Gap in housing starts narrowed in April

A jump in the construction of single-detached homes in the Red Deer census area last month has narrowed the year-over-year gap in housing starts in that category. Canada Mortgage and Housing Corp. reported on Tuesday that work started on 36 single-detached homes in the city during April. That topped the 29-house tally for the same month in 2011 by 24 per cent, and pushed Red Deer’s four-month total to 85 — as compared with 91 single-detached starts for January to April 2011.

A jump in the construction of single-detached homes in the Red Deer census area last month has narrowed the year-over-year gap in housing starts in that category.

Canada Mortgage and Housing Corp. reported on Tuesday that work started on 36 single-detached homes in the city during April. That topped the 29-house tally for the same month in 2011 by 24 per cent, and pushed Red Deer’s four-month total to 85 — as compared with 91 single-detached starts for January to April 2011.

Meanwhile, starts on units in multi-family projects in the city numbered 16 in April, unchanged from a year earlier. Multi-family starts during the first four months of this year totalled 104, as compared with just 39 to the same point in 2011.

As a result, cumulative housing starts in Red Deer for 2012 was up to 189, a 45 per cent improvement over the four-month tally of 130 in 2011.

Among Alberta’s seven largest urban areas, the Calgary metropolitan area posted the biggest year-over-year increase in housing starts — jumping 133 per cent from the January-to-April period of 2011, although much of the increase reflected a big jump in multi-family projects. Residential construction starts in Medicine Hat census area were up 51 per cent to the end of April, followed by Red Deer, the Edmonton metropolitan area (37 per cent) and the City of Grande Prairie (24 per cent).

Housing starts in the Lethbridge census area for the first four months of 2012 were down 50 per cent, and in the Regional Municipality of Wood Buffalo they were 16 per cent lower.

Nationally, housing starts surged a seasonally adjusted 14 per cent from March to April, due mainly to an increase in construction on urban apartments and condos

“There’s little question now that Canada’s residential construction sector is heated, with the big-city condo market boasting the highest temperature,” said Bank of Montreal economist Robert Kavcic.

In a sharp contrast to the robust activity in urban centres — up 18 per cent year over year — construction on rural homes fell by 19 per cent.

The housing market has been driven by historically low interest rates, which appears to be continuing to fuel the robust building pace despite economists’ expectations of some softening.

Super-low mortgage rates and high demand have driven housing sales and prices higher, especially in large urban centres such as Toronto and Vancouver, particularly in the hot condo market.

However, CMHC has said the condo trend is not sustainable and many analysts agree.

“The trend away from building detached homes in favour of condos continues unabated, particularly in Toronto, Vancouver and Montreal,” said Kavcic.

Dina Cover, a TD economist, said the level of home starts recorded in April is not sustainable.

“Overall, we expect home-building activity to remain healthy this year, as builders work to complete projects before the Bank of Canada begins to hike interest rates — a move we expect to take place in September.”

The Bank of Canada and federal Finance Minister Jim Flaherty recently stepped up their warnings to Canadians to moderate borrowing on real estate, declaring household debt to be the domestic economy’s number 1 enemy.

The finance minister has also announced changes to the designed to tighten controls on lending from CMHC, a move that was further expected to slow the market.

With files from The Canadian Press.

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