TD Bank:OVERPRICED AND OVERBUILT: CANADIAN HOUSING

依勒特

During Canada’s “Housing Boom”, which ran roughly
from 2002 to 2008, unsustainable price increases drove
4 L4 J$ R- N/ X! l4 b( Funsustainable levels of building. Our view is that house
+ l$ K4 S0 f; g# t9 Cprices exceeded the value of housing that was justified by
fundamentals by approximately 9% nationwide. This
; t: m& e) y# Ooverpricing compelled a level of residential construction
that exceeded its fundamental-justified level by approximately
12%, an excess that was exaggerated in the past
- u( N0 |1 Q; ^0 P$ _three years.
By “overpricing” we mean that prices detached from
their fundamentals, as witnessed by a steep erosion of
) B( C" Q4 z1 J5 n0 T8 qaffordability. The current unwinding of house prices reflects
' ~: G; I; G- @* Rboth a cyclical downturn and a return of house prices
to fundamentally justified levels.
* c! t. d" i. A( ^! C$ Y4 KWe consider “overbuilding” of two forms: “demanddriven”
where homebuyers buy up too many houses and
$ {& w- {0 \0 ?0 ]) `6 hthat this demand cannot be sustained; and “supply-driven”
2 {* X; @; l7 dwhere builders accumulate excessive inventories. Although
- d$ e- C' b5 d  H; l( xthere is evidence of both types, we contend that Canada’s
3 i# M+ {; k' \$ O- x( t“overbuilding” was mainly of the first type, where
homebuyers pushed homebuilding to an unsustainable pitch
! U1 h. }1 ?% u9 m& l7 V) U; y% Vthat is now being rapidly reined in.
While most markets won’t face U.S.-style overhangs,
" C5 v, A2 m) t0 Mthe construction of too many new homes over the boom
means a deepened slump. This overbuilding will likely weigh
on markets over the next few years. Even as Canada recovers
from the cyclical downturn, house price growth will
remain choppy and new residential construction will be
dampened, owing to this structural weakness. Construction
6 l6 W0 p8 c5 k( lis now undershooting fundamentals and we expect this
; k" I. ~  {! ]% c: ^; [! xto persist over 2009 to 2011. We anticipate that nationwide
+ j; Q) S- T+ e8 i3 R2 Aresidential construction will fall further to around
' |- J6 n; t* S: [  H2 U+ n125,000 starts over 2009 with a trough around 115,000 units
in the fourth quarter.
To quantify the degree of overpricing and overbuilding,
we first develop an empirical model, based on long-run
# u1 {5 D1 |: R& {% Jfundamentals of house prices and housing starts in each
: \+ \; \4 t& Rprovince. Affordability is the key concept behind home
values since house prices should track incomes over the
& O' q% G8 z; {" x0 olong-run. Since homebuilders build to meet demand, we
regard housing prices and household formation as the drivers
of residential construction.
To examine the degree of overbuilding, we employ a
: F2 E5 _& N2 u4 Q' R5 }“counter-factual,” asking what level of residential construction
would have occurred if housing had been priced
optimally. We find that actual homebuilding exceeded this
fundamental-justified level by about 12%. Although new
: L% B" V0 C- Y& Y& X/ Uunits were being absorbed, homebuyers simply bought too
many houses at prices that exceeded fundamentals.
; d4 n+ F  E3 K/ q3 X! w* VRegionally, we see the greatest strains on the Prairies,
/ Z0 L! }% D5 j* z% [& \+ vwhere housing demand will further contract under waning
  I8 r" \+ n# hpopulation inflows. Saskatoon, Calgary and Edmonton are
2 t) ?. w( e; Q6 I8 kalready witnessing surges in their unsold new homes at the
5 `! q/ R/ F& N1 y% ^3 Dvery time that the resale market has swung into strong
buyers’ territory. Homebuilding in the Atlantic provinces
has been relatively balanced but, while not plagued by structural
0 B' H4 H4 T7 X& F2 G( dweakness, will be singed by the downturn nonetheless.
6 V. R" R+ a( H% }) G2 iQuébec shows signs of strain – especially given the
strange accumulation of unabsorbed multiples on l’Île de
Montréal – but recent building has been relatively balanced,
given the province’s history of under-building and low ownership
1 U* @, J1 ]" N% ?& irates. While Ontario homebuilding will reel from a
' _# W' I4 f5 x2 U: Jcyclical downturn, the degree of structural weakness appears
2 S8 N6 j$ I$ ?9 R0 g; [limited – with the important exception of the Toronto
condo market. Both in Toronto and Vancouver, historically
- W0 y: y; q6 s- e; E* ]! ihigh levels of apartment-style units presently under
construction mean that record numbers of condos will
! @  ^, q/ o: }, {* D3 U8 {reach completion during 2009. If absorption rates fall, as
4 {- v7 P8 P0 y9 Y7 bcyclical factors would indicate, condo inventories could
spike severely – particularly in Vancouver. However, while
& a4 q: {1 n0 }* aresidential construction in B.C. will definitely droop, we
0 c( ~" t. `/ fanticipate that the West Coast will continue to benefit from
* A. q' P) G6 m+ F. ointer-provincial and international migration over the coming
years, which, along with improvements in affordability,
will alleviate some of the pressure from overbuilding.
/ r, c5 A7 y( u3 J- ^6 a( cOVERPRICED AND OVERBUILT: CANADIAN HOUSING
: U: y  c* ~( x8 e! k4 W! M2 xMARKET RETURNS TO FUNDAMENTALS
! i  `) E1 ~! w1 {1 j$ D/ Z! WGrant Bishop, Economist
416-982-8063
Pascal Gauthier, Economist
7 R& N5 ^; q0 `4 N2 `416-944-5730
6 `. \8 {5 l( ?& ^" i; @% j
http://www.td.com/economics/special/gb0409_housing_exec.pdf

宋兵乙