TREB Housing Outlook 2010

2010 Member Forums

Housing Market Outlook

Jason MercerSenior Manager, Market Analysis

jmercer@trebnet.com

Part 1: Resale Market Outlook

Part 2: Resale Market Breakdown

Part 3: New Home Market

Part4: Rental Market

Part 5: TREB Member Resources

Immigration!Drives!Population!Growth

GTA!Most!Diverse!Metropolitan!Area!in!the!World

0% 10% 20% 30% 40% 50%

Washington!DC

Montreal

New!York!City

Melbourne

Sydney

Los!Angeles

Miami

Vancouver

Toronto

Source:!Adapted!from!Statistics!Canada,! 2006!Census!Analysis! Series

Share!of!Foreign"Born!Populationin!Major!Metropolitan!Areas

Sustained!Population!Growth!is!Projected

0

2,000,000

4,000,000

6,000,000

8,000,000

10,000,000

Source:!Statistics! Canada,!Ontario!Ministry!of!Finance!Projection

Toronto!CMA!PopulationHistoric!and!Projected

Historic!Toronto!CMA!Population

Projected!Toronto!CMA!Publication

MLS® Sales!Will!Follow!Population!Trend!– Long!Term

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

Source:!Statistics! Canada,!Ontario!Ministry!of!Finance!Projection

GTA!MLS®!SalesHistoric!and!Projected

Actual!Existing!Home!Sales

Historic!Trend

Long"Term!Sales!Projection

Affordability!Improved!Markedly!in!2009,!but…

25%

30%

35%

40%

45%

50%

55%

Source:!Toronto!Real!Estate!Board!Data!and!Calculation;! Statistics!Canada

TREB!Affordability!Indicator!Share!of!Average!Household! Income!Used!for!Mortgage!Principal! and! Interest,!Property!Taxes!and!Utilities!on!the!Average!Priced!GTA!Resale!Home

…the!Cost!of!Home!Ownership!will!Rise!in!2010

25%

30%

35%

40%

45%

50%

55%

Source:!Toronto!Real!Estate!Board!Data!and!Calculation;! Statistics!Canada

TREB!Affordability!Indicator!Share!of!Average!Household! Income!Used!for!Mortgage!Principal! and! Interest,!Property!Taxes!and!Utilities!on!the!Average!Priced!GTA!Resale!Home

MLS® Sales!Remaining!Strong!but!Edging!Lower

20%30%40%50%60%70%80%90%100%

50,000

70,000

90,000

110,000

130,000

150,000

170,000

190,000

Sales"to"New

!Listings!RatioSales/Listings!Trend

!(Ann

ualized

)

Source:!Toronto!Real!Estate!Board

TREB!MLS®!Annualized!Sales/Listings!Trend:!Historic!&!Forecast

MLS!Sales

More!Home!Owners!Will!List!

20%30%40%50%60%70%80%90%100%

50,000

70,000

90,000

110,000

130,000

150,000

170,000

190,000

Sales"to"New

!Listings!RatioSales/Listings!Trend

!(Ann

ualized

)

Source:!Toronto!Real!Estate!Board

TREB!MLS®!Annualized!Sales/Listings!Trend:!Historic!&!Forecast

MLS!Sales

MLS!New!Listings

Market!Conditions!Not!as!Tight!in!2010

20%30%40%50%60%70%80%90%100%

50,000

70,000

90,000

110,000

130,000

150,000

170,000

190,000

Sales"to"New

!Listings!RatioSales/Listings!Trend

!(Ann

ualized

)

Source:!Toronto!Real!Estate!Board

TREB!MLS®!Annualized!Sales/Listings!Trend:!Historic!&!Forecast

MLS!SalesMLS!New!ListingsSales"to"New!Listings!Ratio

Market!Tightness!Correlates!With!Price!Growth

"10%

"5%

0%

5%

10%

15%

20%

20%

30%

40%

50%

60%

70%

80% Annual!A

verage!Price!ChangeSales"to"New

!Listings!Ratio

Source:!Toronto!Real!Estate!Board

Sales"to"New"Listings!Ratio!vs.!Average!Annual!Price!Change

Sales"to"New!Listings!Ratio!(Left!Axis)

Annual!Average!Price!Change!(Right!Axis)

