Experience Profile - Hardlines · 2017-11-20 · 2000s 1990s 1980s 1970s 1960s 1950s Before 1950...

Independent Real Estate Intelligence

Experience Profile

Conference Presentation – Economic and Housing Market Outlook

Research, Valuation & Advisory Cost Consulting & Project Management Realty Tax Consulting Geomatics Economic Advisory

33 Yonge Street, Suite 500, Toronto, ON M5E 1G4 Canada T 416.641.9500 F 416.641.9501

altusgroup.com

22nd Annual Hardlines Retail Conference “Bricks and Clicks”

Extreme pent up demand and a supply shortage in Toronto responsible for price escalation; expect the same ahead

Very strong economic condition and a surge in job growth will lift housing starts in almost all regions

Conference address by Peter Norman, VP & Chief Economist, Altus Group

This was Mr. Norman’s 8th address to the Hardlines Conference over the past 15 years

Synopsis

Housing prices were rising rapidly in Canada and

Ontario and particularly in Toronto until mid-year, and

the turbulence in markets over the past few months

following, in part, government policy announcements, is

interpreted as a housing market adjustment. But tight

underlying conditions and pent up demand still exist, so

expect more price pressure ahead.

Canadian prices have risen over the past two decades

generally in line with most other comparable countries,

and have been more stable. The largest point of price

escalation comes from the Greater Toronto Area where

an extreme shortage of new housing (especially new

single-family housing) relative to a very robust pace of

job growth and accelerating rates of in-migration that is

fuelling housing demand. These conditions are similar to

Vancouver. This pace of price growth is not ideal from an

economic development sustainability perspective, but it

is being fed by fundamentals and will very likely

continue to be an issue through 2018.

Supply and demand imbalances, especially in large cities,

are partly being driven by as shift in supply toward

apartment units and away from the more widely

demanded single family. It’s also likely municipalities are

not planning for and providing adequate units for the

growth in “non-household” occupancy demand.

Housing demand remains steady or even strengthening

in most regions fuelled by job growth, immigration, and

migration trends. While housing affordability in some

markets may be a challenge for ownership (as might the

very modest rise in interest rates recently), this same

factor also fuelling rental demand, which, in turn, is

fuelling a renaissance of purpose built rental supply right

across the country.

On net we expect housing starts will at least hold up to

the numbers seen last year nationally, weaker regions

improve and stronger regions stay relatively buoyant.

In terms of renovation activity, 2018 should see a modest

boost in investment activity, as still generally low interest

rates, improved home equity, and population aging

effects all point to higher demand for renovation projects.

11/15/2017

1

Tracking the Trends Prospects for New Housing and Renovation Spending

Economic Intelligence

November 14th, 2017Hardlines Retail Conference, Niagara Falls

Peter Norman, VP & Chief Economist, Economic Consulting

2altusgroup.com @altus_group @EconomistNorman

Our Company Structure at a Glance

ARGUSAdvisoryData SolutionsVoyanta

Cost Consulting & Project ManagementResearch, Valuation & AdvisoryProperty TaxGeomatics

11/15/2017

2


Today’s Agenda

• Housing Market Adjustments – Real or Fake

News?

• The Economy: Benefits of Convergence

• Consumers Continue to be Stronger Than

We Think

• What Lies Ahead for New Construction?

Housing Market “Adjustments” Real or Fake News

11/15/2017

3


Recent Price Change, Existing Homes

*Composite of eleven major markets

Source: Altus Group, MLS® HPI

20-month price history (Jan. 2016-Aug 2017)September Y/Y price

Y/Y % Change in Price, Monthly

10.8 10.9 0.6 7.7 12.0 6.2 5.1 5.5 17.3 8.8-10.0

-5.0

0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

Canada Vancouver Calgary Regina Toronto Ottawa Montreal Moncton Guelph Oakville


Toronto Inventory Monitor

-20

-10

0

10

20

30

40

0

1

2

3

4

5

6

7

8

9

Jan-

06

Jan-

07

Jan-

08

Jan-

09

Jan-

10

Jan-

11

Jan-

12

Jan-

13

Jan-

14

Jan-

15

Jan-

16

Jan-

17

Jan-

18

Months Inventory

Annual % Change in Price

Month’s of Resale Inventory Annual % Change

Source: Altus Economics, Altus Data Solutions, TREB

Remaining Inventory (units)

