The housing industry continues to lead Canada's economy, with the latest figures showing a stronger-than-expected number of housing starts in August. Starts were 25 per cent higher than in August of 2001, led by Western Canada.
The country is enjoying a long-term housing boom that has seen a dramatic climb in home ownership rates across the country, according to a report by Will Dunning Inc.. The report, which was commissioned by the Greater Toronto Home Builders' Association, uses data from the 2000 Census as well as its own research. It says that home ownership stood at 67.5 per cent nationally in 2000, and projects that it will hit 67.5 per cent by 2004.
In Ontario, the country's most populated province, home ownership will be close to 70 per cent by 2004, says the report. It stood at 66.7 per cent in 2000.
The numbers for the city of Toronto area, where one would expect to find many more renters, are also impressive. They show a steady climb of home ownership from 60.6 per cent in 1996, to 62.8 per cent in 2000, to a projected 65.8 per cent for the city in 2004. In eight years, the home ownership rate in the city will have climbed by more than five percentage points and the number of homeowners will have expanded by 277,000, says the report.
"Households (in Toronto) have responded strongly to the great affordability of home ownership, the value of home ownership as an investment, and the strength of the local economy," says the report. It notes that a median-priced townhome in the city can be purchased for $185,000, which is affordable at an income of $42,000. Other lower-priced options, such as high-rise condominiums, are also available.
"Meanwhile, the cost of renting continues to climb," says the report. "Since 1996, the costs of renting and owning a home have been virtually identical. Buyers don't consider just monthly costs when deciding to buy a home. Personal needs and expectations are primary. An important factor is the value of home ownership as an investment, and its role in a long-term financial plan."
A record number of existing home sales are expected in 2002, in both Toronto and nationally, and the latest housing start numbers indicate no end in sight for Canada's housing boom. That's a surprise for many observers, who thought that interest rates would rise and cool off the market. That could still happen in the near future. Another concern is that slowing demand from consumers in the United States for Canadian-made goods could also have an impact here.
In Toronto, Dunning says that about 600,000 new jobs have been created since mid-1994, and the unemployment rate has fallen from an average of 10.4 per cent in 1994 to 7.1 per cent so far in 2002. "The improved job market has given increasing numbers of families and individuals the ability and confidence to become homeowners," the report says.
For several years, an extremely low rental vacancy rate in Toronto has also been a factor in pushing renters to become owners. During the last year, many investor-owned condominiums have come on the rental market and now there's much more choice for mid- to high-end rentals. However, this has yet to filter down to the low end of the rental market, where accommodation is still scarce.
The Dunning report says the combination of positive factors - affordability, the value of home ownership as an investment, job growth and consumer confidence - ensures that the movement to home ownership will continue.