Housing starts plummet 66%in Calgary region
Mario Toneguzzi
Calgary Herald
Tuesday, February 10, 2009
Total housing starts in the Calgary region plunged a stunning 66 per cent in January compared with the same month a year ago, according to Canada Mortgage and Housing Corp. -- the lowest level for a January in 18 years.
Data released Monday by the agency said starts in the Calgary census metropolitan area dropped from 711 units in January 2008 to 243 units last month with single-detached starts down 44 per cent and multiple-family starts off 89 per cent from a year ago.
The data reinforces the trend of steadily declining activity in Alberta's residential construction sector that has been present throughout 2008, said Dan Sumner, economist with ATB Financial in Calgary. Although the decline in the province was expected, January's numbers were "particularly dismal."
"Considering that Alberta experienced one of the strongest regional housing markets in Canada during the recent economic boom, it is unsurprising that it is also showing some of the greatest declines," said Sumner.
"Considering the global recession is far from bottoming out, it is likely Alberta housing starts will be weak well into 2010 as excess capacity is slowly weaned out of the housing market."
In the Calgary CMA, there were 204 single-detached starts in January 2009 compared with 363 in January 2008.
The downward trend in single-detached starts seen during 2008 is expected to continue into 2009 due to the current economic uncertainty and elevated levels of inventory in the market, said Lai Sing Louie, senior market analyst in Calgary for the CMHC.
Meanwhile, multi-family starts, which include semi-detached units, rows, and apartments, were 39 units in January 2009 compared with 348 in January 2008.
Multi-family starts have been moving lower since June of last year while inventory levels have been moving up, said Louie. "As a result, much of the multi-family construction activity in 2009 will focus on completing the multitude of projects that were started in 2007 and 2008 rather than initiating new construction."
The Calgary CMA includes the city, Airdrie, the Municipal District of Rocky View, Chestermere, Cochrane, Irricana, Beiseker and Crossfield.
"We had a supply issue, but really right now it's more of a demand issue in terms of people having economic uncertainty to make a big purchase item.That's lower now and we're seeing a cut in demand and that is reducing housing starts in the single-family market,"said Louie, adding there is also a lower level of demand in the condo market.
He said there were only nine condominium starts in January and for the City of Calgary there were zero apartment building permit applications for the month.
"This market will take 2009 to iron itself out. So we're expecting a lower level of housing starts in the multi-family market this year as compared with last year," said Louie.
Housing starts across Alberta's seven largest centres totalled 836 units in January compared to 2,185 units a year earlier-- 61.7 per cent down. Lower levels of activity were reported across six of Alberta's seven largest centres with decreases of 63.9 per cent in the Edmonton CMA, 78.2 per cent in Grande Prairie, 58.5 per cent in Lethbridge, 47.6 per cent in Medicine Hat and 46.9 per cent in Red Deer.
The Wood Buffalo region, which includes Fort McMurray, reported a 12.3 per cent increase in year-over-year activity.
On a national level, Canadian housing starts fell 10.9 per cent to 153,500 annualized units in January, the fifth consecutive monthly decline and the slowest pace of residential construction activity since late 2001. The single-detached market fell to 50,000 annualized units, the lowest level since 1996,and the multi-family market dropped to 76,700 annualized units, or 32 per cent below year-ago levels.
The Alberta starts were the weakest since 1996.
"With a correction in the construction sector now in full swing, there are obvious negative implications for regional job markets," said Robert Kavcic, of BMO Capital Markets.
"The Canadian housing correction is in full swing, having a wide impact across the country. With sales activity showing no sign of life, residential construction will be under pressure for most of 2009."
A recent report by the Altus Group, an economic consulting firm, said job losses are only starting to take their toll and will seriously affect Canadians' willingness and ability to purchase a home.
"Housing demand will suffer from significant employment losses, reduced income, and the massive loss of wealth generated by recent stock market collapses," said the Altus Group Housing Forecast. "Rising unsold inventories will likely put further downward pressure on home prices, which will improve affordability."