11/15/2017

4


Toronto House Prices

Vancouver Lower Mainland (resale single-family)

Toronto(resale single-family)

Toronto Single-Family

Toronto ApartmentToronto (new high rise)

Toronto (new low rise)


Housing Policy and Housing Market Performance

-10%

-5%

0%

5%

10%

15%

20%

25%

25.0

30.0

35.0

40.0

45.0

50.0

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Recession

Total Home Sales, Canada

Home Price Index

Existing Home Sales (000s)

* CREA HPI® 11-market aggregate composite index Source: Altus Group Economic Consulting based on data from CREA

Y/Y Change in Benchmark Price* (%)

30 Year Am

Int Only

35 Yr Am

40 Yr Am

High Ratio definition 25% to 20%

Max 35 YrAms

Min 5% DPmt

Tighter Standards

20% down on Invest. Properties Max 30 Yr

Am

HELOC

Max 25 YrAm

Price Cap

GDS max 39%

Min 10% Downpmt above

$500k

OFSI – raise K req. for banks

Tighter federal Standards

Ontario Fair

Housing Plan

BC Foreign Inv’r Tax

OFSIB-20

11/15/2017

5


Canadian House Prices: International Context and Future Expectations

Source: Altus Economics, Economist.com, CREA: homepriceindex.com, Thompson Reuters

2.7%4.4%

5.4%

7.4%

14.8%

-5%

0%

5%

10%

15%

20%

2012

2013

2014

2015

2016

2017

2018

2019

Based on Reuters Canada Housing Market Poll**

Max

Median Response

Min

Year-over-year % Change in Price (CREA MLS HPI)*

* Dec over Dec** Survey of 16 housing forecasters in August 2017

Economy, Consumers, Demographics: Key Real Estate and Housing Drivers

11/15/2017

6


Economic Outlook

* Annual average

Source: Historical - Statistics Canada and Bank of Canada Forecasts – Altus Group Economic Consulting


Growth Improving in Oil-Levered Provinces

-4.0

-3.0

-2.0

-1.0

0.0

1.0

2.0

3.0

4.0

5.0

2014 2015 2016 2017(f) 2018(f)

Oil producing* Ontario and B.C. Rest of Canada**

(e) – estimated, (f) – forecast*Newfoundland and Labrador, Saskatchewan and Alberta**New Brunswick, Nova Scotia, Quebec, Manitoba

Source: Historical - Statistics Canada Forecasts – Altus Group

11/15/2017

7


Job Growth Excelling Almost Everywhere

203

111

144133

325

235

0.0

50.0

100.0

150.0

200.0

250.0

300.0

350.0

10-y

r A

vg

2014

2015

2016

2017

2018

Year-over-year change in jobs (000s)

85

13 10

170

54

-12

-100.0

-50.0

0.0

50.0

100.0

150.0

200.0

BC AB

MS

ON

QU

ATL

Sep. 2017 Y/Y change in jobs (000s)

2.7%

3.9%

1.9%

2.6%2.1%

3.7%

-1.3%-2.0%

-1.0%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

Van Cal

Edm

Win

Tor

Mtr

Hlx

By Major City

Sep. 2017 Y/Y Change in jobs (%)

Canada By Province

Altus Forecast


Net Migration Trends Strongly Boosting Ontario

Source: Statistics Canada

* Annual

11/15/2017

8


Population Growth, Ontario

-100

-50

0

50

100

150

200

250

300

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

Natural Change International Migration Internal Migration Total Change


000s Persons, 12 Months Ending December


Government Bond and Mortgage Rates

0.0

2.0

4.0

6.0

8.0

10.0

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

5-Year Government Bond

5-Year Mortgage

Percent

4.7

2 5.2

3

5.6

2

5.5

4

4.1

7

4.1

0

3.8

6

3.3

0

3.5

1

3.3

1

2.8

3

2.7

7 3.3

1

0.0

2.0

4.0

6.0

8.0

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

Aug

3.

GO

C 1

0-yr

Bon

d (B

loom

berg

)

Percent

Source: Altus Group based on data from Bank of Canada/ Major Financial Institutions/ Bloomberg

11/15/2017

9


Fool Me Once …… Fool Me Twice….

