Posted: April 21, 2010 at 8:05 am | Tags: Alexander MP, canada, CMHC, Co-operative, Diane Finley, Economic, economy, government, Housing Market, kitchener, Minister Responsible, MP Stephen Woodworth, MP Woodworth, Ontario, Stephen Woodworth
Posted by Moishe Alexander
MP Stephen Woodworth today announced that a housing co-operative located in Kitchener will receive almost $206,000 through Canada’s Economic Action Plan, as part of the Government of Canada’s social housing renovation and retrofit investments.
“Through Canada’s Economic Action Plan, our government is taking action to help ensure our economic recovery and create the conditions for long-term growth,” said MP Woodworth. “Funding renovation and retrofit projects, like this one, will not only improve the quality of life of its residents by keeping their homes safe and affordable, but it will also help stimulate the local economy and create local jobs.”
The announcement was made at the Bread & Roses Co-operative Homes by Stephen Woodworth, Member of Parliament for Kitchener Centre, on behalf of the Honourable Diane Finley, Minister of Human Resources and Skills Development and Minister Responsible for Canada Mortgage and Housing Corporation (CMHC).
The Government of Canada, through Canada’s Economic Action Plan, announced $1 billion for social housing renovation and retrofit. Of the $1 billion, $850 million is being delivered by provinces and territories on a cost-matched basis for existing federally assisted social housing projects which they administer on behalf of the partnership. The remaining $150 million is being delivered for existing federally assisted off-reserve housing which it directly administers. Eligible repairs include general improvements, energy efficiency upgrades or conversions, and modifications in support of persons with disabilities.
Bread and Roses Cooperative Homes will receive a contribution of almost $206,000 from the Government of Canada to complete various interior and exterior upgrades including heating, ventilation and door replacement.
“We congratulate and thank the federal government, MP Stephen Woodworth and CMHC for making a sound investment to help ensure that this affordable community is preserved as a legacy for the long-term benefit of its residents, “ said Ken Elliott, President of the Co-operative Housing Federation of Canada. “Today’s announcement is an excellent example of stimulus funding that works towards preserving jobs, assisting the local economy, and protecting valuable affordable housing assets for Canadians.”
“The CEAP Renovation and Retrofit funding has had a great impact on Bread and Roses Co-operative Homes” said Sahver Kuzucuoglu, Vice-President, Board of Directors, Bread and Roses Co-operative Homes. “We were very pleased to access this funding through CMHC to carry out necessary repairs which will ensure our cooperative’s longevity”.
Posted: February 24, 2009 at 7:35 pm | Tags: age, Alexander, apartment, canada, canadian funding corp, canadian funding corporation, cent, CMA, demand, employment, growth, guelph, home, household, Housing Market, JOB, kitchener, level, moishe alexander, Ontario, Rate, rent, Rental Market, sector, US, Vacancy, year, youth
February 24, 2009 — Moishe Alexander’s review on how the current world economy and Canadian economic turndown is affecting the Kitchener and Guelph Rental Market
Moishe Alexander’s Review
Highlights
Moishe Alexander says The average vacancy rate in the Kitchener CMA moved lower to 1.8 per cent. In the Guelph CMA, the average vacancy rate moved higher to 2.3 per cent. A number of factors which include a younger population, immigration, employment and less movement of renters to homeownership contributed to the change in rental demand. Rental housing demand will increase slightly in 2009. The vacancy rate will edge lower to 1.6 per cent in the Kitchener CMA and to two per cent in the Guelph CMA.
Minimal Changes in Rental Demand in Kitchener and Guelph
Vacancy Rate Lower in Kitchener/Higher in Guelph
Moishe Alexander says Demand for rental apartments in the Kitchener and Guelph CMAs moved in opposite directions. A small increase in demand contributed to a decline in the average vacancy rate for privately initiated rental apartments in the Kitchener CMA to 1.8 per cent from 2.7 per cent in 2007. In the Guelph CMA, demand eased and the vacancy rate increased to 2.3 per cent from 1.9 per cent last year. Although higher, the vacancy rate this year was still well below the levels seen in the five-year period between 2002 and 2006 when the vacancy rate averaged close to 3.3 per cent.
A number of factors, both demographic and economic, contributed to the changes in rental demand. In both Kitchener and Guelph, these factors include a younger population, strong immigration, youth employment, little employment growth and less movement of renters to homeownership.
Lower First-time Buyer Demand
Moishe Alexander says Many renter households took advantage of low mortgage rates throughout this decade and the longer amortization periods after 2006 and as a result, pent-up demand is largely satisfied and fewer renter households are planning to buy a home. House prices continue to rise and are discouraging some renter households from moving into homeownership. Some renter households may delay their home purchase as a consequence and remain in their rental accommodation for a longer period.
