According to Canada Mortgage and Housing Corporation, housing starts in the country’s two most expensive markets have not grown much, if at all
According to Canada Mortgage and Housing Corporation, housing starts in the country’s two most expensive markets have not grown much, if at all.
In Vancouver, total starts in August were up 17.6% compared to the same month last year, however, according to Braden Batch, CMHC’s senior analysist of economics and market insights, dissecting housing starts through the first eight months of the year tell a different story.
“If you look at January to August and how much production there’s been, that number looks like 3% growth,” he said. “But 2017 was strong for starts. There have been 13,714 starts this year between January and August, compared to 13,309 during the same period last year. So the equivalent of around a couple of buildings.”
Vancouver and Burnaby led the way in the province’s multi-family housing starts last month, but the single-family detached market is flat, says Batch.
“In August, condos in the cities of Vancouver and Burnaby were the hotspots,” said Batch. “To contrast, if you look at single detached production, it’s basically been flat since last year, and it’s down 1.4% year to date. It’s more or less flat because it’s a section of the market that generally has higher prices per unit, so there’s an issue of affordability. The really hot part of the market right now is units in line with incomes in the $700,000 to $800,000 range. Single detached is typically higher than that.”
Another factor contributing to the flattening is Alberta’s resurgent economy, which is curbing migration to British Columbia.
In Toronto, housing starts are in decline, a direct result of fewer condos and single-family detached homes coming to market. Moreover, escalating price points and land constraints have established a downward trend going back a few years.
“The demand is still there but the two main things being reflected in the numbers are, one, price point: It will cost over a million dollars to buy a single detached home and that’s keeping more buyers away said Dana Senagama, CMHC’s manager of market analysis in Toronto. “Secondly, there’s just not enough land or space out there to build these big subdivisions and we’re not seeing much activity. Both of those, and the B-20 rules that came into effect on January 1, have also made it less affordable for many homebuyers who previously might have been able to qualify. There isn’t one reason; it’s a combination of reasons.”
Senagama wouldn’t say the single-family detached market is in completely in the doldrums, though.
“But I wouldn’t say it’s dead; it’s always been robust. If you look at the resale market, single detached homes account for roughly 50% of sales.”