Source: Altus Group based on Scott Cameron as published in Macleans Magazine 12.13.16


Exchange Rate Outlook

0.6

0.7

0.8

0.9

1.0

1.1

Jan-

91

Jan-

94

Jan-

97

Jan-

00

Jan-

03

Jan-

06

Jan-

09

Jan-

12

Jan-

15

Jan-

18

USD per CADYear-End 2018

11/15/2017

10


Census Surprise

285 270

193

398

310

232

321373

335

0

100

200

300

400

500

1971-1976

1976-1981

1981-1986

1986-1991

1991-1996

1996-2001

2001-2006

2006-2011

2011-2016

Population

Average Annual Growth, Canada, 000s

226 223

142

205

160149

175 177

150

0

50

100

150

200

250

1971-1976

1976-1981

1981-1986

1986-1991

1991-1996

1996-2001

2001-2006

2006-2011

2011-2016

Households

Average Annual Growth, Canada, 000s

v. 395k Total Annual

Population Growth

v. 185k Total AnnualHousing

Completions

Source: Altus Group based on Census of Canada, Statscan, CMHC

altusgroup.com

Housing Supply Dynamics are Complicated

Housing Completions 925,000

Rise in Vacancy (40,000)

Conversion to Non-Household Occupancy (100,000 to 115,000)

Housing Demolitions (70,000 to 85,000)

Secondary Suites and Other 55,000

Total Household Growth 750,000

Source: Altus Group analysis and estimates based on Statistics Canada and CMHC data22

11/15/2017

11


Household Growth by Tenure and Birth Cohort, 2016-2026

340

700

-160-60 -30 -10

-300

490

100

1,020820

330

60

-100

-1,040

1,200

440

1,720

660

270

30

-110

-1,340

1,690

-1,500

-1,000

-500

0

500

1,000

1,500

2,000

2000s 1990s 1980s 1970s 1960s 1950s Before 1950 Total

Total Renter Household Growth

Total Owner Household Growth

Total Household Growth

Net New Units (000s)

altusgroup.com

300.0

320.0

340.0

360.0

380.0

400.0

420.0

440.0

460.0

480.0

500.0

1946

1948

1950

1952

1954

1956

1958

1960

1962

1964

1966

1968

1970

1972

1974

1976

1978

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

2010

2012

2014

2016

Births (000s)


Births, Canada, 1946-2014

Note: Truncated Axis!

1950s 2000s1990s1980s1970s1960s 2010s

11/15/2017

12

altusgroup.com

300

310

320

330

340

350

360

370

380

390

400

1995

1997

1999

2001

2003

2005

2007

2009

2011

2013

2015

Annual Births, Canada

-10,000

0

10,000

20,000

30,000

40,000

50,000

60,000

2006

-201

1

2011

-201

6

2016

-202

1

2021

-202

6

2026

-203

1

Apartment Row Single-Family

Annual Net New Homes Required for Families with Children

What Lays Ahead?

26altusgroup.com

Home Ownership Rate Fell in 2016 Census

0.0

10.0

20.0

30.0

40.0

50.0

60.0

70.0

80.0

90.0

20-24 25-29 30-34 35-39 40-44 45-49 50-54 55-59 60-64 65-69 70-74 75+

1991 1996 2001 2006 2011 2016

Age of Household Head

Source: Altus Group, Census

Home Ownership Rates by Age (%)

59.0

60.0

61.0

62.0

63.0

64.0

65.0

66.0

67.0

68.0

69.0

70.0

Canada

11/15/2017

13

altusgroup.com

Private Purpose-built Rental Apartment Starts & Rental Apartment Starts

14.9 14.2 13.0

14.9 15.7

17.7 19.0

20.3

30.4 30.0

16.9

19.0

0

5

10

15

20

25

30

35

200

7

200

8

200

9

201

0

201

1

201

2

201

3

201

4

201

5

201

6

201

6

201

7Jan-July

Vancouver Calgary Edmonton Saskatoon Regina Winnipeg Toronto Ottawa Montreal Halifax

Medium Term ** Short Term ***

*Centres 50,000+ ** 2016 over 2014 *** First half 2017 Y./Y

Source: Altus Group Economic Consulting based on data from CMHC

Private Purpose-built Rental Apartment Starts, Canada*, (000s units)

Recent Momentum in Rental Apartment Starts by CMA

altusgroup.com

Apartment Starts by Intended Market Segment, Canada*

15 14 13 15 16 18 19 2030 30

18 22

4561

2840

55

7051 50

57 51

3537

0.0

10.0

20.0

30.0

40.0

50.0

0

25

50

75

100

125

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2016 2017

Purpose-built Rental Condominium Purpose-built Rental as % of Total ApartmentUnits (000s)

