Single-family homes, condos lead starts
Calgary's new construction market shows resilience, CMHC analyst says
Calgary's new homes market continues to show strength as starts grew last month despite the pandemic's impact on the province.
Canada Mortgage and Housing Corp. recently released October data for the city and surrounding region, finding starts grew by about 20 per cent over the same month in 2019.
All told, the region saw 982 starts this past October, led by apartment (419) and single-family detached homes (316).
“The new construction market has been pretty resilient,” says senior analyst Michael Mak of CMHC in Calgary.
Single-family home starts increased by 12 per cent over the same month last year.
Multi-family demand was even stronger in large part due to the fact condominiums are typically less costly and more accessible to first-time buyers, Mak says.
Overall apartment starts — which include purpose-built rentals and condominiums — jumped up by almost 40 per cent compared with October 2019.
Mak notes condos accounted for about 300 starts last month across multi-family (including row) while the approximately 180 remaining units were purpose-built rentals.
With respect to new row homes in general, the segment saw a decrease in starts from 160 in October last year to 143 last month. Semi-detached, in contrast, saw starts rise almost 37 per cent — albeit the segment accounted for less than 10 per cent of all new home starts.
Year to date ending Oct. 31, starts were still down substantially overall. So far Calgary has seen 7,443 starts in 2020. That's down from 8,825 last year.
The drop-off is the result of the pandemic's impact in the spring. Like the resale market, demand for new homes largely froze up in April and May, and so did their construction, Mak adds.
But the industry has since accelerated. Monthly levels of dwellings under construction have remained above the 10,000-unit mark since July. As well, unabsorbed new single-family detached homes fell for the fourth straight month in October even as completions increased. In fact, completions for all types are up almost seven per cent year to date over last year.
Realtor Tim Jones says the rising activity reflects builders' recognition of a lack of move-in ready new product.
“No one predicted in the spring that our market would heat up,” says the broker/owner of Re/max Prime in Calgary.
Still, builders are concerned about overbuilding and don't want to be “caught with excess inventory six to 10 months from now,” he adds.
Heading into the rest of the year, single-family starts should slow due to seasonal factors, Mak says. But multi-family activity could maintain momentum, given last year saw “quite a few developments start in December.”
The risk of overbuilding is arguably higher for multi-family developers, given they must predict demand further into the future than single-family home builders, Jones says.
“Pre-sales certainly help, which is what seems to be pushing that segment right now.”
Builder risks aside, Calgarians looking for a home have plenty of options, Mak says.
“It's definitely still a buyers' market in Calgary.”