Since 1980, the Market has grown at a compound annual growth rate (“CAGR”) of 9.4%. The Canadian Market has been very resilient, with three significant downturns occurring in 1990, 1995 and 2008, all of which returned to pre-downturn levels within 24 months. The duration of these Market downturns was 13, 14 and 16 months, respectively, with decreases of 26%, 21% and 19%, respectively.
During the most recent downturn, the Market declined 19% during the 16-month period February 2008 through May 2009, with the most significant decline occurring during the fourth quarter of 2008, when the Market decreased 40% compared to the fourth quarter of 2007.
The Market improvement in 2009 began with the rate of decline moderating steadily from January to May, followed by four months of increasing Market growth and subsequently ending the year with very strong growth of 90% in the quarter over the same period in 2008. The strong Market continued into the first half of 2010, due in part to consumers seeking to close home sales ahead of government mandated changes to mortgage rules, anticipated increases in mortgage rates and the introduction of the HST on July 1, 2010. These Market factors pulled 57% of the 2010 Market activity into the first half of 2010, compared to 46% in 2009, resulting in a year-over-year decline in the second half of 2010. When combined with the first half of 2010, this saw the overall Market rise by 1.7% for the twelve-month period ended December 31, 2010, compared to the same period in 2009.
During the 1990 downturn, interest rates were relatively high, and there was significant speculation in the form of building and multiple home ownerships. Since that time, lenders now require builders to pre-sell a significant portion of their developments before advancing funds, and under new mortgage-lending rules, non-owner-occupied property purchases that qualify for mortgage insurance have increased down payment requirements.