A flurry of figures released this week paint an interesting picture of the Canadian housing market, particularly in Toronto.
Statistics Canada released figures on Wednesday which indicate that HomeOwnership is alive and well in Canada with 68% of residents making it onto the property ladder. Interestingly, the province of Newfoundland and Labrador leads the pack, with British Columbia trailing in the rear. Ontario sits at 71%. Stats Can suggests that this trend is largely fueled by a drop in interest rates from a high of 18% in the early 1980s to approximately 5% today.
And while it may seem like new construction is an unprecedented force in our cities, the number of respondents who reported living in homes 5 years old or newer (8.5%), is actually a drop from the previous highs of the 1980s (16.5%), when baby boomers struck out on their own. Nevertheless, the current pace has resulted in a shortage of construction workers available for new condominium projects in Toronto, negatively affecting Toronto area housing starts in August.
A Royal Bank report also released on Wednesday reveals another side of the land of HomeOwnership: home prices have risen significantly in Canada - perhaps up and out of the reach of average Canadians? Bank of Canada Governor David Dodge doesn't seem to think so, suggesting that income and employment figures have also been rising. Scotia Bank is not as sanguine; a report released Thursday indicates that prices have reached worrying heights across Canada, particularly Western Canada, though increases in the Toronto area have been more modest. All in all, economists have mixed views on when the housing market might 'correct' itself - that is, when home prices might fall.
In the meantime, demand continues largely unabated. Royal Bank confirms the role that 40-year mortgages have played in fueling demand for housing, but notes that the Canadian mortgage market is more conservative than that of our free-wheeling American neighbours: "Only about 2 percent of Canada's C$767 billion mortgage credit outstanding is in nonconventional mortgages, compared with 10 percent in the U.S. market, according to DBRS rating agency." Certainly food for thought as US subprime woes continue to destabilize American housing and global financial markets this week.
And finally, Toronto mayor David Miller introduces his particular brand of tax fairness: while property taxes are not to be raised one little bit, individuals and families buying homes and registering vehicles are to pay for the services that keep all of Toronto humming.