Transcript Document

Is Canada’s Housing Market Overvalued by 30 to 60 per cent?
What you Missed from the BOC Report
Canada Overvaluation
Estimates:
1.
Simple ratios like price-to-rent are easy to understand
but are misleading in a number of ways
Bank of Canada: 10% - 30%
Deutsche Bank: 63%
Fitch Ratings: 21%
IMF: 20%
Moody’s Analytics: Less than 15%
CMHC: Modestly
2.
They concluded that housing has been overvalued
since 2007 and has only experienced a modest degree
of upward creep since 2009
3.
They admitted that their model IGNORES supply!
94% of the top Canadian housing analysts believe these
types of studies have no power to predict future price
movements
Ben Myers, Fortress Real Developments | Twitter: @BenMyers29
GTA Starts,
Completions,
U/C Down, New
Home Sales Up
New Home Sales, Housing Starts, Completions & Units Under
Construction
Toronto CMA/GTA: 2010 to 2015
70,000
60,000
50,000
30,000
Ben Myers, Fortress Real Developments | Twitter: @BenMyers29
0
2010
2011
New Home Sales
2012
Starts
Completions
2013
2014
Under Construction
Source: CMHC (CMA), RealNet (GTA New House Sales)
68,948
29,213
28,929
39,736
69,062
10,000
33,708
20,000
28,101
Annual Need for New Units in
the Toronto CMA
TD: 30,000 to 35,000
CMHC: 34,000
Altus: 40,000
Urban Futures: 42,000 to 46,000
40,000
33,547
Risk of overbuilding has
subsided
Annual House Price Changes (New & Resale)
2014 Price Growth (Actual), 2015 Forecasts
Toronto CMA/GTA
Strong GTA Price
Growth in 2014,
All Forecasts
Positive for 2015
Other 2014 Pricing Results
[Resale] Brookfield RPS: 13.2%
[Resale] Teranet: 7.2%
[New] Urbanation: 3.7% - condo only
[New] RealNet: 4.1% - condo only
[New] CMHC Unabsorbed Singles/Semis
12.1%
[New] RealNet Low-Rise
7.9%
[Resale] MLS House Price Index
7.9%
[Resale] Royal LePage Market Survey
8.1%
[Resale] Fortress RDI
6.8%
[Resale] Will Dunning Inc
5.9%
[Resale] TREB
5.8%
5.4%
[New] Fortress RDI
[Resale] Central 1 Credit Union
5.2%
[Resale] Royal LePage
4.5%
[Resale] Re/Max
4.0%
3.6%
[New] CMHC
[Resale] CMHC
[New] Buzz Buzz Home Poll
2.2%
1.0%
0.0%
Source: Various Sources
Ben Myers, Fortress Real Developments | Twitter: @BenMyers29
5.0%
10.0%
15.0%
Completed and Unabsorbed Supply at Long-Run Average
Housing Units Completed and Unabsorbed by Product Type
Toronto CMA: December 2000 to 2014
2,000
1,800
Actually fewer completed
and unabsorbed apartment
units at year-end 2014
compared to 2013
1,600
1,400
1,200
1,000
800
600
400
200
0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Apartment
Ground-Oriented
Source: CMHC
Ben Myers, Fortress Real Developments | Twitter: @BenMyers29
Condominium Apartment Rents Remain Positive Despite
Additional Supply
Average condo
rents increasing
by 3.4% and
3.5% annually
per CMHC &
Urbanation
respectively
since 2011
Condominium Apartment Rents
Toronto CMA: 2010 to 2015
$1,725
$2.45
$2.40
$1,675
$2.35
$2.30
$1,625
$2.25
$2.20
$1,575
$2.15
$2.10
$1,525
$2.05
Investors &
foreign buyers
not ‘fleeing’ the
market
$1,475
Ben Myers, Fortress Real Developments | Twitter: @BenMyers29
$2.00
2010
2011
2012
Rent per CMHC
2013
2014
Rent PSF per Urbanation
Source: CMHC, Urbanation Inc.
Supply of New Housing is Shrinking Drastically in
Mississauga
Just 864 starts
in 2014, down
87% from 2002
Completions
down 79% from
2002
Housing Starts, Completions & Units Under Construction
Mississauga: 2000 to 2014
7,500
Starts
Completions
Under Construction
6,250
5,000
3,750
Units under
construction
down 41%
since 2002
2,500
1,250
0
2000
2002
2004
2006
Source: CMHC
Ben Myers, Fortress Real Developments | Twitter: @BenMyers29
2008
2010
2012
2014
Market Share of Low-Rise Housing is Shrinking
Singles, Semis
& townhouses
accounted for
84% of
completions
between 2000
and 2004
That rate
dropped to just
36% between
2010 and 2014.
Housing Completions by Product Type
Mississauga: 2000 to 2014
2000-2004
63%
2005-2009
21%
35%
2010-2014
21%
0%
10%
22%
30%
63%
40%
Singles/Semis
50%
Row
Source: CMHC
Ben Myers, Fortress Real Developments | Twitter: @BenMyers29
44%
16%
20%
16%
60%
Apartment
70%
80%
90%
100%
Average Price of a New Single-Detached House is $1.2 Million
to $1.3 Million in Mississauga South
Singles pricing up
around 20% over the
past five years.
Average and Median New Single-Detached House Price
Mississauga South
2010 to 2014
$1,400,000
Median
$1,300,000
Average
$1,200,000
$1,100,000
$1,000,000
$600,000
2010
2011
2012
Source: CMHC
Ben Myers, Fortress Real Developments | Twitter: @BenMyers29
2013
2014
$1,194,805
$1,150,000
$1,325,683
$1,250,000
$1,104,525
$1,025,000
$938,758
$700,000
$950,000
$800,000
Stacked towns are
priced at $440,000
on average.
$1,048,307
$900,000
$950,000
New traditional
townhouses in
Mississauga are
priced at $730,000
on average.
Explosion of GTA Stacked Townhouse Development
Launches since 2012
Market now sees
stacked townhouses
as viable and
desirable housing
type.
Stacked Townhouse Launches by Project Count and Total Units
Greater Toronto Area: 2005 to 2014
2000
Projects
25
Units
1500
20
15
The 18 sites
launched in 2014
are already 68%
sold on average!
1000
10
500
5
0
0
2005
2006
2007
2008
2009
2010
2011
Source: RealNet Canada Inc
Ben Myers, Fortress Real Developments | Twitter: @BenMyers29
2012
2013
2014
Apartment Rents have Increased in 22 of the Last 24 Years in
Mississauga, Condos getting Big Rent Premium
Vacancy Rate
currently sits at
just 1.8%
Apartment Rents & Vacancy Rate
Mississauga: 2005 to 2014
5.0%
$1,700
4.5%
Vacancy Rate
4.5%
$1,600
Purpose Built Rent
4.0%
In Peel Region
average leased
condo had rents
increase 7.2% in
2014, vacancy
rate at 1.2%
$1,500
Condo Rent
3.5%
$1,400
3.0%
2.8%
3.0%
2.8%
$1,300
2.3%
2.5%
$1,200
2.1%
1.8%
2.0%
1.8%
1.7%
1.4%
1.5%
$1,100
$1,000
1.0%
$900
2005
2006
2007
2008
2009
2010
Source: CMHC, Urbanation
Ben Myers, Fortress Real Developments | Twitter: @BenMyers29
2011
2012
2013
2014