New residential construction to rebound in 2020: report

But local builders skeptical of CMHC’S rosy outlook for single-family dwellings

Regina can expect to see a rebound in new house builds next year, according to a forecast released by Canada Mortgage and Housing Corporation (CMHC) this week.

“Construction of single-detached units are expected to pick up as an improving employment outlook and population growth will contribute to new household formations and increased demand,” said the report.

Between 700 and 1,400 new units are expected to pop up by 2021 — 300 to 600 of those single detached homes and 400 to 800 of those units spread out among multi-unit dwellings like rentals, row houses and condos.

The new construction will be supported by “favourable demand” for lower-priced housing options like condos and townhouses and although sales are expected to increase, the average price growth will be limited, says the report.

Jeff Marchigiano, sales manager for Gilroy Homes, is skeptical but hopeful about the numbers.

“I believe those are very high expectations, especially on the single-family dwelling side,” he said. “I’m hoping they know more than me.”

Gilroy Homes deals solely with single-family dwellings, and Marchigiano said the general consensus among those he’s spoken to is that the industry will remain much the same in 2020 as it has in 2019, and then pick up slightly in 2021.

“What’s happening right now in the market should be a good indicator of what’s going to happen next year,” he said.

The CMHC forecast appears to be more optimistic.

The average MLS sale price is expected to range from $290,000 to $300,000 in 2020, with the number of sales expected to hit somewhere between 3,000 and 3,350.

While overbuilding increased rental in 2018 and 2019, a slowing of rental construction this year is expected to decrease vacancy rates in 2020 and 2021.

“Rental demand in Regina will be supported by population growth and positive international immigration levels,” said the report.

But there are potential challenges that could put the forecast at risk, according to the report, including a slower than expected economic recovery and tightening credit market conditions.

“If employment growth in Regina is concentrated in the part-time sector rather than in full-time positions, new household formations and housing demand may fall,” said the report.

The rebound would be a welcome change to the industry if the forecast proves true.

Back in May, the residential construction industry reported being in a “deep recession” and 2019 housing starts were expected to be the lowest in 11 years.

A report from the Regina and Region Home Builders’ Association put most of the blame on mortgage stress-testing rules, which it said is raising the barrier to home ownership.

The association pointed to the expansion of the provincial sales tax (PST) to include the cost of construction labour as a factor.

“Those employed in the residential construction industry have been losing their livelihood,” Stu Niebergall, president and CEO of the Regina and Region Home Builders’ Association, said at the time.

I believe those are very high expectations … I’m hoping they know more than me.