By The A-Team | Apr 19, 2019 | Buyers
As the curtain closes on the first quarter of the year, we're starting to see trends begin to form regarding the activities of the housing market. The national housing market has taken a hit recently, and a lot of fingers have been pointed in different directions. A few factors are responsible for this negative trend:
Canadian Borrowing Rates Are Climbing, But Growth Is SlowingAfter the borrowing rate hit double digits, the market has become rather lukewarm. People – lenders and consumers alike – have grown cold feet about residential real estate, and growth in the sector has stuttered badly.
Canadian lenders have started to stall on rising rates. Bank of Canada (BoC) numbers show the effective borrowing rate held for five consecutive weeks by February 15. The stall, rarely seen prior to 2016, also came with deceleration of annual growth.
How the Canadian Housing Market Kicked Off the YearThis overall poor showing in the housing starts is bound to have an effect on the residential real estate sector, especially when the country fared better during a more spirited housing start.
The annual pace of housing starts – new housing construction projects – slowed, according to Canada Mortgage and Housing Corporation (CMHC), but dropped less than what was expected for the beginning of the year.
The annual pace of urban starts slowed by 2.1% to 190,912 units as single-detached urban starts slumped by 10.4% to 44,559 units. The annual pace of multiple-unit projects such as condos, apartments and townhouses, however, rose by 0.7% to 146,353 units.
Despite the negatives, house ownership in the country remains quite high when compared to the situation in many First World countries. According to livable.com:
Homeownership rates in Canada’s most expensive markets still among the highest for global citiesApparently, Canada’s house ownership challenges are much lower compared to what’s obtainable elsewhere. While we've seen better days, the current situation is far better than other Western countries.
RBC notes that 43.1 percent of households under the age of 35 in Canada own a home, compared to 34.5 percent south of the border. Even in Canada’s most expensive major market, Vancouver, the ownership rate among the under-35 set is 35.9 percent, while it’s as high as 50.6 percent in Calgary.
“Even Toronto and Vancouver — the least affordable markets in the country — rank near the top of global cities on homeownership and have home ownership rates that are about double cities like Paris and Berlin,” according to RBC.