CMHC releases Canadian Housing Observer

Jean-Guy Turcotte

CMHC has just released its flagship report on Canadian housing activity.

“The Canadian Housing Observer provides a comprehensive review of the critical role housing plays in the Canadian economy,” said Karen Kinsley, president of CMHC.

“The Observer details the far reaching impact of housing in generating economic activity and employment across sectors, and highlights how housing finance continues to be a cornerstone of Canada’s financial system.”

The report includes hundreds of different analyses across the housing sector and is pertinent to economists to provide us with the proper information to show us where we’ve been so that we can navigate the waters ahead, whether they are rough or smooth.

Here’s a brief breakdown of the data:

Housings economic impact

* Housing-related economic activity was $307 billion last year which is roughly 20% of Canada’s GDP

* Real estate comprises over 40% of Canadian household assets

Mortgage debt

* Mortgage payments were 33% of the average Canadian’s disposable income in the fourth quarter of 2009 which isn’t far from the historical average of 31%

Home equity

* The average Canadian homeowner has 74% equity in their home versus just 43% for our American counterparts

* 60% of Canadian homeowners have a mortgage

* 80% of mortgagors have at least 20% equity

* 9% of mortgagors have less than 10% equity

* 18% of homeowners withdrew equity in the 12 months leading up to October 2009, which is down 22% from the previous year

Mortgage funding

* 60% of mortgages are funded through deposits

* 32% of mortgages are funded through mortgage-backed securities

* 8% of mortgages are funded via other means including covered bonds

* The Canada Mortgage Bond market grew 7.8% in 2009 to $175.6 billion (the bond rates determine where the fixed mortgage rates)

Miscellaneous

* Allocation of outstanding mortgage credit:

– Chartered banks: 48%

– NHA mortgage-backed securities: 30%

– Credit unions: 13%

– Other (mortgage/finance companies, trust companies., life insurers, etc.) 9%

* Mortgages by type of dwelling

-Single family detached properties: 70.7%

-Multi-family dwellings: 29.3%

* Total tax relief and funding related to housing in Canada’s Economic Action Plan in the federal budget 2009 was $7.8 billion

* Total value of housing in Canada in November 2009 was $2.7 trillion

*Total equity value of housing in Canada is $2.0 trillion

*Total value of all outstanding mortgages in 2009 was $700 billion

CMHC says, “Canada’s financial system weathered the global financial crisis relatively well in 2009, as it had in 2008.

Canada’s housing finance system continued to serve the needs of Canadian borrowers, despite some economic weakness and mortgage market problems in other countries. Improved capital market conditions together with a lowered Bank of Canada overnight rate contributed to further reductions in mortgage rates.”

The report is indicative of the strength of Canada’s financial system and that we’ve come through the economic storm relatively unscathed.

We’ve got to continue to be prudent with our lending practices and not become short sighted as other countries around the world have.

Canadians should be proud that our system is as strong as it is, as other countries around the world now come to Canada to learn about our system and not make the greedy mistakes that they had.

Jean-Guy Turcotte is an Accredited Mortgage Professional with his Partners at Regional

Mortgage Corporation at can be reached at 403-343-1125 or emailed to jturcotte@regionalmortgage.ca .

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