A shortage of lots in Red Deer is resulting in a decline in housing starts for 2011.
Canada Mortgage and Housing Corporation released its statistics for the month of September, July to September and year-to-date.
In general, there’s a drop in Red Deer single-family housing starts while housing starts in general are faring better in surrounding communities.
For the month of September, Red Deer saw a 38.5 per cent drop in single-detached housing starts from the previous September.
It amounted to 16 in 2011 compared with 26 in September 2010.
Multiple-family starts stayed the same in September 2010 and again in September 2011 — eight.
In total, September housing starts dropped to 24 from 34 in September 2010, or a 29 per cent decrease.
“This is just a slow month,” said Regine Durand, CMHC market analyst in Calgary.
Year to date, from January to September, Red Deer experienced a 19 per cent slip in single-detached starts, with 236 compared with 292 in 2010. But multi-family improved by 12 per cent — with 198 in 2011 as opposed to 177 in 2010.
Overall, Red Deer housing starts dropped by 7.5 per cent in 2011 — with 434 compared with 469 in 2010.
Durand said this overall figure shows that Red Deer isn’t doing too bad. CMHC was predicting around a 14-per-cent decrease.
“At CMHC, we were expecting a slower year,” she said.
“The demand is there — the local economy is getting stronger.”
Two factors have slowed Red Deer housing starts — a lot shortage, as well as a higher differential between the price of a new home and an existing home.
One example of a shortage is in Timberlands, where in Phase 1A there are only five lots left.
“In speaking with builders, we have heard of constraints on the lot side,” Durand said.
The good news is that Red Deer will have a higher supply of lots later this year. The City of Red Deer confirmed it’s bringing on 35 more lots in Timberlands Phase 1A, she added.
There’s a potential to have 592 new lots in Red Deer next year, Durand said.
The difference between a new single-family detached home and an existing one was at the end of 2010 around $82,000. At the end of August, it grew to $106,000. “That may have detracted demand from new to resale,” Durand said.
For the months of July through September, Central Alberta’s smaller communities saw increases in housing starts.
“They don’t have that lot shortage,” said Durand.
Single-detached housing starts in Lacombe totalled 27, compared with 20 in the 2010 period. Lacombe County’s figures came in at 23 for the 2011 quarter, as opposed to seven in the previous year period.
Red Deer County’s figures for single-family detached totalled 17 in the 2011 period, 13 in the 2010 period. Sylvan Lake’s came in at 29 compared with 22.
Multiple family starts increased to 10 from two for Lacombe, seven from two for Sylvan Lake (Lacombe County and Red Deer County reported none for each period).
In total, Lacombe housing starts for this quarter increased by 68 per cent, Sylvan Lake by 50 per cent, Red Deer County by 31 per cent.
Lacombe County’s total housing start came in at 23 in 2011, up from seven in the 2010 quarter. No figure was given for percentage increase.
For the January through September period, Red Deer County’s total housing starts climbed 2.4 per cent while Lacombe’s decreased 25.4 per cent.
— copyright Red Deer Advocate