Morning Market Brief: September 19, 2023

Seeking to increase the housing supply?

Yesterday, Canada Mortgage and Housing Corporation (CMHC) released data on housing starts across Canada during August. All levels of Canada’s government are closely monitoring this crucial statistic as it seeks to overcome affordability issues in the housing market.?

• CMHC announced that housing starts fell by 1% in August over the previous month to 252,800. Despite the slight drop, this was above economists’ expectations of 250,000 starts, according to a survey by Bloomberg.
• August’s decline was the second straight, driven by a 1% fall in multi-unit starts. Conversely, single-unit housing starts rose by 2%.
• Housing supply is being monitored by all levels of government here in Canada. Housing has become a key topic among government officials seeking to increase supply to help meet strong demand. Housing prices surged coming out of the pandemic as low interest rates helped boost demand. The result has been considerable concern about the affordability of Canadian housing.
• To help raise the supply of housing, the federal government completed its first deal under the Housing Accelerator Fund. The deal was for $74 million, with 2,000 homes to be built over the next three years.

CMHC believes Canada’s housing market supply gap currently sits at 3.45 million. Introducing this many homes to Canada by 2030 could help improve affordability issues, according to CMHC. Canada’s housing market has seen prices grow rapidly, and now, higher mortgage rates have made home ownership even more difficult. The strength of Canada’s housing market still contains a bit of uncertainty, as evidenced by the slump in existing home sales in August. Still, real estate remains a strong investment for the long term and is an important part of any diversified portfolio.

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