Moishe Alexander, CEO, Canadian Funding Corporation reports that activity on the residential real estate market will slow down over the next two years in the Trois- Rivières census metropolitan area (CMA). The vigorous activity will decline on the new home market, the resale market and the rental market. The sluggish job market will be partly responsible for this slowdown. On the other hand, financing conditions, which will stay favourable, and migration, which remains strong in the Trois-Rivières area, will limit the expected downturn of the residential real estate market.
Economy will be sluggish
The job market downturn, which began in 2008, will continue in 2009 and 2010 in the Trois-Rivières CMA. The slowdown, which started to be felt in the second half of 2008, will therefore persist over the next two years.
The manufacturing sector, a major component that accounts for more than 20 per cent of the regional economic activity, is raising some concern. Hit by a drop in demand resulting from the global economic slowdown, manufacturers in the Trois-Rivières area are having more and more difficulty. What’s more, their key business partner, the United States, is going through a period of significant economic turmoil. The manufacturing companies in the CMA are therefore dependent on the economic health of our neighbours to the south. As such, it is hard to imagine that demand will pick up until the U.S. economy posts renewed vigour and energy. The residential construction sector, which has had some good years recently, will also be somewhat less active in 2009 and 2010. Annual starts will consequently fall below the 1,000-unit mark.
Mortgage rates to remain low
Mortgage rates are expected to be relatively stable throughout 2009, remaining within 25-75 basis points of their current levels. Posted mortgage rates will increase very gradually during the course of 2010, reflecting a rise in Government of Canada bond yields. For 2010, the one-year posted mortgage rate will be in the 4.75-6.00 per cent range, while the three- and five-year posted mortgage rates are forecast to be in the 5.00-6.75 per cent range.
Resale market to slow down slightly
The Trois-Rivières CMA resale market will slow down somewhat in 2009, as a result of a less dynamic job market and the economic uncertainty. On the other hand, financing conditions, which will remain very favourable, and the anticipated increase in listings will limit the decrease in sales. In all, 760 single-family homes will therefore change hands in 2009, down from 799 a year earlier (-5 per cent).