This lower first-time buyer demand is more pronounced in the Kitchener CMA as the difference between owning a home and renting an apartment is higher. In the Guelph CMA, steady job creation coupled with low borrowing costs enabled a lower but steady movement of first-time buyers into home ownership.
Population Characteristics Affect Demand
Moishe Alexander says A young population, a high level of immigration and declining household size contributed to the increased rental demand this year in the Kitchener CMA. These factors also kept demand in the Guelph CMA at a relatively strong level.
According to the 2006 Census, the Kitchener and Guelph CMAs have young populations compared to the Ontario average. Younger households are more likely to rent than older age groups. A large student population and a strong high-tech sector have contributed to the high youth presence and strong demand for rental housing. As well, many young people who gain full-time employment will move out of their parental home into rental accommodation. In the Kitchener CMA, while overall employment for those aged 15-24 has fallen, more than 1,200 full-time jobs in this age group have been created in the CMA in the last year encouraging youth household formation. In the Guelph CMA, while overall employment for those aged 15-24 has declined marginally, full-time jobs in this age group have fallen, limiting the formation of youth rental households.
In the 12 months ending June 30, 2007, more than 3,000 immigrants made their new home in the Kitchener CMA. Due to a high employment rate and relatively more affordable home prices and rents compared to the GTA, immigrants find the Kitchener CMA an attractive place to live. A large proportion of persons new to Canada will initially rent as it takes time to gain employment, establish a credit rating and save for a down payment.
Moishe Alexander says Smaller household size added to the demand for rental housing. According to the 2006 Census, one-person, lone-parent and couples without children households increased at a higher rate than couples with children households. A higher percentage of these smaller-sized households rent. The oldest baby-boomers are now in their sixties and many are looking to downsize. Renting is a viable option.
Resilient Local Economies
Moishe Alexander says The local area economies have remained resilient despite uncertainty in global financial markets and a weak US economy.
Although job growth has slowed in the Kitchener CMA, employment has remained at a high level. Job uncertainty and less confidence in the economy have delayed some renter households’ decision to purchase a home. However, for the first three quarters of 2008, employment in the Kitchener CMA grew by 2.4 per cent compared to the same period in 2007. All of the job gains were in full-time employment. While the goods-producing sector continues to be a drag on the local economy, the services sector continues to add jobs.
In the Guelph CMA, employment has remained at a high level with job growth of more than six per cent in the first ten months of this year compared to the same period in 2007. With strong job growth in the 25-44 and 45-64 age groups, some renter households in these age groups were able to purchase a home.
Condominium Apartment Completions
Moishe Alexander says Condominiums are a more affordable type of housing compared to single detached homes and are a viable alternative to renting for first-time buyers. More than 80 condominium apartments were completed in the Guelph CMA this year. First-time buyers and empty-nesters, who may otherwise have rented an apartment, are attracted to this type of ownership housing. In the Kitchener CMA, only 50 condominium apartments were completed in the same period.
Rent Growth Below Inflation
Moishe Alexander says The percentage change of average rent from fixed sample is 0.9 per cent for a two-bedroom apartment in the Kitchener CMA and 1.6 per cent in the Guelph CMA. This measure is strictly based on structures that were common to the survey sample for both the 2007 and 2008 surveys. For the Kitchener CMA, this increase was well below the Residential Tenancies Act (RTA) guideline for 2007 of 1.4 per cent. As well, this increase was below the inflation rate. In the Guelph CMA this increase was slightly above the RTA guideline for 2007, but below the inflation rate.
Rental Supply Declines In Kitchener
Moishe Alexander says At 174, the number of purpose-built rental apartments completed in the Kitchener CMA since June 2007 was somewhat lower than usual. Over the last five years, the number of new rental apartments completed has averaged about 650 annually. Despite this additional supply, the private rental apartment universe decreased by 184 units because some apartments were converted to other uses. With more than 800 rental apartments under construction currently, completions next year will be more in line with the longerterm average.
No purpose-built rental apartments were completed in the Guelph CMA since June 2007. As a result, the private rental apartment universe remained unchanged this year.
Low Vacancy Rates for One and Two-Bedroom Apartments
Moishe Alexander says The vacancy rate for all bedroom types of rental apartments decreased in the Kitchener CMA The majority of private rental apartments are one and two-bedroom units. These two unit types accounted for 93 per cent of the total apartment rental universe and have the lowest vacancy rate at 1.8 per cent. The one-bedroom apartment vacancy rate edged lower to 1.8 per cent from 2.2 per cent a year ago, while the two-bedroom apartment vacancy rate declined more significantly from 2.9 per cent to 1.8 per continent
Moishe Alexander says A more than 100 unit decline in the supply of two-bedroom apartments combined with increased rental demand pushed the vacancy rate down to this level, the lowest since 2001. The widening gap between the average principal and interest payment for a resale home and the average two-bedroom rent has impacted some renters’ interest in moving into homeownership. With the more diverse financing options available after 2006, many first-time buyers were able to enter the resale market earlier than would normally have been expected, resulting in lower demand for homeownership from current renters.
