TORONTO - The Canada Mortgage and Housing Corporation (CMHC) released its Spring Housing Market Outlook report for the Kitchener and Guelph Census Metropolitan Areas (CMAS). Demand for both new and resale homes will fall in 2009. Resale home prices will slip in 2009, after 12 consecutive years of price growth.

Highlights of this report include:

Higher unemployment, less spillover demand from the resale home market, and satiation of the pent-up demand that built up during the 1990s are weighing on activity in the new home market. Home starts in the Kitchener CMA will reach 2,200 in 2009, down 16 per cent from last year, while Guelph CMA starts will fall to 550.

Single-detached starts in both CMAs will decline. The strong price growth in the last ten years and economic uncertainty will combine to push detached starts to their lowest level since 1995. Townhome and semi-detached construction will remain at current levels, as these types of housing are a more affordable option for homebuyers.

The resale home market in the Kitchener-Guelph area will continue to ease in 2009. Sales through the Kitchener-Waterloo Real Estate Board will decline by 19 per cent to 5,100. Sales through the Guelph and District Real Estate Board will reach 2,200 in 2009, down 21 per cent from last year.

The supply of resale homes will move slightly lower in 2009 with some homeowners taking a wait and see attitude. The existing home market will be more favourable to buyers. Resale home prices in the Kitchener and Guelph CMAs are expected to decline by five per cent to $257,000 and $255,000 respectively.

“An easing labour market will push demand for ownership housing lower,” said Erica McLerie, CMHC Senior Market Analyst for the Kitchener CMA. “The more affordable home types, especially townhomes, will be attractive to those households looking to buy a home.”