Red Deer home builders slightly ahead of 2011
With two months remaining in 2012, Red Deer home builders find themselves slightly ahead of the pace they were setting last year at this time.
Canada Mortgage and Housing Corp. reported on Thursday that there had been 499 housing starts in the city as of Oct. 31.
That was four per cent ahead of the 479 starts recorded to the same point a year ago.
Construction was up five per cent in the case of single-detached homes in Red Deer, to 282 from 269; and three per cent higher for units in multi-family projects, to 217 from 210.
The gap widened a bit in October, with 52 residential starts recorded in the city. That was up 16 per cent from the same month in 2011, when there were 45 starts.
However, work on single-detached houses fell by nearly 40 per cent last month, to 20 from 33. Multi-family projects more than made up for this slide, with 32 starts in that category last month, up from 12 a year earlier.
Among Alberta’s largest urban centres, Medicine Hat has led the way when it comes to year-over-year gains in housing starts for the January-to-October period, with a 90 per cent increase.
The City of Grande Prairie has posted the second biggest gain, at 66 per cent; followed by the Calgary metropolitan area, at 52 per cent; and the Edmonton metropolitan area, at 30 per cent.
Housing starts in Lethbridge during the first 10 months of this year were down 17 per cent from 2011, and for the Wood Buffalo census area the figure fell by 31 per cent.
Nationally, home construction slowed in October. On a seasonally-adjusted basis, starts fell almost nine per cent from September to October. The decrease applied to both single- and multi-unit starts in urban areas.
“The monthly decrease in total housing starts posted in October was mostly due to a decrease in both single and multiple starts in urban centres in Quebec and the Prairies,” said Mathieu Laberge, deputy chief economist at CMHC. “Multiple starts also declined in many urban centres in Ontario, more than offsetting an increase in such starts in Toronto.”
Seasonally-adjusted urban starts decreased 1.5 per cent in British Columbia, 6.4 per cent in Ontario, 12.3 per cent in the Prairies, and 16.8 per cent in Atlantic Canada.
Earlier this week, CMHC predicted a sizable drop in housing starts next year, compared to what it had been forecasting.
Bank of Canada governor Mark Carney said the slowdown is consistent with the bank’s expectations.
“We view household formation around 190,000 annualized and the starts are a little north of 200,000, so they’ve slowed from a very rapid pace to a pace that’s still above household formation,” Carney said in Montreal.
“We’re expecting this decreased contribution from housing relative to GDP. . . . We’re starting to see some things that are consistent with that, so it’s entirely consistent with expectations.”
Emanuella Enenajor of CIBC WM Economics noted that “despite low (interest) rates and surprisingly resilient investor demand, housing construction looks to be struggling to attain new heights in recent months.”
“Although the housing starts data tend to be volatile month-to-month, we expect to see a trend in softening starts through 2013, as a slowdown in secondary market activity weights on homebuilding.”
The CMHC data suggests housing starts — where trends tend to lag those in the home resale market — are falling in line with home sales figures released in the last few months, which points to a broader slowdown in Canada’s housing market.
The latest figures from Canadian Real Estate Association found sales in September fell 15.1 per cent from a year earlier, due in large part to a further tightening of mortgage rules and a slowdown in Vancouver.
A real estate expert at Queen’s University called the drop in housing starts in October “significant” and said it’s “clear evidence” that the housing market is slowing down.
“(The numbers) provide sound evidence reinforcing the idea that housing markets in most regions and cities are cooling off rapidly,” John Andrew, director of the Queen’s real estate roundtable, said in a release.
“Housing starts are clearly responding to the decrease in new and existing home sales that we’ve seen in most markets over the past few months, especially for condos. I expect this trend to deepen over the remainder of 2012 and likely into 2013.”
In a global outlook released last month, the International Monetary Fund singled out housing and household debt, which currently sits at a near-record 163 per cent of income, as the key areas of concerns for Canada.
Those concerns have been voiced before, including by Bank of Canada governor Mark Carney and Finance Minister Jim Flaherty, who has moved four times in as many years to reduce mortgage lending.
Over-saturation, high prices, high debt levels and recent tightening of mortgage rules are impacting the resale market, economists have noted, particularly in the previously torrid markets of Toronto and Vancouver.