Affordability Indicator
Moishe Alexander says According to CMHC’s rental affordablility indicator, affordablility in Kitchener’s rental market increased this year. The rental affordability indicator in Kitchener stands at 108 for 2008, up from 101 in 2007. The 2007 indicator was the lowest level of affordability Kitchener has seen in the thirteen years for which the indicator is available. The rental affordability indicator is not available for Guelph due to a lack of required data for that centre.
Rental Market Outlook: 2009
Moishe Alexander says Rental housing demand will increase slightly in 2009. The vacancy rate will edge lower to 1.6 per cent in the Kitchener CMA and to two per cent in the Guelph CMA. In the Kitchener CMA, demand for rental accommodation in 2009 will be boosted by immigration, rental household growth and little movement into homeownership. Migrants will continue to be attracted to the CMA due to its relatively stronger economy compared to other Ontario CMAs.
On balance, population will increase by 2,500 next year due to international migration. Immigrants represent more than 50 per cent of the net population increase due to migration. They tend to rent when they first move to Canada. Due to the expected lower job growth and uncertain economic conditions, more renter households will delay their plans to move into homeownership. Although the gap between average rent and average mortgage carrying cost will narrow somewhat in 2009, the number of rental households will continue to grow. In the Kitchener CMA, with few new condominium apartments being built, younger, downsizing and aging households have little alternative but to rent. On the supply side, with more than 800 rental apartments under construction in the Kitchener CMA, rental completions will be more in line with the historical average in 2009. This increased supply will partially offset the higher demand. In the Guelph CMA, although 177 rental apartments are currently under construction, no new rental apartments will be completed by next October. With higher demand and no new supply, the rental market will tighten. On the other hand, with more new condominium apartment completions next year, some renter households will be able to move to ownership housing in this more affordable type of housing. As well, due to less than optimistic job prospects, some youth will remain in their parental home longer.
Moishe Alexander says With the vacancy rate in both CMAs expected to be below its 20-year average in 2009, there will be slightly more room to raise rents. In both CMAs, rent increases in 2009 will be in line with the Residential Tenancies Act guideline for occupied units of 1.8 per cent.
You can find the entire report in PDF format through the following link:
http://www.cmhc-schl.gc.ca/odpub/esub/64399/64399_2008_A01.pdf
Posted: February 24, 2009 at 5:52 pm | Tags: activity, Alexander, Cambridge, canadian funding corp, canadian funding corporation, cent, CMA, CMAs, construction, demand, growth, guelph, home, Housing Market, kitchener, market, Moishe, moishe alexander, Ontario, price, Resale, review
February 24, 2009 — Moishe Alexander’s review on how the current world economy and Canadian economic turndown is affecting Kitchener and Guelph Housing Market
Moishe Alexander’s Review:
New Home Market
Mixed Picture for Starts
Moishe Alexander says Housing starts in the Kitchener and Guelph CMAs will move in opposite directions in 2009. Housing starts in the Kitchener CMA will increase to 2,650 in 2009, up four per cent from the expected 2,560 starts in 2008. Guelph CMA housing starts will slip by three per cent to 890 in 2009 from the forecasted 920 starts in 2008. Rising house prices, a well supplied resale home market and uncertain economic conditions will combine to keep housing starts lower than levels seen in the first half of the decade. In the medium term, starts will be moving gradually higher in line with demographic requirements. Within the next ten years, the type and location of housing starts will be impacted by provincial and local efforts to use land more intensively.
Moishe Alexander says Single-detached starts in the Kitchener CMA will increase by eight per cent, while Guelph CMA detached starts will slip by two per cent. Detached homes remain the product of choice for many homebuyers. Wealthier move-up buyers will support demand for detached homes. After two years of moderate detached starts due to a lot shortage, increased construction activity in Cambridge will boost Kitchener CMA detached starts above the 2008 level.
Moishe Alexander says Single-detached homes are becoming more expensive. But, as demand for detached homes has eased in the past few years, price growth has slowed. The average price of a newly-completed single-detached home in the Kitchener CMA will reach $360,000 in 2009, up slightly more than one per cent, while Guelph prices will increase by less than two per cent. Looking ahead, higher lot prices and development charges will push up new home prices. The overall Kitchener CMA has a good supply of undeveloped land, but the ability of builders to acquire lots for single-detached homes in certain areas may impact prices moving forward.
Moishe Alexander says Semi-detached homes, townhomes and apartments are a more affordable option to higher priced singledetached homes. In both the Kitchener and Guelph CMAs, construction of these home types has been trending higher. With the emphasis on intensification, they will represent a significant share of future new construction – close to 50 per cent in both CMAs.
