Nov 9, 2010, Calgary multi-family starts soar

Multi-family starts in the Calgary census metropolitan area soared in October to a level more than 90 per cent higher than a year ago.

According to data released today by Canada Mortgage and Housing Corp., there were 438 multi-family units that began construction last month, up from 230 units in October 2009.

However, the CMHC also said single-detached units dropped by 31.1 per cent in the month to 346 starts compared with 502 a year ago.

Total starts were up 7.1 per cent in the region to 784 units.

“Single-detached construction continued to moderate as a result of heightened competition from the resale market and slowing sales,” said Richard Cho, senior market analyst in Calgary for the CMHC. “This represents the third consecutive month where starts have declined on a year-over-year basis.”

He said new home construction in the single-detached sector will remain modest for the rest of the year and into the early part of next year until active listings in the resale market diminish.

David Hooge, president of the Canadian Home Builders’ Association-Calgary Region, said the October single-detached market decrease is a continuation of a trend for the last few months.

“Our MLS numbers (resale) have come down a little bit particularly in the last three weeks. We’ve seen a little better traffic in the sales centres for sure. A little stronger traffic over the last three weeks which is a positive sign,” added Hooge. “But it’s not really translating into a lot of sales at this point. We’re still hopeful that’s going to be the case.”

Across Alberta, housing starts in the seven largest cities declined 17 per cent in October from 2,179 in 2009 to 1,801 this year.

While many economic indicators in Alberta are pointing towards a gradual economic recovery, one of the key indicators, housing starts, has been on a slow decline since early spring, said Todd Hirsch, senior economist with ATB Financial in Calgary.

Although the province’s housing starts have “clawed their way back” from the lows hit in 2009, the trend has been decidedly slower since March, he said.

“Most of this is due to the fact that much of the market for real estate was brought forward into the first half of the year when people anticipated higher rates to come after the summer,” said Hirsch. “Even though higher rates have yet to materialize, the pool of potential buyers has been thinned out, leaving a softer market.”

He said housing starts may struggle for the rest of the year and perhaps into 2011 but with the provincial population still growing and the employment situation improving, the demand for new homes is bound to return later next year.

At the national level, Canadian homebuilding showed signs of weakness in October as starts fell 9.2 per cent to 167,900 annualized units – the third straight monthly decline and fifth in the past six months.

By Mario Toneguzzi, Calgary Herald