Housing boom still ripe for growth

Following two very strong years in 2012 and 2013 with new housing starts of over 3,000 each year, all the forecasters are predicting we will have a more moderate year in 2014. However, when we put their prognostications into context, we can see that, in fact, 2014 should be another very active and exciting year for the new home building industry in Regina.

In January of 2013 there was not an economist in the nation who predicted Regina’s new housing starts would exceed those of 2012. Since the Regina & Region Home Builders’ Association (RRHBA) has been keeping records, the 3,122 starts in 2013 has only been exceeded by those in 1974, when there were 3,497 housing starts that year. As such, 2013 was a very good year for housing starts in Regina. This has also been one of the rare years that Regina housing starts outpaced Saskatoon’s, which also had a strong new housing market of 2,980 starts in 2013.

Single detached home starts were slightly lower in 2013 than they were in 2012. However, they were still over 30.6 per cent higher than the five year average and 37.5 per cent above the 10 year average. The multi-unit market exploded over the past few years with a record 1,876 starts in 2013.

In 2013 multi-unit housing starts, which are made up of a diversity of housing forms, made up 60 per cent of the housing market in the Regina area, with single detached homes constituting the other 40 per cent. That, in comparison to the record year 40 years ago, in which single detached homes made up 71 per cent of the new housing market, demonstrates how our city building form continues to evolve and become more diverse.

In sharp contrast to that of Saskatchewan, for the overall Canadian housing market, 2013 was actually a disappointing year, and some economists and pundits are predicting the Canadian housing market will be worse in 2014 than it was in 2013. However, others are expecting some growth as interest rates are expected to continue to stay low through 2014. Bank of Canada Governor Stephen Poloz is suggesting a “gradual slowing of housing sales and starts” or what is often called a soft landing. However, Royal LePage CEO, Phil Soper, says “Talk of a ’soft landing’ for Canada’s real estate market in the new year is misguided.” Soper goes on to say, “We expect no landing, no slowdown, and no correction in the near-term. Conditions are ripe for as strong a market as we saw in the postrecessionary rebound of the last decade.”

What is Canada Mortgage and Housing Corporation (CMHC) saying? They are forecasting that the prairie provinces will remain stable in 2014. They predict that Alberta will see slight gains from the 34,200 starts in 2013 to 34,900. Manitoba is expected to also increase from 7,100 in 2013 to 7,400 in 2014. And for Saskatchewan, they predict new housing starts will moderate from 8,400 in 2013 to 8,000 in 2014.

CMHC has stated that for Regina, “Heightened supply levels and lower net migration will inhibit new home construction this year and next. Given these factors and the addition of higher active listings in Regina’s resale market, local builders will be motivated to scale back production of new homes as we move into next year.” CMHC has set its 2014 forecast at 1,150 single detached and 1,600 multi-unit new homes starts, for a combined 2,750 housing starts in Regina for 2014.

To put all of this into perspective, even if CMHC is accurate in its forecast, you can still count on a continuation of a very healthy new housing market in Regina in 2014.

Putting a ‘slow down’ into context, one can see that new housing starts in 2014 would need to be reduced by 35 per cent to be consistent with the five year average, which was very healthy, and would still be 12 per cent over the 10 year average. As such, 2014 should be another very active and exciting year for the new home building industry in Regina.

Wherever the 2014 housing starts finish up, you can still count on this — members of our association will continue to respond to the demand for quality housing in a diversity of options to fit the entire market. Our Home Builders and Community Developers will continue to invest in turning the Regina & Region Home Builders’ Association’s vision of “Creating an innovative, sustainable, and diverse community,” into reality in Regina. Niebergall is president and CEO of the Regina & Region Home

Builders’ Association.