While 2009 was an improvement over 2008 with home sales shooting up and the price of homes skyrocketing, it was not so great if you were building homes. Home starts in Ontario were down significantly, by 32 percent from 75,000 to 50,000 homes. In Toronto, it was even worse with home starts falling by 39 [...]

While 2009 was an improvement over 2008 with home sales shooting up and the price of homes skyrocketing, it was not so great if you were building homes. Home starts in Ontario were down significantly, by 32 percent from 75,000 to 50,000 homes. In Toronto, it was even worse with home starts falling by 39 percent to 25,949 units.

The question can be asked as to why if home sales are so great, are home starts so poor. Well, home starts have lag time compared with how the housing market is doing. When the housing market is not doing well and then improves, it can take time for the builders to catch up because of permits and zoning. When the market is doing well and then falls, then it can be awhile before the builders begin slowing down because of contracts already signed and projects already started.

 In the start of 2009, with less people buying homes, builders slowed down how many homes they were building to almost zero. Then, when the market began to improve, builders waited to see if it was just a fluke and when it turned into a long-term trend, builders began filing permits once again. This means that once we get into 2010, especially the later-half, then we will have more homes being built because the building market will have caught up with the housing market.

 This is easily shown by the fact that building permits fell in Ontario by 19.2 percent from 2008 to 2009. One good thing about the housing market improving is that there will be more housing starts and that means more homes being built. When more homes are built, there are people with jobs building them. Therefore, the improving housing market will help give people jobs, which will give them more spending money and therefore bring up the rest of the economy.

 Most experts are expecting that the housing market will continue to grow until June 2010 when it begins to level out with the increase of the interest rate and new rules for getting a new mortgage. With these new rules, less people will be getting a mortgage and things will even out. Right now it is a sellers market, which lifts up the housing prices. Housing starts will continue to increase through 2010, and may even reach higher levels in 2011 if experts can be believed.


Posted: 2010-01-18 12:27:20

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