Moishe Alexander says Townhome construction activity will remain strong as row houses are a more affordable option for homebuyers who desire groundoriented living. Apartment construction will remain buoyant in both CMAs. In the Kitchener CMA, most developers plan to rent the new apartments due to the strong demand from the student population and younger workers for this type of housing. In the Guelph CMA, the focus of builders has shifted to condominium apartments as retirees, empty-nesters and firsttime buyers are attracted to the condominium apartment lifestyle.
Resale Home Market:
Sales Slowdown
Moishe Alexander says The resale home market in the Kitchener-Guelph area will continue to moderate in 2009. Sales of existing homes through the Kitchener-Waterloo Real Estate Board will reach 6,100 units in 2009, down six per cent from the expected 6,500 sales in 2008. Sales through the Guelph and District Real Estate Board will decline by seven per cent to 2,700 units. Rising house prices, uncertainty about the economy and the satiation of demand will dampen existing home sales in 2009. With the more diverse financing options available after 2006, many first-time buyers were able to enter the resale market earlier than would normally have been expected resulting in less first time buyer activity moving forward. The price advantage of resale over new, more selection, and continued population growth will combine to keep existing home sales at strong levels, but below record 2007 levels. Move-up buyer activity will support existing home sales through 2009. A well supplied existing home market will influence many homebuyers to inbegin the search for their new home in the resale market.
The supply of resale homes will move higher again in 2009. New listings are expected to reach near record levels which have not been seen since 1990. Rising home equity due to rising prices continue to encourage some homeowners to list their homes for sale so that they can move into a home more suited to their needs.
Moishe Alexander says The average price of a resale home through the KW Board will increase by two per cent in 2009 to reach $277,000. Guelph prices will reach $276,000, an increase of two per cent. With the number of new listings growing, and demand moderating, the sales-to-new listings ratio (SNLR), a leading indicator of price growth and a measure of market state, will move lower. The lower SNLR will be indicative of more balanced market conditions. As a result, existing home prices will grow at a slower pace.
Economic Trends:
Little Employment Growth
Moishe Alexander says Economic growth in the Kitchener-Guelph area will be flat in 2009. Employment in the Kitchener CMA will increase by less than one per cent in 2009, while the Guelph CMA will see employment declining by less than one per cent. The unemployment rate is expected to inbegin crease in 2009, but will continue to trend below the Ontario average. While the expanding service sector has been supporting employment growth in the past, lower consumer spending through 2009 will slow growth in this sector. Several employment sectors from a diverse economy continue to add jobs. Over the next year, job growth will occur in the high tech sector, as well as in the education, trade and construction sectors in the Kitchener CMA. These sectors are creating higher-paying jobs. On the other hand the manufacturing sector, and its largest subsector, the automotive industry, will continue to face challenges.
Moishe Alexander says Overall weekly earnings are forecast to increase by two per cent in both the Kitchener and Guelph CMAs in 2009. Despite the loss of higherpaying manufacturing jobs, many of the growth sectors have jobs which pay above-average wages. Employment growth in sectors such as education and high tech will continue to support housing demand.
Continued Population Growth
Moishe Alexander says Population growth in the Kitchener CMA has slowed due to an outflow of migrants to Western Canada. Net migration into the Kitchener CMA is expected to reach 2,500 persons in 2009. A diverse economy, high employment rate and more affordable house prices are attractive to migrants. The Kitchener CMA cannot be characterized as a bedroom community. According to data from the 2006 Census, only 14 per cent of employed persons who lived in the Kitchener CMA worked outside the CMA. Companies in the Guelph CMA, Peel Region and Toronto employ the most Kitchener workers. On the other hand, companies in the Kitchener CMA employ more than 34,000 non Kitchener CMA residents. More than 5,000 more people each day travel to the Kitchener CMA for work than leave the CMA. Similar Guelph CMA data shows that more than 25 per cent of employed Guelph residents work outside the CMA. Current gasoline prices will not induce most area commuters to move closer to their work.
Mortgage Rates
Moishe Alexander says Mortgage rates are expected to be relatively stable throughout the last quarter of this year, remaining within 25-50 basis points of their current levels. Posted mortgage rates will decrease slightly in the first half of 2009 as the cost of credit to financial institutions eases. Rising bond yields, however, will nudge mortgage rates marginally higher in the latter half 2009. For the last quarter of 2008 and in 2009, the one year posted mortgage rate will be in the 6.00-6.75 per cent range, while three and five year posted mortgage rates are forecast to be in the 6.50-7.25 per cent range.
You can find the entire report in PDF format through the following link:
http://www.cmhc-schl.gc.ca/odpub/esub/64323/64323_2008_B02.pdf