Housing starts expected to rise in 2010

by Cody Stuart
Cover Story | Vol. 27 No. 20 | May 14, 2009

Calgary is expected to be amongst the country’s biggest casualties when it comes to new housing starts for 2009, according to statistics recently released by Altus Group and the Canada Mortgage and Housing Corporation.

Of course, there is a silver lining to be found in all of this. For those who are in the market for a new home, the economic downturn has resulted in a price correction of sorts to the Calgary housing market.

Despite a slowdown in sales, which amounted to a 35% decline in homes sold through MLS from March to April of 2008 to the same period this year, the resulting decrease in house prices has improved the affordability for buyers in the Calgary market.

Unlike markets in Ontario and Quebec, where the decline is expected to continue, housing starts in Calgary are expected to rebound, with forecasted numbers for 2010 showing a 30% increase over this years stats.

Job losses, slowing income growth and the collapse of the stock market were key factors in the decline, with Toronto, Vancouver and Calgary accounting for nearly half of the Canada-wide decline. Between the first quarters of 2008 and 2009, the unemployment rate in our city has nearly doubled, increasing from around 3% to 6.3% in just one year.

New housing starts for Calgary are expected to drop from over 11,000 in 2008 to just 4,400 in 2009, with the number of new apartment starts in the city falling drastically, going from 5,700 to less than 1,000 predicted for this year.

“The decrease in April’s housing starts is partly attributable to the volatile multiple starts segment,” said Bob Dugan, Chief Economist at CMHC’s Market Analysis Centre, in press release.

Contributing to the problem is the fact that many developers have had to put many existing projects on hold, with the number of completed but unabsorbed condominium units increasing from 38 through March of 2008 to 165 in March of 2009. The number of new condominium starts in Calgary conversely fell to just 84, compared to over 3,000 new starts through March of 2008.

After a period of almost unparalleled growth, home prices in Calgary are predicted to drop by nearly 7% in 2009, a far cry from the 16% increase experienced just two years ago.

Month to month, the number of housing starts across the country fell from over 146,000 units in March of 2009 to less than 120,000 in April.

The decline is even more dramatic when looked at on a yearly basis, as housing starts in Alberta in March of this year are expected to number 11,900, compared to nearly 52,000 in March of 2008.

Cody Stuart is a Calgary Real Estate News reporter.