Canada Mortgage and Housing Corporation
Second Quarter 2015
- – Total housing starts decreased this quarter
- – The resale market remained tight and favoured sellers
- – Average price for both new single-detached homes and for all existing homes edged higher
New Homes Market
Housing starts in the St. Catharines-Niagara Census Metropolitan Area (CMA) trended at 1,495 units in March down from 1,586 in February according to the Canada Mortgage and Housing Corporation (CMHC). The trend is a six-month moving average of the monthly seasonally-adjusted annual rates (SAAR) of housing starts.
Seasonally-adjusted total housing starts decreased this quarter compared to the fourth quarter of 2014. A decrease for all groundoriented housing put downward pressure on total housing starts. Apartment starts, which can be quite volatile, increased slightly after construction began on 35 apartments this quarter. Single-detached homes remained the most popular new housing type.
Builders report that the weather negatively affected new home starts. It was difficult to pour foundations on new projects and several days of construction were lost. Because of the weather-related delays some construction was shifted to March but the majority will now take place in the spring. New home starts increased in March but not enough to off-set the decrease in February. In spite of the drop this quarter total starts remained in line with total starts in the same quarter last year.
Homes under construction have been trending higher because of rising numbers of unfinished single-detached and rows homes. The winter months not only slowed down new projects but also projects currently underway. Builders want to finish some of these projects underway before committing to more new ones.
The decrease in starts this quarter was not related to demand. The movement of new households into the region continued to support new housing demand.
Thorold City was the only submarket where total starts increased this quarter compared to the fourth quarter of 2014. Builders broke ground for 35 apartment units (4 rental and 31 condos) in the first quarter which helped lift total starts.
The average price of a new singledetached home increased. Over half the homes in the St. Catharines-Niagara CMA were priced above $400,000. The gap between the average and median price of a new single-detached home widened because a greater share of luxury homes in Pelham Town, Niagara-on-the-Lake Town, and Niagara Falls City pushed the average price up. In these three markets the average price was well over $500,000. Buyers coming from outside the region bid up prices. Economic growth and low mortgage rates also allowed buyers to look at pricier options in the new homes market.
Existing Homes Market
The existing homes market in St. Catharines-Niagara remained tight. Seasonally-adjusted existing home sales dropped slightly in the first quarter of 2015. In spite of the drop, sales remained significantly stronger than they had been in early 2014. Some easing from the very strong sales in the third quarter of 2014 was inevitable, but the sharp decline in sales from January to February indicates the harsh weather was also a factor. Without the February decline, first quarter sales would have almost matched those in the previous quarter.
Employment continued to support housing demand. Seasonally-adjusted employment has increased during the last six months. Full-time employment has increased especially for workers 25-44 years of age. New residents are influencing the economy. As new residents relocate to the region the economy expands to provide a greater range of services to satisfy their needs. In particular, the movement of older households to the region is creating demand for health care and other services. The inflow of younger people is associated with growth in the education sector. Seasonally-adjusted wages continued to rise, going up by almost four per cent compared to the last quarter of 2014.
New listings have decreased this quarter relative to the fourth quarter last year. Seasonally-adjusted new listings decreased in January and February but not in March. Fewer new listings in two of the three months put downward pressure on the quarter total. New listings growth has not kept pace with sales growth. Many buyers are coming from outside the region and they do not contribute a listing when they purchase a home. Also, new listings tend to respond to price growth with a lag. Average price growth strengthened in mid-2014 and has not yet translated into a significant increase in new listings.
Seasonally-adjusted average existing home price growth was just over two per cent in the first quarter. Fewer new listings relative to sales tightened the market and put upward pressure on price. Employment and wage growth and low inflation attracted buyers to pricier homes. The sales-to-new-listings-ratio (SNLR) continued to trend up from the previous quarter. This indicates that market conditions continue to favour sellers. The seasonally-adjusted sales-to-new-listings-ratio (SNLR) averaged 67 per cent in the first quarter.
New Residents Add to St. Catharines-Niagara’s Population
Statistics Canada has recently released updated migration data for all major centres in Canada. In St. Catharines-Niagara CMA net migration remains significant after dipping in 2011. Over the last three years net migration has averaged upwards of 1,000 new residents.
The region is attracting two groups: older households headed by someone older than 45 years and students 19 years of age and younger moving to the region for their post-secondary studies (i.e., trade schools, college, and university). The western provinces continued to attract people away from the region but the movement of people leaving the region is offset by younger households coming from abroad and older households coming from other nearby centres in Ontario.
In recent years, investments in educational institutions have been significant and they are paying off. Foreign students see St. Catharines-Niagara as a great place to come and study.
Data confirms discussions with members of the community. The majority of people moving to the region are older households, attracted to the region either to retire or to live in the region and work in one of the nearby centres such as Hamilton or the Greater Toronto Area (GTA). However, the most recent data also indicate a shift to the younger age groups. The net flow of people between the ages of 20 and 44 to elsewhere in Ontario diminished significantly, contributing to the net population gain in the region due to migration.
New residents settling in the region will support growth in all segments of the housing market in St. Catharines-