%

Source: Altus Group Economic Consulting based on CMHC data

Jan - Aug

*Centres 50,000+

11/15/2017

14

altusgroup.com

Apartment Starts by Intended Market Segment, Canada*

1.74.8 3.5 2.6 1.5 2.7 2.3 1.8 2.9

7.03.4

5.4

9.3

11.3

9.48.3

18.1

20.9

13.6 13.1 11.07.0

4.14.2

0

10

20

30

40

50

60

0

5

10

15

20

25

201

0-1

4

201

5-1

6

YT

D 2

01

6

YT

D 2

01

7

201

0-1

4

201

5-1

6

YT

D 2

01

6

YT

D 2

01

7

201

0-1

4

201

5-1

6

YT

D 2

01

6

YT

D 2

01

7

Purpose-built Rental Condominium Purpose-built Rental as % of Total ApartmentUnits (000s)%

Source: Altus Group Economic Consulting based on CMHC data

Vancouver Toronto Montreal

altusgroup.com

Montreal New Home Sales

2,1411,878

2,9253,245

1,565943

1,668 1,607 1,620

0

1,000

2,000

3,000

4,000

2013* 2014* 2015 2016 2013* 2014* 2015 2016 2017

1,277

2,682

1,493 1,532 1,731 1,925

1,057 929 756 612908

1,429

0

1,000

2,000

3,000

4,000

2011 2012 2013 2014 2015 2016 2012 2013 2014 2015 2016 2017

* Excludes low rise Source: Altus Group Montreal New Condominium Market Overview

Hig

h a

nd

Mid

-ris

e A

par

tmen

t

(Do

wn

tow

n)

All

Un

its

(Res

t o

f

CM

A)

1st Half

11/15/2017

15

altusgroup.com

New Home Sales, Toronto

13,80711,996

18,02419,575

18,350

9,096

5,998

9,76711,915 11,644

6,160

0

6,000

12,000

18,000

24,000

2012 2013 2014 2015 2016 2012 2013 2014 2015 2016 2017

Source: Altus Data Solutions

17,628 15,748

21,627 22,165

29,684

10,3107,326

10,918 11,08613,765

22,729

0

10,000

20,000

30,000

40,000

2012 2013 2014 2015 2016 2012 2013 2014 2015 2016 2017

Ap

artm

ent

(“H

igh

-ris

e”)

Sin

gle

-fam

ily

(“Lo

w-r

ise”

)

1st Half


GTA Land Sales Continue to Break Records

$4.9

$3.0

$0.8

$0.4

$1.9

$1.0

$7.6

$4.5

$0

$2

$4

$6

$8

$10

199

5

199

6

199

7

199

8

199

9

200

0

200

1

200

2

200

3

200

4

200

5

200

6

200

7

200

8

200

9

201

0

201

1

201

2

201

3

201

4

201

5

201

6

H1

2016

H1

2017ICI land

Residential lots

Residential land


11/15/2017

16


Foreign Investor Buyers Picked Up Again


0.0%

1.2%

2.4%

3.6%

4.8%

6.0%

$0

$300

$600

$900

$1,200

$1,500

2012 2013 2014 2015 2016 H12016

H12017

Volume ($millions)