After!Very!Strong!Price!Growth!in!2009…

200,000

250,000

300,000

350,000

400,000

450,000

Source:!Toronto!Real!Estate!Board

TREB!MLS®!Average!Price!Trend:!Historic!&!Forecast

…the!Average!Price!Trend!Will!Flatten

200,000

250,000

300,000

350,000

400,000

450,000

Source:!Toronto!Real!Estate!Board

TREB!MLS®!Average!Price!Trend:!Historic!&!Forecast

Components!of!Affordability

Average Price +7%

Economic!Recovery!is!Underway!in!Canada

"1.2%

"0.8%

"0.4%

0.0%

0.4%

0.8%

Source:!Statistics!Canada

Canadian!Real!GDP,!MonthlyMonth"Over"Month!Per!Cent!Change

GDP!Growth!Will!Continue!in!2010

"8%

"6%

"4%

"2%

0%

2%

4%

6%

Source:!Statistics!Canada;!Bank!of!Canada!Baseline!Forecast

Canadian!Real!GDP,!QuarterlyAnnualized!Quarter"Over"Quarter!Per!Cent!Change

Components!of!GDP!Growth

"8%

"6%

"4%

"2%

0%

2%

4%

6%

Source:!Statistics!Canada;!Bank!of!Canada!Baseline!Forecast

Canadian!Real!GDP,!QuarterlyAnnualized!Quarter"Over"Quarter!Per!Cent!Change

FACT:!More!than!60!per!cent!of!Canadian!GDP!is!accounted!for!by!personal!expenditure

Consumer!Price!Growth!Moving!Toward!BoC!Target

"2%

"1%

0%

1%

2%

3%

4%

Source:!Statistics!Canada

Canadian!Consumer!Price!Index!(CPI)Year"Over"Year!Per!Cent!Change

CPI!Annual!Per!Cent!Change

Core!CPI!(Bank!of!Canada)!Annual!Per!Cent!Change

Bank!of!Canada!Will!Increase!the!Overnight!Rate

0%

1%

2%

3%

4%

5%

6%

Source:!Bank!of!Canada

Bank!of!CanadaTarget!for!the!Overnight!Lending!Rate

Slope!of!Yield!Curve!Changing

0.00%

0.50%

1.00%

1.50%

2.00%

2.50%

3.00%

3.50%

4.00%

Bill/Bon

d!Yield

Source:!Bank!of!Canada;! TREB! Forward!Rate!Calculations

Canadian!Government!of!Canada!Bill/Bond!Yield!CurveSpot!and!Derived!Forward!Rates

Spot

December!2010!Forward!Curve

Variable!and!Fixed!Mortgage!Rates!Will!Increase!Disproportionately

0123456789

Jan"00

Jul"0

0

Jan"01

Jul"0

1

Jan"02

Jul"0

2

Jan"03

Jul"0

3

Jan"04

Jul"0

4

Jan"05

Jul"0

5

Jan"06

Jul"0

6

Jan"07

Jul"0

7

Jan"08

Jul"0

8

Jan"09

Jul"0

9

Jan"10

Jul"1

0

Per!C

ent

Source:!Bank!of!Canada;! TREB! Forecast

Prime!Rate!and!5"Year!Fixed!Mortgage!RateHistoric!and!2010!Forecast

Average!5"Year!Fixed!Mortgage!RatePrime!Rate

Rates!Will!Still!Be!Very,!Very!Low!Historically

2%

7%

12%

17%

22%

Source:!Statistics! Canada;! TREB! Forecast

Average!5"Year!Fixed!Mortgage!Rate:!Historic!&!Forecast

Components!of!Affordability

Average Price +7%

Components!of!Affordability

Average Price +7%

Mortgage Rates

Up

GTA!Employment!Will!Start!to!Improve!in!2010

"2%

"1%

0%

1%

2%

3%

4%

2,650

2,700

2,750

2,800

2,850

2,900

2,950 Employm

ent!Annual!Per!cent!Change

Actual!Employmen

t!(,0

00s)

Source:!Statistics! Canada,! TREB! Forecast

Toronto!CMA!EmploymentActual!and!Annual!Per!Cent!Change

Annual!Per!Cent!Change!(Right!Scale)

Actual!Employment! (Left!Scale)

GTA!Unemployment!Will!Be!Above!Average!in!2010

5%

6%

7%

8%

9%

10%

11%

Source:!Statistics!Canada;! TREB! Forecast

Toronto!CMA!Unemployment!Rate(Seasonally!Adjusted!Trend)

