Canada’s Quiet Economic Strength

CMHC forecasts continued new housing rebound

The Canadian Press

OTTAWA — The national housing agency is reporting that housing starts have started to recover and it expects the recovery to continue.

Canada Mortgage and Housing Corp. predicts starts will reach 141,900 this year and increase to 164,900 in 2010.

The CMHC’s fourth-quarter market outlook forecasts housing markets will continue to strengthen over the next year as economic conditions improve.

It says demand for existing homes has rebounded and both new and existing home markets are characterized by lower inventory levels.

However, the national housing agency says the strong pace of sales in the second and third quarters partly reflects delayed activity and is not likely to be sustained.

The CMHC says it expects the level of sales to move back closer in line with anticipated economic conditions.

It predicts existing home sales will reach 441,300 units in 2009 and increase to 445,150 units in 2010, while the average price is expected to be $312,950 in 2009 and $324,500 in 2010.

October 30, 2009

Q. What can the Bank of Canada do about the value of the dollar?

A. Usually the Bank can use monetary policy to impact the value of the dollar. But given that the bank rate is already as low as it can go; the Bank cannot use monetary policy to weaken the dollar. But the Bank can intervene directly in the FX market by buying American dollars and selling Canadian dollars. History suggests that such intervention can be useful—at least to a degree. So far, the Bank is not talking about it but if the dollar regains upward momentum in the near future, such an action from the Bank is a real possibility.

Q. Will rising real estate prices force the Bank of Canada to raise interest rates?

A. It is very clear that the recent increase in house prices in Canada reflects a dramatic improvement in affordability. But is it too much of a good thing? The problem with any kind of a bubble is that, in most cases, you know that it’s happening, but you are not sure what do about it. Some argue that the Bank of Canada should raise interest rates in order to make housing less affordable. While this policy makes sense in a booming economy, it does not make sense in an economy that is still trying to find its poles.

The Bank will not raise rates just to deal with the housing market while sacrificing the rest of the economy and risk an even stronger Canadian dollar. So what to do? So far, the Bank is doing nothing, with the hope that we are simply stealing activity from next year. If that is the case then there is no urgency to do anything at this point. But if in the coming six months, house prices continue to rise at current rates and the economy is still in an early recovery mode, the market will start speculating about some direct intervention by the Bank/government in the housing market by altering current regulations regarding insurance and securitization.

Q  How sustainable is the economic growth in the US in the last quarter

A. The 3.5% third quarter GDP growth in the US is clearly unsustainable. Most of the increase was temporary in nature and reflects government spending and a short-lived improvement in the auto sector. My focus at this point is on US business investment which is still falling. That is important given that integral element in formatting the market’s current view is that the Fed will start hiking rates in the second half of 2010 and by that time, business capital spending in the US will be rising by no less than 5% on an annual basis. Given that business spending has been a huge contributor to the US GDP recession, the timing of its rebound will be critical to the timing of a turn to monetary tightening.

The conventional wisdom was that the US recession in the past year was consumer-led, as opposed to the investment-led recession of 2001. But the reality is that the current slump in capital spending is, infact, steeper than the IT meltdown. Back then, the burst of the bubble meant a 12% drop in real capital spending over a two-year period. Currently, as of the third quarter of 2009, and only a year removed from its peak, capital spending is already down by no less than 20%, qualifying it as the steepest slump in business spending in the post-war era. Even as a share of GDP, capital spending is already down to the

Another misconception is that the current decline in US business spending is largely due to the weak state of the American commercial real estate market. But the reality is that, so far, the largest slump in spending was in the machinery and equipment category, which is now down by 21% since the beginning of the recession, compared to a 15% decline in the non-residential real estate component.

Note that the descent in non-residential investment began 6-8 months after spending on machinery and equipment started its nosedive. This suggests that the adjustment in non-residential real estate investment is still in its early stages. Add to it the high correlation of this business investment category with employment growth and the fact that the industrial vacancy rate is now at a dazzling 12%—a record high and a full five percentage points above levels that in the past signaled a recovery, and it becomes painfully clear that any hopes of a turnaround in non-residential real estate investment by mid-2010 are nothing more than wishful thinking.

