Canada: Housing starts higher than normal? - Scotiabank

Analysts at Scotiabank suggest that Canada releases housing starts for February today and their main concern on this front is that an unusually mild winter in the most population-heavy centres like southern Ontario may be biasing starts higher than normal.

Key Quotes

“Since September, Ontario’s housing starts have soared by over 40% in seasonally adjusted but non-annualized terms, while nationwide starts have fallen by 5%. It’s unclear the extent to which abnormal weather is bringing forward construction and model-home browsing that might have occurred at other times and in ways that standard seasonal adjustments are not controlling.” 

“It’s also the case, however, that Ontario’s housing markets have received a series of positive shots in the arm over the past year. As argued previously, people were leaving Ontario to go to other provinces in net terms for about a decade and a half and suddenly began returning home in droves over the past year to drive the strongest net inflow of people from other provinces— chiefly Alberta—to Ontario since 2001. Higher national immigration targets also concentrate arrivals on centres like the Greater Toronto Area. Rate cuts by the BoC in 2015 added housing momentum. The 107,000 jobs created in Ontario over the past six months has been about 45% of national job growth.”

“The plunge in the currency over the past five years put Canadian real estate on sale for anyone investing with US dollars (like Americans, or Asian investors). And finally, parents with kids under 17 and in households with under $200k in annual before-tax income are getting an extra $375 per month in tax-free income thanks to the increased child benefit payments that began going out last July, and these payments count toward income on a mortgage application and hence can be leveraged in buying a home with at least as much confidence in the income stream as employment income.”