BREAKING NEW GROUND
Single-family units up over 2017
New construction of single-family homes in the Calgary area last month topped the same time in 2017 by more than 100 starts.
Ground broke for 325 homes in the Calgary census metropolitan area, rising 32 per cent year over year, says Canada Mortgage and Housing Corp. The census metropolitan area counts builds in nearby cities and towns, including Airdrie, Cochrane, and Chestermere.
Within Calgary city limits, starts climbed to 216 from 162.
The Calgary census metropolitan area was the busiest urban centre in Alberta for single-family starts in January, edging 298 in the Edmonton census metropolitan area. For the Edmonton area, this was a jump from 244 in January 2017. Across Alberta, single-family starts rallied to 784 from 651 a year ago.
The Office of the Superintendent of Financial Institutions (OSFI) rolled out revised guidelines for residential mortgage writing practices and procedures, starting Jan. 1. One change is a new stress test for uninsured mortgages, requiring the borrower to qualify at the higher figure between the five-year benchmark rate published by the Bank of Canada and two per cent above the contracted mortgage rate.
“It’s hard to say the extent of the impact,” says Richard Cho, CMHC’s principal of market analysis. “Definitely in the fourth quarter (of 2017) we had been hearing some people trying to get into the market before those rules came into effect. But it’s really hard to say what the proportion of starts were that were related to those rule changes.”
While the tighter mortgage rules could shift some buyers to lower priced, and in some cases, smaller home options, Cho says, “I think the rules will affect people differently.”
“I know in Calgary there are a lot of different housing options on both the new home and resale market,” he adds. “I think there will be some buyers who will be looking for something smaller compared to what they were originally looking to purchase. But I think, both on the new home and resale (markets), there is quite a variety and still the opportunity to move into a single-detached house.”
On the increase in single-family starts, Cho says “the economy has been improving over the last year, and I think that’s supporting demand for housing, including those in the single-detached market.”
Supply in the Calgary area market is on the rise. CMHC says there were 429 constructed but unabsorbed single-family homes, up about 15 per cent year over year.
CMHC forecasts shovels to turn for between 4,200 and 4,600 single-family homes in 2018, followed by between 4,600 and 5,000 starts in 2019. There were 4,423 starts in 2017.