So, the continuing decline in business investment next year will leave the market’s overall US economic growth expectations light on fuel. While talk in some quarters of a double-dip recession looks to be too gloomy given the huge stimulus still flowing next year, the long wait for a capital spending turn will keep overnight rates at highly stimulative levels for longer than the market now thinks.

Q. To what extent monetary and fiscal policies are coordinated?

A. Officially the Bank of Canada is independent, but it does not mean that it does not take fiscal policy into account while making decisions regarding interest rates. And given the fact that by 2011, fiscal policy will act as a negative for the economy as government will stop spending and start looking for ways to reduce the deficit, it is highly possible that this situation will work to postpone the first hiking move by the Bank, or at the minimum, limits the magnitude of the tightening cycle.

Canada’s economy still sputtering

October 30, 2009

OTTAWA —Canada’s economy unexpectedly went into reverse again in August, adding new uncertainty about the strength and sustainability of the recovery.

The country’s real gross domestic product slipped 0.1 per cent in August — the first outright decline in three months — in a broad set-back led by oil-and-gas extraction, mining, utilities, mining and manufacturing.

The markets reacted strongly to today’s news, led by the Canadian dollar’s one-cent dive to the mid-92-cent level.

Economists said the negative reading, after a flat July that was not revised upwards as some had hoped, will make it very difficult for the economy to match the Bank of Canada’s newest forecast announced last week that growth would average two per cent in the third quarter.

With only the September data remaining, it would take a massive bounce to meet the expectation.

If it’s a recovery, “it’s a pretty wimpy start of a recovery,” said Scotiabank senior economist Derek Holt.

With the strong dollar likely having cut into exports and boosted imports in September, Holt said it is not beyond the realm of possibility that the quarter as a whole could turn in a negative performance — which would mean the recession, technically, did not end.

“I don’t rule out a negative (reading) at all,” he said.

That is still not the base-case scenario envisioned by economists, however. Most, including Holt, believe the third quarter will show modest growth, but not enough to boost confidence and far behind the 3.5-per-cent pace set by the U.S. for the corresponding period.

The two-country comparison appears to support a report by the Canadian Centre for Policy Alternatives this week that argued the United States had done a far better job of rolling out stimulus spending than Ottawa. The report estimates the President Obama administration has outspent the Harper government seven-to-one so far.

About half of the gross domestic product jump in the U.S. during the third quarter was attributed to the wildly popular cash-for-clunkers program and government incentives for new home buyers, both of which have ended.

“We now put more hope in a strong quarter four, but there is no doubt that the Canadian economy has been slower out of the recessionary gate that we had initially expected,” said Meny Grauman, an economist with CIBC.

Grauman said the Bank of Canada is now likely to keep interest rates at the lowest practical level of 0.25 per cent until the end of 2010, well beyond the conditional commitment of next summer.

That changes the picture of the loonie going forward and puts into question earlier expectations it would reach parity by the end of the year, and possibly rise above next year.

The August fall-back was almost entirely due to continued weakness in the critical goods producing part of the economy, with consumer-generated activity remaining strong.

Oil-and-gas extraction fell 2.3 per cent, as maintenance work at some crude petroleum facilities on the East Coast slowed production. Natural gas production also retreated.

The output of the mining sector excluding oil and gas extraction declined 1.4 per cent.

Manufacturing activity decreased 0.7 per cent, with eight of the 21 major groups retreating. Wholesale declined 0.5 per cent, reflecting weakness in foreign and domestic demand.

Meanwhile, retail sales increased 0.3 per cent, the public sector advanced 0.4 per cent, construction gained 0.2 per cent, and the level of activity of real estate agents and brokers remained high for a third straight month.

The output of utilities also rose, 1.8 per cent, as natural-gas distribution and the production of electricity increased.

