Canada housing agency ups 2010, 2011 starts view

* Sees 2010 housing starts at 182,000 units

* Expects 2011 starts at 179,600 units

* Balanced resales market expected as rates, supply rise

TORONTO, May 19 (BestGrowthStock) – Pent-up demand and stronger
economic conditions are expected to support housing starts over
the next two years, Canada Mortgage and Housing Corp said on
Wednesday in a forecast for new home construction and
residential resales.

Saying Canadian housing markets have recovered since low
points hit last year, the national housing agency said it
expects housing starts of 182,000 units, up from 171,250 units
in a previous view. Housing starts are expected to range
between 166,900 to 199,600 units in 2010.

CMHC said it sees housing starts next year at 179,600
units, ranging between 148,600 to 208,800 units, compared with
a 2011 forecast of 175,150 units last quarter.

There were 149,081 starts in 2009.

CMHC’s chief economist Bob Dugan also cited new government
measures for the mortgage market, which took effect in April,
that will help the long-term stability of Canada’s housing
market.

The rule changes now require borrowers to have the
resources to qualify for a five-year fixed-rate mortgage even
if they decide on a lower-cost variable rate mortgage.

The government also lowered maximum amounts that can be
withdrawn when borrowers refinance mortgages. A minimum down
payment of 20 percent for insured mortgages tied to properties
purchased as speculative housing investments not occupied by
the owner is also now required.

Canada’s housing sector has been surprisingly resilient in
the face of a global economic slowdown, partly encouraged by
record low interest rates.

Recent housing starts data for April offered further
evidence that the housing sector has been a leader in Canada’s
economic recovery. [ID:nN17260441]

But an expected rise in interest rates soon and a healthier
supply of homes for sale will eventually dampen activity.

“In late 2009 and early 2010, sales activity included some
pent-up demand from early 2009. Once this demand is exhausted,
and as mortgage rates gradually rise, the pace of activity in
the resale market will ease,” the report said.

Dugan said the existing home market is likely to shift to
more balanced conditions over the next two years, with sales in
the range of 484,000 to 513,300 units in 2010.

It is then expected to ease the following year to be in the
range of 443,500 to 504,900 units.

Earlier this week, home resales data showed a slower pace
of sales in April while new listings climbed, suggesting
Canada’s real estate market could soon start to cool after a
year of surging activity.
Investing Analysis

(Reporting by Ka Yan Ng; Editing by Theodore d’Afflisio)

Canada housing agency ups 2010, 2011 starts view