Edmonton sees big jump in multi-family starts in June
New housing starts took a massive jump in June, driven by growth in apartment units. The latest monthly data from Canada Mortgage and Housing Corp. (CMHC) reveal that starts grew 51 per cent last month, up from June the previous year.
Still, year to date, starts were down by three per cent compared to the first six months of 2018.
“In Edmonton … growth has mostly been driven by apartments,” says James Cuddy, senior analyst with CMHC.
Compared with the same month last year, single-family home starts dropped by about two per cent, (475 units versus 467) whereas the “all others” segment — largely led by apartments — increased by 117 per cent, rising from 387 to 838.
Cuddy notes high inventories of single-family detached homes in Edmonton are a key reason for the sluggish rate of home starts.
“In Edmonton, there are almost 1,300” unsold single-family detached homes, which is much higher than Calgary, which has about 580 unsold new single-family homes.
The rise in multi-family starts is a heartening sign, however. Cuddy notes while the economic numbers are by no means stellar, they are improving.
“In terms of demand, while Alberta is still in the middle of an economic recovery, there are a lot of promising signs in the economic fundamentals.”
Edmonton lost 600 jobs in June, according to Statistics Canada labour force data. But average weekly wages grew by three per cent compared with the same month the previous year. What’s more, the City of Edmonton’s economic forecast for labour for the second half of the year predicts gains in professional services, health and trade sectors, supported by a steady recovery in construction and manufacturing. At the same time, the labour force pool is also expected to grow.
All this data suggest to developers a growing need for housing, which Cuddy notes partly explains the rise in apartments, many of which are purpose-built rentals.
Adding support for the market are improving conditions on the resale side, which saw in June sales rise slightly from the same month in 2018. But more importantly, inventories fell by more than 18 per cent, data from Realtors Association of Edmonton reveal.
Single-family unit sales rose 1.5 per cent while condo resales fell about four per cent in June compared with 2018.
“While we are seeing some recovery, there’s still some challenges ahead, which is why individuals are turning toward more affordable options in the market, and of course, builders are responding,” Cuddy says.
He further notes the first half of the year has been positive for the new homes segment after a scare at the end of 2018.
Although plenty of supply remains, which benefits buyers, demand should pick up with population growth and a rise in higher paying occupations, Cuddy says.
All told, “things are improving.”