The Canadian Press

Globe and Mail Update Published on Monday, Oct. 19, 2009

While it’s tempting to think of a “housing correction” as a continent-wide phenomenon, National Bank Financial says the Canadian and U.S. markets couldn’t be more different.

“The two have absolutely nothing in common,” senior economist Marc Pinsonneault wrote in an economic update Monday. “In Canada, the correction got under way much later and lasted nowhere as long.”

Mr. Pinsonneault said “prudent lending practices” in Canada prevented the housing market from falling as hard as its American counterpart, and pointed out that Canada’s crisis was a side-effect of its recession rather than its cause.
Here are four ways the markets have differed:

Duration of slowdown
The Canadian market began to slide in October, 2008, while the American slump has lasted 2 1/2 years.

“People wishing to sell their homes either cut their asking price or quite simply took their property off the market,” he said of the Canadian market. “Lower interest rates, lower home prices and renewed consumer confidence led to a quick recovery in sales, so much so that as early as last May, these had surpassed pre-recession levels.

Price declines
According to Teranet, Canadian home prices fell 8.9 per cent from their August, 2008, highs to their recessionary lows eight months later. In the U.S., the S&P/Case Shiller index shows prices slid 33 per cent in 33 months.

Delinquency rates
Canadian banks have seen delinquency rates climb to 0.4 per cent, compared to the 0.65 per cent high reached in 1992. The number is far greater in the U.S., at 3.67 per cent.

Consumer spending
When home prices are under pressure, consumers tend to reel in the spending.
“According to Statistics Canada, from the end of Q3 2008 to mid-2009, the value of household real estate wealth sagged only 1.1 per cent,” he said. “The impact of this impoverishment on consumer spending has been negligible.”

In the U.S., the value of household real estate wealth dropped 18.2 per cent. The Federal Reserve estimates that for each dollar lost in housing wealth, consumer spending pulls back up to 15 cents.
Steve Ladurantaye

Bank of Canada maintains overnight rate target at 1/4 per cent and reiterates conditional commitment to hold current policy rate until the end of the second quarter of 2010

OTTAWA – The Bank of Canada today announced that it is maintaining its target for the overnight rate at 1/4 per cent. The Bank Rate is unchanged at 1/2 per cent and the deposit rate is 1/4 per cent.

Recent indicators point to the start of a global recovery from a deep, synchronous recession. Global economic and financial developments have been somewhat more favourable than expected at the time of the July Monetary Policy Report (MPR), although significant fragilities remain.

A recovery in economic activity is also under way in Canada. This resumption of growth is supported by monetary and fiscal stimulus, increased household wealth, improving financial conditions, higher commodity prices, and stronger business and consumer confidence. However, heightened volatility and persistent strength in the Canadian dollar are working to slow growth and subdue inflation pressures. The current strength in the dollar is expected, over time, to more than fully offset the favourable developments since July.

Given all of these factors, the Bank now projects that, relative to the July MPR, the composition of aggregate demand will shift further towards final domestic demand and away from net exports. Growth is expected to be slightly higher in the second half of this year than previously projected but to average slightly lower over the balance of the projection period. The Canadian economy is projected to grow by 3.0 per cent in 2010 and 3.3 per cent in 2011, after contracting by 2.4 per cent this year. This is a somewhat more modest recovery in Canada than the average of previous economic cycles.

The Bank now expects that the output gap will be closed in the third quarter of 2011, one quarter later than it had projected in July. Correspondingly, inflation is also expected to return to the 2 per cent target in the third quarter of 2011, one quarter later than in July’s projection.

While the underlying macroeconomic risks to the projection are roughly balanced, the Bank judges that, as a consequence of operating at the effective lower bound, the overall risks to its inflation projection are tilted slightly to the downside.

