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Economic Drivers Are
FactorFactor ImpactImpact
Wealth EffectWealth Effect HousingHousing Returning to PositiveReturning to Positive
Wealth EffectWealth Effect StocksStocks Less ScaryLess Scary
Canadian DollarCanadian Dollar Strongly NegativeStrongly Negative
Commodity PricesCommodity PricesPositive for ProducersPositive for ProducersNegative for ConsumersNegative for Consumers
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Enormous Wealth Effect From
$350
$300 ' s
$200 $ 1
, 0 0
$150
1990 1993 1996 1999 2002 2005 2008
Source: CREA
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Volatile Stock Markets15,000
9,000
12,000
d e x
6,000 T S X
I n
3,000
1990 1993 1996 1999 2002 2005 2008
ourc e: a s c s ana a
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High Commodity Prices
2.00
1.75 j u s t e
1.25
.
t i o
n - A
1.00 I n f l a
.
1990 1993 1996 1999 2002 2005 2008
ourc e: a s c s ana a
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Employment Rate Forecast Suggests
6465
y e d
6263
E m p
l
6061
d u l t s
5758
% o
f
1987 1990 1993 1996 1999 2002 2005 2008 2011
ource: a s c s ana a unn ng nc .
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Canadian Resale Rebound550
450 S
A
350 , 0 0 0 s -
250
300 1
200
1988 1991 1994 1997 2000 2003 2006 2009Source: CREA
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Canadian Resale Activity May
550
450 -
S A
350 , 0
0 0 s
200
250
1988 1991 1994 1997 2000 2003 2006 2009 2012
.
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Canadian House Prices
$350
$300 0 s
$200 $ 1
, 0 0
$150
1988 1991 1994 1997 2000 2003 2006 2009
ource :
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Modest Growth Forecast for
$350
$300 s
$200 $ 1
, 0 0
$150
1988 1991 1994 1997 2000 2003 2006 2009 2012
Sour c e: CREA / Will Dunnin g Inc .
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Canadian Housin Starts275 e d
225 A d j u s t
175 o n a l l y -
125 S e a s
1988 1991 1994 1997 2000 2003 2006 2009
Source: CMHC
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Short-Term Bounce Forecast for
275 d
225 d j u s t e
175 n a l l y -
125 S e a s
1988 1991 1994 1997 2000 2003 2006 2009 2012
ource : unn ng nc .
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The State of the
es en a or gage
November 2009
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Rapid Growth of Residential
$1 ,400
$1 ,000$1 ,200
s
A c t u a lFo recas t
$ 6 0 0
$ 8 0 0
$ B i l l i o
$ 0
$ 2 0 0
1 9 9 0 1 9 9 3 1 9 9 6 1 9 9 9 2 0 0 2 2 0 0 5 2 0 0 8 2 0 1 2
So u r c e s : B a nk o f Ca n ad a / Wi l l Du nn i n I nc .
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Arrears Rate Has Increased
1.00%
0.80% t e -
%
0.40%
.
a r s R a
0.20% A r r e
0.00%1990 1994 1998 2002 2006
ourc e: ana an an ers s soc a on
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Consumer Attitudes and Choices
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Variations in Satisfaction
g es or o er ages groups Highest for adjustable/variable rate
mortgages (average of 8.2 out of 10
versus 7.7 for all)
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Most Mortgage Borrowers do
Number of Quotes % of Borrowers
2 28%3 17%
Average 1.91
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Fixed Rate Mortgages Still
Number of Quotes % of Borrowers
Fixed Rate 68%
Adjustable/Variable 27%
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Interest Rates
- . Lowest for variable 3.03%; 5.15% for fixed
or gages nego a e pas mon s - . For renewers: rate fell for 73%, rose for 15%,
. Average change minus 1.12%
ur ng pas mon s scoun s averagebasis points (5-year terms)
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Mortgage Rates Versus
-8
6 t
4 e r C e
2 P Pos ted
D i s c o u n t e d5 Year GoC
02 0 0 7F M A M J J A S O N D'0 8 F M A M J J A S O N D '0 9F M A M J J A S O N
.
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Spread Between Bonds and
4.00
3.00
2.00
1.00
0.00 2007F M A M J J A S O N D'08 F M A M J J A S O N D '09F M A M J J A S O N
.
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Housing Equity in Canada
s ma e a . r on ase on$2.69 trillion in values versus $706
on n mor gages
Average 74% equity 1% of mortgage holders may have
ne ative e uit > 95% have more than 5% equity
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Equity Take-out
o a mor gage o ers oo ouequity
Take-out averages $41,000
Total take-out of $41 billion vs $46 earago)
income
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To consolidate or pay down debt $ 17 bn
To renovate my house/condo $ 12 bn
To invest $ 6 bn
Other $ 3 bn
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A i d B i V S
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Attitudes to Buying Very Strong
-
6
5
4
Fall2009
Spring2009
Fall2008
Spring2008
Fall2007
Spring2007
Fall2006
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Will H P i Ri ?
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Will House Prices Rise?
-
A t l a n t i c
Qu e
On t
M a n
A l t a
B C
4 .0 4 .5 5 .0 5 .5 6 .0 6 .5 7 .0
C a n a d a
St g R f P i
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Strong Recovery of Price
-
6
7
5
4
3FallSpringFallSpringFallSpringFall
C E t ti f
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Consumers Expectations for
expec ecreases, expecincreases.
a or y s neu ra
Few expect large increases (or decreases) Consumers expectations seem consistentwith recent market trends
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Final Thoughts
,housing markets are uncertain
,exceed 6%
wo- r s o mor gage ac v y s renewa sand refinances; one-third is new mortgages
qu y a e-ou s gn can
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