Housing starts soar in Calgary
Alberta only province with ‘clear’ momentum
The pace of new multi-family construction sent housing starts soaring in Calgary and throughout Alberta in June.
Canada Mortgage and Housing Corp. reported Wednesday that housing starts in the Calgary region rose to 2,407 units in the Calgary census metropolitan area from 912 last year — a hike of 164 per cent.
The multi-family segment experienced a 400 per cent year-over-year increase to 1,780 units, up from 358 in June 2013.
The single-detached sector also saw a jump of 13 per cent to 627 units in June from 554 last year.
“The trend in total housing starts recorded a pronounced gain in June, primarily due to an elevated pace of multi-family construction,” said Richard Cho, senior market analyst in Calgary for CMHC. “A low inventory of complete and unabsorbed units combined with elevated demand continues to support the rise in multi-family construction this year.
“Supply in both the resale and new home markets has been low, while demand has been supported by impressive job gains, low mortgage rates and elevated migration. This has contributed to the increase in new construction. Some demand has also shifted to multi-family units where prices on average are lower compared to single-detached homes.”
Year-to-date, total starts in the Calgary region are up by 67 per cent from a year ago to 9,294 units. Single-detached starts have risen by 7.7 per cent to 3,323 units while multi-family starts are up 141 per cent to 5,971 units.
Robert Kavcic, senior economist with BMO Capital Markets, said a surge in activity in Alberta was the big story in June.
“Housing starts in the province saw a massive burst to 53,700 annualized units, a level topped only in a handful of months during the pre-recession housing boom in 200607,” he said. “Given scant supply and very strong population growth, recent soft readings for starts in the province didn’t make a whole lot of sense, but June’s result quickly turns that story around.”
He said starts for the second quarter of this year in Alberta hit a six-and-a-half-year high, “the only province with clear upward momentum in building activity.”
Richard Goatcher, economic analyst with the Canadian Home Builders Association-Alberta, said the surge in multi-family construction pushed Alberta housing starts up strongly in the first half of 2014. At 18,137 units, total starts in the province’s cities over 10,000 population were up 12 per cent from the first six months of 2013.
“Demand for new homes in Alberta should remain strong for the balance of 2014 thanks to affordable mortgage rates, steady job creation and robust population growth,” he said. “A shortage of rental units and relatively tighter resale home markets are also helping to bolster consumer interest in new homes this year.”
Admir Kolaj, economic analyst with TD Economics, said Canadian housing starts continue to defy market expectations coming in at 198,185 annualized units, which is a slight increase of 0.6 per cent over May.
“Low interest rates are adding more fuel to the housing market’s tank,” said Kolaj. “Builders are clearly responding to the low interest rate environment and continued strong price growth in the existing home market by keep construction activity elevated.
“However, the market is still considered to be at least moderately overbuilt. Many of Canada’s biggest cities are already flush with condos for sale and still have a record number of units under construction, many of which will end up on the market once completed.”