Conditional on the outlook for inflation, the target overnight rate can be expected to remain at its current level until the end of the second quarter of 2010 in order to achieve the inflation target. Consistent with this conditional commitment, the Bank will continue to conduct longer-term Purchase and Resale Agreements based on existing terms and conditions and according to the accompanying schedule: http://www.bankofcanada.ca/en/notices_fmd/2009/notice_fad201009.pdf.

In its conduct of monetary policy at low interest rates, the Bank retains considerable flexibility, consistent with the framework outlined in the April MPR.

Information note:
A full update of the Bank’s outlook for the economy and inflation, including risks to the projection, will be published in the MPR on Thursday, 22 October. The next scheduled date for announcing the overnight rate target is 8 December 2009.

Post Date: Tuesday, October 13, 2009

Most economists say recession is over and recovery is beginning

By Mae Anderson
NEW YORK — More than 80 per cent of economists believe the recession is over and an expansion has begun, but they expect the recovery will be slow as worries over unemployment and high federal debt persist.
That consensus comes from leading forecasters in a survey by the National Association for Business Economics released Monday.
“The survey found that the vast majority of business economists believe that the recession has ended but that the economic recovery is likely to be more moderate than those typically experienced following steep declines,” said association president-elect Lynn Reaser, chief economist at Point Loma Nazarene University.
The forecasters upgraded the economic outlook for the next several quarters, but cautioned that unemployment rates and the federal deficit are expected to remain high through the next year. Forecasters now expect the economy, as measured by gross domestic product, to advance at a 2.9 per cent pace in the second half of the year, after falling for four straight quarters for the first time on records dating to 1947. They expect a three per cent gain in 2010.
Still, the federal deficit has ballooned and the jobless rate is expected to lag behind, as employers remain cautious.
The unemployment rate rose to 9.8 per cent in September from 9.7 per cent, the Labour Department said earlier this month, the highest point in 26 years.
Forecasters expect the unemployment rate to continue to rise, to 10 per cent in the first quarter of next year, before edging down to 9.5 per cent by the end of 2010.
The recession, the worst since the 1930s, has eliminated a net total of 7.2 million jobs.
Worries about unemployment are likely to continue to constrain household spending. Personal consumption spending likely began rising in the second half of this year, but is expected to remain low in 2010. Still, Americans aren’t expected to save as much as they have in past decades. The savings rate is expected to be above the 2 per cent average of the past four years, but below the 9 per cent average in the 1970s and 1980s.
The housing recovery is one bright spot. Forecasters expect 2010 to be the first year since 2005 that the housing sector will contribute to overall growth. Home prices are expected to rise two per cent in 2010, but panellists do not believe that will stifle the housing recovery.
Inflation is expected to remain low due to the weak labour market and other factors. Thus, the association panel — which consists of 44 economists surveyed Sept. 2 through Sept. 24 — expects the federal funds rate to remain at its current record low near zero until late next spring, before a gradual rise begins.
“The good news is that this deep and long recession appears to be over, and with improving credit markets, the U.S. economy can return to solid growth next year without worry about rising inflation,” said Reaser.
The Associated Press

Post Date: Wednesday, August 12, 2009

The BC Harmonized Sales Tax in a Nutshell
– A Quick Overview of the B.C. HST 12% Tax and How It Influences New Home Buyers of Real Estate
1.The Harmonized Sales Tax (also known as the new BC HST) is 12% tax applicable to most goods and services, including new homes, real estate, and property.

2.The new B.C. HST 12% Tax is the combination of the Federal Goods and Services Tax (5% GST) and the Provincial Sales Tax (7% PST).

3.Implementation of the BC Harmonized Sales Tax will take place on July 1, 2010.

4.The BC HST is NOT a 12% real estate tax, but a provincial harmonized tax on most goods, services and consumer products including new homes.

5. Currently, new BC and Vancouver homes are subject to 5% GST (federal tax) in which first time homebuyers or investors can receive GST rebates. This 5% GST will be replaced with the higher 12% B.C. Harmonized Sales Tax (HST), a 7% difference in taxes on the total purchase price of a new British Columbia home or property.