Source: Canada Mortgage and Housing Corp.
Calgary Herald
Tuesday, February 10, 2009
Total housing starts in the Calgary region plunged a stunning 66 per cent in January compared with the same month a year ago, according to Canada Mortgage and Housing Corp. -- the lowest level for a January in 18 years.
Data released Monday by the agency said starts in the Calgary census metropolitan area dropped from 711 units in January 2008 to 243 units last month with single-detached starts down 44 per cent and multiple-family starts off 89 per cent from a year ago.
The data reinforces the trend of steadily declining activity in Alberta's residential construction sector that has been present throughout 2008, said Dan Sumner, economist with ATB Financial in Calgary. Although the decline in the province was expected, January's numbers were "particularly dismal."
"Considering that Alberta experienced one of the strongest regional housing markets in Canada during the recent economic boom, it is unsurprising that it is also showing some of the greatest declines," said Sumner.
"Considering the global recession is far from bottoming out, it is likely Alberta housing starts will be weak well into 2010 as excess capacity is slowly weaned out of the housing market."
In the Calgary CMA, there were 204 single-detached starts in January 2009 compared with 363 in January 2008.
The downward trend in single-detached starts seen during 2008 is expected to continue into 2009 due to the current economic uncertainty and elevated levels of inventory in the market, said Lai Sing Louie, senior market analyst in Calgary for the CMHC.
Meanwhile, multi-family starts, which include semi-detached units, rows, and apartments, were 39 units in January 2009 compared with 348 in January 2008.
Multi-family starts have been moving lower since June of last year while inventory levels have been moving up, said Louie. "As a result, much of the multi-family construction activity in 2009 will focus on completing the multitude of projects that were started in 2007 and 2008 rather than initiating new construction."
The Calgary CMA includes the city, Airdrie, the Municipal District of Rocky View, Chestermere, Cochrane, Irricana, Beiseker and Crossfield.
"We had a supply issue, but really right now it's more of a demand issue in terms of people having economic uncertainty to make a big purchase item.That's lower now and we're seeing a cut in demand and that is reducing housing starts in the single-family market,"said Louie, adding there is also a lower level of demand in the condo market.
He said there were only nine condominium starts in January and for the City of Calgary there were zero apartment building permit applications for the month.
"This market will take 2009 to iron itself out. So we're expecting a lower level of housing starts in the multi-family market this year as compared with last year," said Louie.
Housing starts across Alberta's seven largest centres totalled 836 units in January compared to 2,185 units a year earlier-- 61.7 per cent down. Lower levels of activity were reported across six of Alberta's seven largest centres with decreases of 63.9 per cent in the Edmonton CMA, 78.2 per cent in Grande Prairie, 58.5 per cent in Lethbridge, 47.6 per cent in Medicine Hat and 46.9 per cent in Red Deer.
The Wood Buffalo region, which includes Fort McMurray, reported a 12.3 per cent increase in year-over-year activity.
On a national level, Canadian housing starts fell 10.9 per cent to 153,500 annualized units in January, the fifth consecutive monthly decline and the slowest pace of residential construction activity since late 2001. The single-detached market fell to 50,000 annualized units, the lowest level since 1996,and the multi-family market dropped to 76,700 annualized units, or 32 per cent below year-ago levels.
The Alberta starts were the weakest since 1996.
"With a correction in the construction sector now in full swing, there are obvious negative implications for regional job markets," said Robert Kavcic, of BMO Capital Markets.
"The Canadian housing correction is in full swing, having a wide impact across the country. With sales activity showing no sign of life, residential construction will be under pressure for most of 2009."
A recent report by the Altus Group, an economic consulting firm, said job losses are only starting to take their toll and will seriously affect Canadians' willingness and ability to purchase a home.
"Housing demand will suffer from significant employment losses, reduced income, and the massive loss of wealth generated by recent stock market collapses," said the Altus Group Housing Forecast. "Rising unsold inventories will likely put further downward pressure on home prices, which will improve affordability."
Source: Canada Mortgage and Housing Corp.
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