Housing starts remain brisk

Residential builders in Red Deer remained busy in May, with 53 starts on single-family houses in the city during the month, according to Canada Mortgage and Housing Corp.

Residential builders in Red Deer remained busy in May, with 53 starts on single-family houses in the city during the month, according to Canada Mortgage and Housing Corp.

That figure was up 43 per cent from May 2012. But starts on multi-family units — which tend to fluctuate as projects commence — was down to 13 last month, as compared with 30 a year earlier.

When the two housing types are combined, May 2013 starts came in at 66, slightly behind the 67 recorded in the same period last year.

So far this year, there have been 364 housing starts in Red Deer: 164 single-family homes and 200 in the multi-family category. That compares with 256 during the first five months of 2012, when there were 122 single-family and 134 multi-family starts.

Among the province’s other six other centres with 100,000 or more people, only Medicine Hat had fewer housing starts this May versus the same month last year — and the decline was just one.

For this calendar year to date, Calgary has had fewer housing starts than it had to the same point in 2012. All others are up.

Nationally, CMHC reported a surprising resurgence in May.

“It’s defying gravity,” said Benjamin Tal, deputy chief economist with CIBC World Markets.

But he predicted a slowdown in the future, a conclusion supported by other economists.

“May’s sharp jump in the pace of new home construction is unlikely to be sustained,” TD Bank economist Dina Ignjatovic said.

“Indeed, slower price growth in the housing market could lead to lower home-building activity in the coming quarters. Moreover, the overbuilding that has taken place over the last 10 years could lead to new home construction falling below this demographic need for a period of time.”

That is also the view of CMHC analyst Mathieu Laberge, who noted the six-month moving average, or the trend in starts, remained largely unchanged in May.

The market did fall following last July’s changes to regulations that made mortgages more difficult and more costly to obtain for first-time buyers. The cooling was most noticeable in starts and in sales, which are off about 10 per cent from last year. But prices have remained stubbornly immune.

Last week, the Paris-based OECD cited Canada as one of the most concerning markets in the world, one of three in which despite their elevated levels, prices are still rising.

But Tal, and many others, believe with sales falling, prices will also eventually move lower.

Barring that, he says the superintendent of financial institutions may have no choice but to follow through on its hint that it might lessen the amortization period from 30 to 25 years for uninsured mortgages — those with more than 20 per cent down payment — bringing those in line with CMHC-insured borrowing.

The Bank of Canada and the federal government have long worried about Canada’s housing market continuing to expand beyond fundamental levels because of the potential for a sudden and steep crash once interest rates start to rise, which would not only put many homeowners’ finances in jeopardy, but could also sideswipe the economy.

One encouraging element in the May numbers — for those who subscribe to the soft landing scenario — is that most of the gains came in the notoriously volatile condo market, which registered a 22.2 per cent jump in starts. Single urban starts rose only three per cent.

Urban starts increased 14.6 per cent in May, led by gains in Atlantic Canada and Ontario, while the Prairies saw little change and British Columbia and Quebec decreased.

With files from The Canadian Press.

Just Posted

With a new syphilis outbreak in Alberta, infectious disease testing is made easier in Red Deer

Shining Mountains Living Community Services staff can do quick, simple dry blood spot test

Central Alberta home sales down 10 per cent from 2018

August sales 17.7 per cent lower than August 2018

Singh urges Canadians to consider troubling impact of Trudeau photos, video

OTTAWA — Jagmeet Singh challenged Canadians Thursday to try to see through… Continue reading

Your community calendar

Wednesday Central Alberta Historical Society annual general meeting is 6 p.m. at… Continue reading

Red Deer, Innisfail to host high school golf provincials next week

Nearly 150 of the best golfers across the province are set to… Continue reading

Senate tech critic tells Facebook CEO: Sell message services

WASHINGTON — The Senate’s most vocal critic of the tech industry offered… Continue reading

Walgreens, Google affiliate to launch drone delivery test

Walgreens and a Google affiliate are testing drone deliveries that can put… Continue reading

Airbnb says it will go public in 2020

Airbnb Inc. said Thursday it plans to go public in 2020, a… Continue reading

Understanding weather risks for home insurance as premiums, coverage shift

TORONTO — As the immediate impacts of hurricane Dorian fade from the… Continue reading

POLL: Should Liberal Leader Justin Trudeau resign after it was revealed he wore “brownface?”

Should Liberal Leader Justin Trudeau resign after it was revealed he wore… Continue reading

MAP: Red Deer Open Houses for Sept. 20-22

Plan your open house viewings with the attached map of listings in… Continue reading

Most Read