6. The B.C. HST program will give partial rebates for new BC homes priced up to $400,000. The government will give these homebuyers a partial five per cent BC HST rebate on the provincial tax side which makes any new B.C. home or Vancouver property $400,000 or less no more expensive than it is today.

7. Homebuyers looking to buy new Vancouver property over $400,000 will receive a maximum BC HST rebate of $20,000, but will see the purchase price above that level subject to the extra five per cent tax rate system.

8. The British Columbia Harmonized Sales Tax of 12% HST is also applicable to any costs and fees associated with your property/home purchase including legal/notary fees, commissions and other closing costs.

9. The BC HST transition rules are unclear at this time. It is unknown whether new Vancouver home sales contracts written before July 1, 2010 but completed after the harmonized sales tax HST launch date will be subject to the current 5% GST only or the entire 12% HST new tax.

10. The cost of new home ownership will increase significantly in British Columbia due to the new BC HST tax of 12%. Not only will your new home or real estate cost more up front, but the 12% HST harmonized sales tax is also applicable to such things like strata fees, residential heating fuel, commercial rents, smoke detectors, fire extinguishers, repairs, cable TV, internet, electricity, gas, renovations, painting and other professional services.

Some BC Real Estate HST Numbers and How It Affects You

Scenario 1: Based on a purchase price of $600,000 for a new BC or Vancouver home, the homebuyer would pay a total of $72,000 in BC HST taxes (12% on $600,000). With the homebuyer HST rebate for purchases above $600,000, the homebuyer would receive the $20,000, thus reducing their purchase cost to $52,000 in taxes for a total of $652,000. Currently, the 5% GST applicable to the same home would cost only $30,000 (a difference of $22,000). *This does not include the HST applicable to closing fees.

Scenario 2: If a BC homebuyer wanted to purchase a new Vancouver home costing $800,000, the total 12% HST hit would be $96,000. The partial HST rebate of $20,000 (maximum allowed) will reduce this to $76,000, making the final purchase price at $876,000 plus property transfer taxes and other closing costs. Before July 1, 2010, a new home would be subject to only 5% GST which is $40,000 on a $800,000 property. With the new BC harmonized sales tax, a BC homebuyer would pay $36,000 more for the same home after implementation of the HST tax. *This also does not include the HST applicable to closing costs.

The B.C. Harmonized Tax – BC HST Will Raise New Home PricePlease comment on this blog post regarding your opinion and thoughts on how the new BC HST will influence the British Columbia and Greater Vancouver real estate home prices next year. Announced in August 2009, the BC HST will come into effect July 1st, 2010. The BC Harmonized Tax is simply the combination of the two current sales taxes: the 7% provincial BC sales tax and the 5% federal goods and services tax. The BC HST is 12% (twelve per cent) and will be added to the purchase price of new BC homes and Greater Vancouver real estate. In addition to applying 12% on new home prices, the BC HST will also be applicable to real estate closing costs and fees, which will in turn increase the price of any new home in British Columbia and throughout the Greater Vancouver property market. Currently, new homes in BC and Greater Vancouver are only subject to the 5% GST federal tax (and not the 7% provincial sales tax) Some analysts say that as the BC real estate markets start their long recovery from the global economic crisis and housing bubble of 2008-2009, the introduction of the BC HST 12% tax on new homes in Vancouver and the province of BC will halt first time homebuyers from making the largest purchases of the life. In addition, the 12% HST will also affect Greater Vancouver housing affordability, which is already the highest of any city in Canada. Overall, BC housing affordability is also the highest in Canada, which means that British Columbians and Vancouverites spend the most after tax dollars on their homes and real estate purchases. The introduction of the BC HST on new Vancouver homes for July 1st, 2010 will likely damper the sales volume of new real estate in the city in addition to making property more unaffordable for first time homebuyers while making it that much more expensive for current homeowners looking to upsize into larger new Vancouver homes. The other thing to keep in mind is that many retirees are getting to retirement age, and the addition of the 12% BC HST will likely influence what these empty nesters can afford to purchase if they are looking for a new home in BC or Greater Vancouver real estate markets.
Overall, the combination of the PST and GST into the British Columbia HST new Harmonized Sales Tax will ultimately affect the majority of the BC population looking to purchase new homes and real estate property, including those Vancouver condo home buyers. On average, a consumer looking for new BC property will end up spending 7% more because of the difference between the 12% HST harmonized sales tax versus the current 5% GST goods and services tax that are applied to new property. British Columbia already has the award for the most expensive real estate in Canada. The Okanagan region, Victoria and Greater Vancouver also all fit within the top ten most priciest property markets in the country.
The integration of the new provincial BC HST of 12% on new real estate will further increase and bump up the price for new homes in the province, thereby decreasing affordability throughout the region.

