Steady sales drive development of new multi-family housing

The rise in construction starts for multi-family development in the Calgary area last year has continued in early 2018.

Construction crews broke ground on 7,111 multi-family homes in the Calgary census metropolitan area in 2017, rising 19 per cent from activity a year earlier, says Canada Mortgage and Housing Corp. In January, year-overyear growth continued.

Shovels turned for 326 apartments, townhomes, and duplexes, combined last month, climbing 37 per cent from January 2017, says CMHC. The census metropolitan area includes activity from neighbouring cities and towns, such as Airdrie, Cochrane and Chestermere.

“Overall, we’ve been expecting the market to gradually improve and that’s what we’ve been seeing over the last couple of months,” says Richard Cho, CMHC’s principal of market analysis.

Looking at developments within Calgary city limits exclusively, the increase was even sharper. Here, there were starts on 272 of these homes, up from 76 a year earlier.

“We saw a good start to this year with consistent sales compared to last year at this time,” says Nada Courtliff, Trico Homes multi-family sales and business development manager.

“We are seeing a mix of first-time buyers and investors but also quite a few downsizers looking at buying in the next couple years.

“With more and more options available to these buyers, an attractive base specification and price point are the main drivers for sales over our competition.”

New construction of multi-family homes in the Calgary area was the second busiest of any urban centre in Alberta last month, says CMHC.

It only trailed the Edmonton census metropolitan area, which had 421, more than doubling its tally from January 2017, when 204 of these units took root.

Alberta-wide, new multi-family development soared 46.5 per cent last month, says CMHC.

While all three multi-family segments recorded growth in the Calgary area in January, the hike from apartments led the way. Buildings containing 197 apartments broke ground in the Calgary area last month, up from 100 year over year.

Growth in starts on duplexes and townhomes followed with increases of 78 from 72, and 51 from 33, respectively.

For the year, however, CMHC is expecting the Calgary area to see fewer multi-family starts than it did in 2017.

The federal agency’s most recent forecast — released in late 2017 — looks for between 6,000 and 6,500 multi-family starts in 2018, followed by between 6,300 and 6,700 in 2019.

“With all the inventory in the market, we’re expecting a bit of a pullback, more so on the apartment side,” says Cho. “But overall, I think multi-family starts will come in lower this year compared to last year.”

Both the new and resale ends of the market have elevated levels of supply.

For constructed but unabsorbed units, a statistic that typically reflects spec and show homes, there were 1,594 in the Calgary area last month.

CMHC says this was up by about 42 per cent year over year.

From the city’s resale listings, inventory of duplexes and townhomes were up 20 per cent and 13 per cent year over year, says the Calgary Real Estate Board.

Apartment resale supply edged January 2017’s total by about two per cent.