Can this housing starts data quell market worries?

by Olivia D'Orazio09 Jan 2015
Housing starts in Canada were trending slightly lower in December as developers work to stabilize the pace of new home construction, and by extension the supposedly overheated housing market.
According to the Canada Mortgage and Housing Corp., the trend measure of Canadian housing starts in December was 192,047, down 1.4 per cent from December a year ago. The trend represents a six-month moving average of seasonally adjusted housing starts.
“The modest decline in the trend in December reflected lower levels of both multiple and single-detached starts,” said Bob Dugan, the chief economist for the CMHC. “Overall, activity in 2014 continued to be supported by employment growth and migration with [seasonally adjusted annual rates of] starts remaining essentially unchanged at 189,401 compared to 187,923 in 2013. These factors are expected to continue to promote stability in the pace of new home construction during 2015.”
Seasonally adjusted rural starts fell 9.8 per cent from the month before to 17,645 in December, while total urban starts fell 6.2 per cent from November, to 162,915. That included just 59,681 starts of single-detached properties, highlighting the national shift to multi-unit properties.
In Vancouver, however, housing starts trended up 2.7 per cent to 20,030 in December, mainly on actual starts of single-detached homes, which spiked 25 per cent over the year to 372 starts for the month of December. Seasonally adjusted starts in the West Coast city rose slightly to 21,325 in December.
“The trend measure of housing starts moved higher in December due to small increases in construction of all types of homes except town houses,” said Robyn Adamache, CMHC’s senior market analyst. “The actual number of housing starts in 2014 totalled 19,212 units, a slight increase over the previous year. Single-detached homebuilding accounted for most of this increase and was concentrated in the cities of Burnaby, Coquitlam, Richmond, Surrey and Vancouver.”
Meanwhile, in Toronto, the six-month trend for starts in Toronto was essentially flat at 25,509. Seasonally adjusted starts, however, rose 9.9 per cent to 26,398 in December, compared to the year-ago period. Actual starts of single-detached homes did not fare as well as in Vancouver, falling 14 per cent to just 690 starts in December.
“Toronto housing starts stabilized in December after trending lower for most of the second half of the year, said Andrew Scott, CMHC’s Toronto senior market analyst. “Toronto posted 28,929 new housing starts in 2014, a decline of 14 per cent from 2013, which is mainly attributable to a downturn in condominium apartment pre-construction sales between mid-2012 and mid-2013. Nonetheless, stronger pre-construction sales in 2014, supportive economic conditions and mortgage rates near historic lows will likely translate into higher starts in 2015 for the GTA”.


  • by 1/9/2015 11:24:44 AM

    Does anyone remember Halifax is in Canada.

  • by Shayne Fedosenko 1/9/2015 11:35:39 AM

    Realestate starts in December being higher is probably because of the changes that are occuring in the BC Building Code,I work with 5-6 Builders and they all purchased lots and scrambled to get Building Permits in by Dec 19th,some put in 7-8 permits..alot of builders are concerned in BC about the increased cost to build a new home(especially low end houses(baseboard heat etc..) I've heard Builders say the new changes(HRV,air exchange,Insulation,Doors,Build Plans etc..) May increase cost another 5-10k to build a home(Depends what the local municipalities enforce,and how) It will be interesting to see what happens..I do believe that lot prices will drop,to compensate this,they will have to,prices of new homes aren't increasing in the area I work..It was Eye Opening to see all People who are involved in Building trades who owned Subdivisions,sold as many lots as they could(worried,was reasonable on selling prices) all subdivisions owned by out of province owners,or financial groups,know nothing about actual Build Costs, that we wrote on in my opinion,didn't have a clue of this impact the new code may have.Be interesting to see what happens.

  • by Deborah Kline, Sutton Victoria 1/9/2015 2:41:46 PM

    In Victoria, especially on the West Shore of Langford, we continue to see a reduction in the resale prices of homes that are less than 4 years old. This is due to the low and very competitive prices of new single-family detached homes and condos which are built smaller. Families are sacrificing the luxury of interior and exterior square footage in the quest for 'new'. This means smaller yards to play in (if a yard at all), narrower streets, congested with multiple cars because most families have two cars, or tenants to help with the mortgage. The West Shore has seen a glut of new builds over the past several years and developers are often forced to reduce their profit margin substantially to continue their business. Some smaller ventures have gone belly up and the unfinished new builds are sold in foreclosure. Just look at the inactive building sites on Colwood Corners, Goldstream and Bear Mountain, where large gaping holes are all that is left behind after condo developments run out of money... It causes one to pause when buying into a new - not-yet-constructed development, that's for sure. But what is the difference between the successful builders and those who are not so successful? What's the formula for success? While it starts with a solid building plan and savvy investors, It all comes back to quality within the units and quality of life that the unit will support... The successful industry-standard for condos must have the 2 bed/2 bth with all the bells and whistles of granite, hardwood and let's not forget the square footage! For single-family homes, the 'must haves' are family-friendly (spacious) layouts with a separate family room, yards for the children and neighbourhoods that have a more open feel with parks nearby. Some developers nail this formula beautifully (always at the cost of their profit margin of course) and so, the cost of building makes it less worth their while to continue. Other developers, who are keen to increase their profit margin, sacrifice on all these things and wonder why their units do not sell. If we are going to address the real quality of life issues on the West Shore, we cannot ignore the impact of traffic congestion (the "Colwood Crawl"). A developer can build the best home, but fewer buyers will be willing to sacrifice their free time to commute. Quality matters and will continue to matter.

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