Post Date: Thursday, July 9, 2009

New Immigrants Driving Housing Demand,
according to Scotia EconomicsTORONTO, July 9 /CNW/ –

Canadian immigrants are narrowing the homeownership gap with their Canadian-born counterparts, according to the latest Real Estate Trends report released today by Scotia Economics. The most recent census data available show that in 2006, almost 72 per cent of immigrants lived in a dwelling owned by a household member, up from 68 per cent in 2001. The comparable share for the Canadian-born population rose a more modest two percentage points over this period, from 73 per cent to 75 per cent. “Homeownership tends to increase the longer one has lived in Canada, with the majority of new arrivals first settling in rental accommodation,” said Adrienne Warren, Senior Economist, Scotia Economics. “Over time, immigrant families eventually make the move to homeownership, at rates similar to the Canadian-born population. However, between 2001 and 2006, the homeownership rate rose for all immigrant groups, regardless of how long they had resided in Canada. The biggest increase was among those living in Canada for less than 10 years. “As recent immigrants to Canada make the transition from renter to owner, they will increasingly drive housing demand,” states Ms. Warren. According to the report, the faster transition to homeownership has been supported in part by strong labour markets. The employment rate for core working-age recent immigrants jumped 3 1/2 percentage points between 2001 and 2006 (to 67.0 per cent). This was faster than the 1 1/2 percentage point gain among their Canadian-born counterparts (to 82.4 per cent). The employment rate for all immigrants also increased over this period, but by a more modest one percentage point (to 77.5 per cent). “The better labour market performance of recent immigrants may reflect a favourable skills mix, with many employed in high-growth industries such as engineering, construction and skilled trades. It may also reflect a greater geographic mobility to meet shifting regional labour requirements,” said Ms. Warren.The report also states that, of the more than one million immigrants that came to Canada between 2001 and 2006, 69 per cent settled in the three largest census metropolitan areas (CMAs) – Toronto, Montreal and Vancouver – and their surrounding municipalities. Meanwhile, a growing proportion (28 per cent) of immigrants settled in smaller CMAs, most notably Calgary, Ottawa-Gatineau, Edmonton, Winnipeg, Hamilton and Kitchener. Less than three per cent chose to live in a rural area. “Given Canada’s aging population and relatively low fertility rates, longer-term household formation and housing needs will be largely determined by immigration,” concluded Ms. Warren. “Using standard assumptions regarding immigration, fertility and mortality rates, the share of Canada’s population growth coming from immigration could rise to three-quarters a decade from now, up from 60-65 per cent today and almost all by 2030. Most of this growth will be in Canada’s urban areas.” Scotia Economics provides clients with in-depth research into the factors shaping the outlook for Canada and the global economy, including macroeconomic developments, currency and capital market trends, commodity and industry performance, as well as monetary, fiscal and public policy issues.

Post Date: Wednesday, July 8, 2009

Improved affordability helps spur Canadian housing market, says RBC Economics
Every major city in Canada enjoying a housing market resurgence

TORONTO, July 8 /CNW/ – Home affordability in Canada recorded some of the biggest quarterly improvements on record in the first quarter of the year, with aggressive economic policy and softening home prices drawing buyers back into the market, according to the latest housing report released today by RBC Economics.

