Canadians Choosing to Live in Urban Cores – Report

High density neighbourhood in Downtown Vancouver. A new report says Canadians are choosing the shorter commute times and proximity to work offered by residences in city cores over larger houses in the suburbs (photo credit: Guilhem Vellut from Vancouver, Canada)

Canadians are increasingly preferring downtown living over life in suburbia, according to a new report on Canada’s real estate market.

Issued jointly by PricewaterhouseCoopers and the Urban Land Institute (ULI), the annual report aims to track trends in the country’s real estate market, and has identified the growing preference for urban living as a major shift that will shape Canadian cities.

The emerging trend toward living in the urban core is accompanying greater construction of high density mixed-use development which can include residential, retail, office and hotel units under one roof.

The report cites a declining tolerance for long commutes among Canadians, as well as municipal policy to encourage intensification in city cores over an expansion of their suburbs, as the major forces behind the growing trend.

It warns that the reverse migration to city cores could spell trouble for commercial real estate in the suburbs. An expansion by American firms in Canada, amid a strengthening U.S. economy, could counteract this drop in demand for suburban office space, the report says.

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Immigration Boosting Canadian Housing Sector -Analysis

A house in Greater Vancouver, Canada. A report by the National Bank of Canada says the effects of immigration on demographics will keep housing prices in Canada from falling (Tony Fox, GFLD)

A new economic analysis credits immigration for keeping Canada’s housing sector growing amid a slowdown in the developed economies.

As reported by the Globe and Mail, a National Bank of Canada (NBC) report on the Canadian housing market finds that the so-called ‘household forming cohort’, which is the segment of the population aged 20-44, is growing much faster in Canada than in most developed countries.

Without the influx of 147,000 new Canadians aged 20-44 through immigration, the demographic would have seen a decline in 2012, according to NBC senior economist and report author, Matthieu Arseneau. The average growth rate of the 20-44 demographic was negative 0.3 percent last year among the rest of the developed economies, compared to the positive 1.1 percent growth rate seen in Canada.

Arseneau cites a high rate of employment among foreign born Canadian citizens, which is lower than only New Zealand and Norway’s, as a pull attracting foreigners to immigrate to Canada.

The report projects the growth in Canada’s 20-44 cohort will decrease after 2013, but will remain positive, and will exceed that of other developed countries. This demographic trend, Arseneau argues, will provide the country’s housing market with a comparative advantage over those in other developed countries, and reduce the likelihood of a crash in Canadian housing prices as predicted by some market watchers.

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CIBC Economist: Immigrants to Boost Canada’s Housing Prices

CIBC headquarters in Commerce Court in Toronto, Ontario. A report published today by CIBC World Markets concludes that immigrants will help maintain housing prices over the next decade (Wikipedia)

A report released today by a major Canadian bank says growth in the 25-34 age group and increases in immigration levels will likely push housing prices up over the next decade.

The analysis, by CIBC World Market’s deputy chief economist Benjamin Tal, points to the propensity of Canadian immigrants to buy a home to support its conclusion.

Statistics show that nearly 20 percent of Canadian immigrants who have been in the country for three years or less are home owners, while home ownership rates among immigrants who have been in Canada for ten years or longer is over 70 percent, a figure higher than that of natural-born Canadian citizens.

The report says that owing to recent shifts in immigration targets by the federal government, immigration levels, already at historic highs in absolute terms, are expected to increase over the next few years, which will increase demand for housing.

A pdf of the report can be found online here.

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Vancouver Sees 12 Percent Drop in Housing Prices in July from Same Time Last Year

Year on year home prices declined 12 percent in Vancouver in July

Vancouver, one of the most popular Canadian housing markets for the country’s immigrants, saw the average value of real estate purchases in July drop 12 percent from the same period last year, according to data collected by Bloomberg News.

The city’s real estate prices have boomed in recent years due in large part to foreign investment from China and home purchases by Chinese immigrants, who are the city’s largest foreign born ethnic group.

With a cooling Chinese economy and Vancouver home prices that have risen to become the highest in Canada though, many this year have been warning that Vancouver’s real estate market is in a bubble.

Toronto also saw a slow down in its real estate market, although it was much more moderate, with year on year home purchase volume decreasing by 1.5 percent in July.

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Inflation Drops to 1.2% in May, Reducing Likelihood of Rate Hike

The decline in inflation in May is bullish for short-term housing prices. Housing prices in Canada's major cities have increased significantly over the last five years, which anecdotal evidence suggests is partly due to greater investment in the market by foreign and immigrant investors.

Prices increased 1.2 percent in the 12 months leading up to May, a drop of 0.8 percent from the annual inflation rate in April, according to a report released by Statistics Canada today, a development that could keep interest rates low and help shore up housing prices in the near term.

The slowdown in inflation was due primarily to declines in natural gas and oil prices, smaller price increases for passenger vehicles, and a small decline in women’s clothing prices.

The inflation news could help boost short term housing prices, or forestall what some see as a coming correction in housing prices that are at bubble levels, as it reduces the likelihood that the Bank of Canada will increase interest rates.

The likely repercussions for the housing market are tempered by Finance Minister Jim Flaherty’s announcement yesterday that the federal government would tighten mortgage rules to reduce what his department sees as housing demand driven by speculation and funded by too much borrowing.

He said that the Canada Mortgage and Housing Corporation (CMHC), a government owned home mortgage guaranteer that insures 49 percent of Canadian home mortgages, would reduce the maximum term of mortgages it will insure from 30 years to 25 years and no longer insure mortgages for homes worth more than $1 million.

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