Building boom stalls

The first quarter of 2009 was one to forget for Red Deer home builders.

A worker cuts excess plywood from a new home under construction in Southbrook Wednesday.

The first quarter of 2009 was one to forget for Red Deer home builders.

Canada Mortgage and Housing Corp. reported on Wednesday that housing starts in the city during the first three months of the year numbered 58 — down 51 per cent from the first quarter of 2008.

Single-detached homes accounted for 50 of the 2009 total, as compared with 89 the preceding year. The rest of the starts were units in multi-family buildings.

During the month of March, there were 20 housing starts in the city, with 16 of these single-detached projects. Last March, the tally was 29, with all of these single-detached homes.

Despite this 31 per cent decline in construction starts last month, Red Deer’s residential construction sector experienced a smaller percentage drop-off than any of Alberta’s other large cities.

Calgary’s metropolitan area experienced a 90 per cent year-over-year slide in residential starts in March, while in the Rural Municipality of Wood Buffalo the decrease was 78 per cent, in the Edmonton metropolitan area it was 72 per cent, in Lethbridge it was 63 per cent, in Medicine Hat it was 47 per cent and in Grande Prairie it was 39 per cent.

On a quarterly basis, Red Deer’s decline in residential construction was less than all but one of its urban counterparts. The Calgary metropolitan area experienced an 84 per cent drop, in the Edmonton metropolitan area it was 67 per cent, in the Rural Municipality of Wood Buffalo it was 63 per cent, in Lethbridge it was 60 per cent, in Medicine Hat it was 48 per cent and in Grande Prairie it was 20 per cent.

For Alberta municipalities with 10,000 or more people, housing starts during the first three months of 2009 fell a cumulative 73 per cent.

Nationally, CMHC reported that housing starts were up 13.7 per cent in March as compared with February — which marked a nine-year low.

BMO Capital Markets economist Douglas Porter noted that almost all of the gain was in the volatile multiple unit category, which was up 28.3 per cent while urban single-family starts rose just 1.3 per cent.

“Home-building reports around this time of year can be as much a weather report as an economic report, and March was generally on the mild side,” Porter wrote in a note to clients.

“The level of residential building permits sagged to just 124,000 units in February, suggesting activity is likely to fade further.”

“March’s level of starts is still down a towering 35 per cent from a year ago,” Porter said.

CMHC said urban housing starts increased by 35 per cent in Ontario and by 23.3 per cent in Quebec, but declined by 17.3 per cent in British Columbia, by 7.9 per cent in Atlantic Canada, and by 7.5 per cent in the Prairies.

TD economist Pascal Gauthier suggested that poor weather conditions in Central Canada during the first two months of the year likely added to the usual winter weakness, with milder than usual March weather helping to boost residential construction.

“There is not enough in this monthly March data to believe it breaks the previously entrenched downtrend,” Gauthier wrote in a note to clients.

“We expect further weakness in the coming quarters, and will be looking for signs of stabilization in home-building activity towards the end of the year in sync with the rest of the economy.”

With files from The Canadian Press

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