% of All Investment

Foreign Buyer Property Investment, GTA

4%12%

38%10%

8%

9%

19%

% of Foreign Investment by Asset Class, 2014-H1 2017

ICI Land

Residential Land

Office

Retail

Industrial

Apartment

Hotel

altusgroup.com

New Apartment Sales, Vancouver

3,379 3,1623,906

5,336

7,538

1,9251,320

1,958 2,279

4,197

2,766

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

2012 2013 2014 2015 2016 2012 2013 2014 2015 2016 2017


5,559 5,097

7,1668,186

12,051

3,5532,356

3,415 3,291

6,000

3,322

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

2012 2013 2014 2015 2016 2012 2013 2014 2015 2016 2017

Hig

h-r

ise

Ap

artm

ent

All

oth

er

Ap

artm

ents

1st Half

11/15/2017

17

altusgroup.com

New Multifamily Home Sales, Calgary

1,361

2,008

1,276990 894 1,056

771446 520 422

0

500

1,000

1,500

2,000

2,500

2012 2013 2014 2015 2016 2013 2014 2015 2016 2017

1,652 1,5111,216

849

309

902607

337 175 238

0

500

1,000

1,500

2,000

2,500

2012 2013 2014 2015 2016 2013 2014 2015 2016 2017

1st Half

1,173

1,8962,332

1,3281,117 1,037

1,375

647 588841

0500

1,0001,5002,0002,500

2012 2013 2014 2015 2016 2013 2014 2015 2016 2017

Low

-ris

e A

par

tmen

tTo

wn

ho

use


Hig

h-r

ise

Ap

artm

ent

altusgroup.com

Residential Investment Still Lagging

% of GDP Chronically Weak Investment in New Residential Since Recession is Troubling

Typically, Look For About 3.2% of GDP as a Sustainable Rate of Investment

Source: Altus Economics based on Statistics Canada

2.4

2.6

2.8

3.0

3.2

3.4

3.6

3.8

200

2

200

3

200

4

200

5

200

6

200

7

200

8

200

9

201

0

201

1

201

2

201

3

201

4

201

5

201

6

201

7

11/15/2017

18


Buoyant Housing Starts Forecast Ahead12

9.0

157.

0

157.

0

127.

0

101.

0 125.

0

114.

0

118.

9

109.

4

110.

4

100.

9

107.

6

118.

1

114.

9

121.

4

41.0

71.0

72.0

84.0

48.0

65.0

80.0

95.9

78.5

79.0

94.6

90.3

93.0

93.1

87.9

0

50

100

150

200

Avg

. 199

5-20

05

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

f

2018

f

2019

f

Single-Family Apartment

000s

Uni

ts

170

227

228

211

149

190

194

215

188

189 196

198 21

1

208

206

201

192

0

50

100

150

200

250

300

Avg

. 199

5-20

05

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

f

2018

f

2019

f

2020

f

2021

f

000s Units

50%

60%

70%

80%SF % of Total

Source: Altus Economics based on CMHC

Historical Forecast


Forecast by Province

0.0

10.0

20.0

30.0

40.0

50.0

2009

2010

2011

2012

2013

2014

2015

2016

2017

(f)

2018

(f)

2019

(f)

2009

2010

2011

2012

2013

2014

2015

2016

2017

(f)

2018

(f)

2019

(f)

2009

2010

2011

2012

2013

2014

2015

2016

2017

(f)

2018

(f)

2019

(f)


000s Units

BC Alberta Man/Sask

Source: CMHC, Altus Group Economic Consulting

11/15/2017

19


Forecast by Province

0.0

10.0

20.0

30.0

40.0

50.0

60.0

70.0

80.0

90.0

2009

2010

2011

2012

2013

2014

2015

2016

2017

(f)

2018

(f)

2019

(f)

2009

2010

2011

2012

2013

2014

2015

2016

2017

(f)

2018

(f)

2019

(f)

2009

2010

2011

2012

2013

2014

2015

2016

2017

(f)

2018

(f)

2019

(f)


000s Units

Ontario Quebec Atlantic

Source: CMHC, Altus Group Economic Consulting


Residential Renovations – Our Love Affair Continues

Source: Altus Group Economic Consulting based on Statscan Data

71.3

0

10

20

30

40

50

60

70

80

199

21

993

199

41

995

199

61

997

199

81

999

200

02

001

200

22

003

200

42

005

200

62

007

200

82

009

201

02

011

201

22

013

201

42

015

201

62

017

201

82

019

Residential Renovation Spending, Canada

Billions 2016$

11/15/2017

20

Altus Group Limited | altusgroup.com41

Data Solutions – We’ve Got You Covered.


Want to Stay Ahead of the Competition?

Altus Group Housing Provides the Little Numbers Behind the Big Picture

11/15/2017

21

Thank you.

Peter NormanVice President & Chief Economist

[email protected]

@economistnorman@altus_group

416-698-4653

National Economic Advisory

33 Yonge St., Toronto, Suite 500

2020 - 4th Street SW, Calgary, Suite 310

1040 West Georgia Street, Vancouver, Suite 630

Date post:	06-Aug-2020
Category:	Documents
Upload:	others
View:	1 times
Download:	0 times

Experience Profile - Hardlines · 2017-11-20 · 2000s 1990s 1980s 1970s 1960s 1950s Before 1950...

Documents