As employment falls, these trends are likely to continue. Although commercial lease rates increased 43 percent nationwide in the 2005-2008 period, I expect to see rents decline in most commercial markets over the next two or more years.

In the last real estate downturn (2001-2004), national average Class-A rents fell 19 percent. Another decline in the 15 percent to 25 percent range is quite possible. Nationally, vacancy rates are likely to increase substantially from 2007’s year-end rate of 9.7 percent. In fact, I wouldn’t be surprised to see it top 15 percent before the current cycle ends.

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Las Vagas Review – Not Getting Worse, Staying Bad

December 31, 2008

Once the darling of the nation’s housing boom, Las Vegas is feeling unloved for the holidays.

Median home prices have dropped 30 percent in the past year, foreclosures have doubled and the inventory of homes for sale in the valley is hovering around 23,000, slightly below its all-time high.

Foreclosures now account for 60 percent to 70 percent of monthly home sales in Las Vegas and their median price is $166,000, which is below replacement cost in most cases, housing analyst Larry Murphy of Las Vegas-based SalesTraq said.


New-home construction has fallen to its lowest level in 30 years. Fewer than 6,000 new residential building permits will be pulled this year, less than half of last year’s total. With an estimated 15,000 real estate-owned properties held by banks, the picture isn’t going to get any prettier in the coming year, Murphy said.

Most analysts agree it’s going to get worse before it gets better.

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