“With the turmoil in financial markets partially subsiding and the flow of credit increasing, home resale activity has rallied impressively since the late-winter,” said Robert Hogue, senior economist, RBC. “What’s most impressive is how widespread this rebound has been, with all major cities in Canada experiencing a revival.”

Declining costs of home ownership during the last year were driven by significant cuts in mortgage rates along with the federal government taking an active role in supporting the mortgage securities market. In the first quarter, monthly payments on a typical detached bungalow in Canada had decreased by close to 17 per cent from a year earlier.

The RBC Housing Affordability measure captures the proportion of pre-tax household income needed to service the costs of owning a home. During the first quarter of 2009, the RBC Affordability measure at the national level improved across all housing segments, as the benchmark detached bungalow moved to 39.4 per cent, the standard townhouse to 31.9 per cent, the standard condo to 27.1 per cent and the standard two-storey home to 44.7 per cent respectively.

The report found that rates of housing affordability improved at the national level from 2.8 percentage points for standard condominiums and 5.0 percentage points for two-storey homes, marking the third consecutive quarterly decline in home ownership costs.

“Housing markets generally appear to be on the mend in Canada but the road to full recovery still has obstacles,” added Hogue. “With property values stabilizing and the effect of the steep drop in mortgage rates likely behind us, further improvement in affordability will depend on greater gains in family income. Those gains will be dictated by the speed of the economic recovery expected during the second half of this year.”

RBC’s Affordability measure for a detached bungalow for Canada’s largest cities is as follows: Vancouver 62.6 per cent, Toronto 45.9 per cent, Ottawa 39.1 per cent, Montreal 36.5 per cent and Calgary 35.1 per cent. The property benchmark for the Housing Affordability measure, which RBC has compiled since 1985, is based on the costs of owning a detached bungalow. Alternative housing types are also presented including a standard two-storey home, a standard townhouse and a standard condominium. The higher the reading, the more costly it is to afford a home. For example, an Affordability reading of 50 per cent means that homeownership costs, including mortgage payments, utilities and property taxes, take up 50 per cent of a typical household’s monthly pre-tax income.

Highlights from across Canada:

– British Columbia: In the first quarter, housing affordability in B.C. showed the sharpest improvements since 1991. Sales of existing homes have picked up vigorously since the November-January lows, prices appear to be leveling off and more balanced supply and demand conditions are expected to emerge in coming months.
– Alberta: The drop in mortgage rates and sinking home prices have fully restored homeownership affordability in the province. Sales of existing units have rebounded smartly this spring from earlier depressed levels and market conditions have tightened. Alberta’s housing market is likely at the point of turning the corner.
– Saskatchewan: Significant improvement in affordability has helped the Saskatchewan housing market pick up pace again after bottoming at the start of the year. Moderately stronger sales of existing homes this spring and a slower pace of home sale listings have restored some balance into the market.
– Manitoba: Supported by relatively favourable affordability rates, Manitoba’s market continues to be among the most resilient in the country. A relatively robust economy, steady population growth and recent improvement in affordability should support housing demand in the period ahead.
– Ontario: Spring resales figures show a surprising amount of activity in Ontario, with average prices for existing homes climbing back to where they were mid-2008. Much of this resurgence in the province is due to greater affordability, with homeownership costs for detached bungalows and condominiums dropping below long-term averages.
– Quebec: Resale activity has rebounded quickly in Quebec, reflecting a homeownership market that is now more accessible than has generally been the case in the province since the mid-1980s. Home prices have generally stayed their upward course, even through the period of weaker resale activity earlier this year.
– Atlantic region: The costs of owning a home in Atlantic Canada continue to improve, with housing affordability rates among the best in the country. Favourable affordability levels in Atlantic Canada have given the region some protection against the housing storm with minimal declines in property value.