April 18, 2008
Economy at a Glance - April 17, 2008
Multiple-unit housing starts remarkably resilient in first quarter
Canada Mortgage and Housing Corporation (CMHC) recently released its March 2008 figures on housing starts. The national total was 255,000 units, seasonally adjusted at an annual rate. Total starts are ahead 9% on average in the first quarter of this year versus the same period in 2007. The “singles” market has actually slipped a little, but “multiples” have more than made up the difference.
The strength in multiples is partly a carry-over of condo units that were sold last year, but are only getting started this year. Many projects were temporarily delayed due to shortages of manpower and materials. However, there are at least three other reasons for the heightened demand for multiples.
(1) Multiples generally have a lower price-point than singles and are therefore more affordable for many first-time home buyers. This becomes more important in cities where there has been a particular run-up in the cost of housing, such as Calgary.
(2) Aging baby-boomers and some seniors are selling their high-maintenance residences in the suburbs and opting for a more glamorous lifestyle in city cores. Sometimes they can even pocket some change for retirement in the process.
And, (3) there is a heightened awareness among foreigners that Canada is a good place to dwell, for at least part of the year. Canada is a safe haven for investment and the Canadian dollar has demonstrated more stability of late than the U.S. dollar, thanks to this nation’s wealth of resources and its self-sufficiency in energy.
For more articles by Alex Carrick on the Canadian and U.S. economies, visit his blog and Market Insights.
Canada Monthly Housing Starts
(seasonally adjusted at annual rates)
Inventory of Completed but Unoccupied Dwelling Units
(Centres in Canada with Populations of 50,000 or More)
Data source for both charts: Canada Mortgage and Housing Corporation (CMHC).
Charts: Reed Construction Data - CanaData.
