Daily Market Update

CMHC condo survey reveals levels of investment properties… Cottage market suffering from lack of supply… Analysts await existing sales data… And Canadian households’ net worth increases.

 

CMHC survey reveals rate of condos are investments

Canada Mortgage and Housing Corporation (CMHC) has released the results of its 2013 Condominium Owners Survey showing that 82.9% of condos are owned by their occupiers with 17.1% owned by investors. “As information on condominium investment is rather limited at this time, CMHC has gathered new data on a segment of domestic condominium investment activity in Toronto and Vancouver. While the results are not representative of other markets or all types of investors, the survey helps to shed some light on the profile and purchasing motivations of a segment of condominium investors in Toronto and Vancouver,” said Bob Dugan, Chief Economist at CMHC’s Market Analysis Centre. The data shows that among the 17 per cent of owners that are investors, around half rent out their last-purchased properties. More than 42,000 households in the Vancouver and Toronto area were surveyed. The survey did not cover Canadian households that own condominium units in Toronto or Vancouver but do not reside in these CMAs. Foreign investors and corporate investors are also not included but Bob Dugan said: “CMHC continues to explore opportunities to enhance the availability of information on foreign and corporate investment activities in the housing market.”

 

Cottage prices rise as supply falls

A lack of availability in the cottage market is pushing prices higher. As more Canadians have chosen to buy at home rather than head to US markets it has put further pressure on the sector, which has seen building rates decline for a decade. In a research note, Bank of Montreal economist Sal Guatieri says that the number of permits issued for cottages in the last year is just 335, around 10 per cent of the number being built in the 70s. Although sales have been lower since the turn of the century, so has construction and as the demand has picked up since the recession and the cold winter, supply is now an issue. Read the full story.

 

Existing home sales data due this week

The Canadian Real Estate Association will be releasing its existing home sales data for July this Friday. The big question for analysts is whether the surge in activity following the cold start, has continued into the second half of the year. Many local real estate boards have already published results, with Edmonton and Toronto seeing the biggest increases in sales although there is some movement downwards on prices in some markets. There also seems to be a shift towards condos rather than family homes, as prices have made them more affordable despite the rise in demand. Experts seem to have mixed opinions on the market currently, with some believing the heat is starting to level off, while others suggest we have more increases to come in the remainder of this year. Read the full story.

 

Canadians see increase in net worth

We hear a lot about the rising levels of debt in Canadian households and while that is a concern, when you look at the average ‘household balance sheet’ things look rosier. Last year net assets saw an increase of 8 per cent, with the average Canadian household worth $442,130 and debts at $122,705. Although we know that property values have helped push asset figures higher, there has also been an increase in investments. Read the full story.

 

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