Earnings!Trend!Will!Remain!Flat

$740

$760

$780

$800

$820

$840

$860

$880

Source:!Statistics! Canada;! TREB! Forecast

Toronto!CMA!Average!Weekly!Earnings

Household!Income!In!Line!with!2010

$50,000

$60,000

$70,000

$80,000

$90,000

$100,000

Source:!Statistics!Canada;! TREB! Estimates!and!Forecast

Toronto!CMA!Average!Household!Income

Components!of!Affordability

Average Price +7%

Mortgage Rates

Up

Components!of!Affordability

Average Price +7%

Hhld Income

Flat

Mortgage Rates

Up

Components!of!Affordability

Average Price +7%

Hhld Income

Flat

Mortgage Rates

Up

Taxes&

UtilitiesUp

The!Average!Home!Will!Be!Affordable!in!2010

25%

30%

35%

40%

45%

50%

55%

Source:!Toronto!Real!Estate!Board!Data!and!Calculation;! Statistics!Canada

TREB!Affordability!Indicator!Share!of!Average!Household! Income!Used!for!Mortgage!Principal! and! Interest,!Property!Taxes!and!Utilities!on!the!Average!Priced!GTA!Resale!Home

The!Average!Home!Will!Be!Affordable!in!2010

25%

30%

35%

40%

45%

50%

55%

Source:!Toronto!Real!Estate!Board!Data!and!Calculation;! Statistics!Canada

TREB!Affordability!Indicator!Share!of!Average!Household! Income!Used!for!Mortgage!Principal! and! Interest,!Property!Taxes!and!Utilities!on!the!Average!Priced!GTA!Resale!Home

Part 1: Resale Market Outlook

Part 2: Resale Market Breakdown

Part 3: New Home Market

Part4: Rental Market

Part 5: TREB Member Resources

Share!of!Condominium!Apartment!Sales

19%

20%

21%

22%

23%

24%

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009Source:!TREB

High"Rise!Share!of!Total!MLS®!Sales

Resale!Condo!Apartment!Affordability

Resale!Condo!Apartment!Affordability

Resale!Condo!Apartment!Affordability

Resale!Single"Detached!Affordability

Resale!Single"Detached!Affordability

Resale!Single"Detached!Affordability

Part 1: Resale Market Outlook

Part 2: Resale Market Breakdown

Part 3: New Home Market

Part4: Rental Market

Part 5: TREB Member Resources

New!Home!Sales!Follow!Resale!Market

"100%

"50%

0%

50%

100%

150%

200%

Jan"07

Mar"07

May"07

Jul"0

7

Sep"07

Nov"07

Jan"08

Mar"08

May"08

Jul"0

8

Sep"08

Nov"08

Jan"09

Mar"09

May"09

Jul"0

9

Sep"09

Nov"09

Source:!Toronto!Real!Estate!Board;!RealNet!Canada! Inc.

GTA!MLS®!and!New!Home!Sales:!Annual!Growth/Decline

MLS!Sales!(Annual!Per!cent!Change)

New!Home!Sales!(Annual!Per!Cent!Change)

Check!Out!RealNet!Portal

Builders!Are!Cooperating!With!REALTORS®

Builders!Are!Cooperating!With!REALTORS®

Builders!Are!Cooperating!With!REALTORS®

New!Low"Rise!Available!For!Sale

North:(2,805)!39%

East:2,370!(33%)

West:1,982!(27%)

Central:75!(1%)

Remaining!New!Low"Rise!InventoryTotal:!7,232!(Dec.31/09)

New!High"Rise!Available!For!Sale

Central:!6,571!(46%)

West:!4,440!(31%)

East:1,581!(11%)

North:1,752!(12%)

Remaining!New!High"Rise!InventoryTotal:!14,344!(Dec.31/09)

Condominium!Apartment!Construction!Trends

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009Source:!CMHC

Condominium!Apartment!Completions!and!Units!Under!Construction

Completions

Average!Number!of!Units!Under!Construction

Part 1: Resale Market Outlook

Part 2: Resale Market Breakdown

Part 3: New Home Market

Part4: Rental Market

Part 5: TREB Member Resources

Historic!Condominium!Apartment!Vacancies

0.0%

0.2%

0.4%

0.6%

0.8%

1.0%

1.2%

1.4%

1.6%

Source:!CMHC

GTA!Rental!Condominium!Apartment!Vacancy!Rate

Purpose"Built!Vs.!Condo!Apartment!Vacancies

0%

1%

2%

3%

4%

5%

Halton Peel Toronto York DurhamSource:!CMHC

Rental!Vacancy!Rates:Purpose"Built!vs.!Condominium!Apartments

Condo!Apartment!Vacancy!Rate

Purpose"Built!Rental!Vacancy!Rate

Part 1: Resale Market Outlook

Part 2: Resale Market Breakdown

Part 3: New Home Market

Part4: Rental Market

Part 5: TREB Member Resources

TREB!Housing!Market!Charts

TREB!Housing!Market!Charts

TREB!Housing!Market!Charts

TREB!Housing!Market!Charts

TREB!Economic!Commentaries

TREB!Economic!Commentaries

TREB!Economic!Commentaries

Thank You!

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