Housing starts tell an interesting story
April 09, 2019
Taken at a glance, the first couple of months of 2019 appear to be a lot like last year. Upon closer inspection, however, there are a few notable differences.
According to Canada Mortgage and Housing Corporation (CMHC) statistics, there were 602 total new home starts in February 2019 compared to 578 in February 2018, which on the surface, is a difference of just 24 starts. Look a little more closely, and you’ll see that this year’s total is buoyed by 235 apartment starts in February and a year-to-date figure of 408 apartment starts so far in 2019. (See Chart)
On the other hand, 2018 saw quite a few more single-family home starts in the first two months of the year, 621 compared to 476 this year. Row homes, or townhomes, although down from February to February, were up by 76 per cent in 2019 on a year-to-year basis.
So, although the numbers at the bottom of the chart appear similar, how they got that way is not with the first couple of months of 2018 being boosted mainly by big single-family numbers, while 2019 has been boosted by multi-family projects.
Most February starts were in the northwest quadrant (190), followed by the southeast (171 total with 131 apartment starts).
In addition to starts, another indicator of market health is new home completions. Here 2019 is outpacing last year by a significant amount (1,599 to 1,442), mainly thanks to homes started last summer and completed in January. In fact, February completions were down 34 per cent (850 to 562) compared to last year, meaning January 2019 saw more than 1,000 completions in the Calgary market!
The cost of obtaining shelter in Calgary has gone down a little, with the average absorbed price of a single-family home dropping from $660,093 in February 2018 to $617,370 this year. Meanwhile, rent for a one-bedroom apartment is around $1,050 and a two-bedroom approximately $1,272.
What can be taken from all of this is that the trend for multi-family starts to outpace single-family continues, driven in large part by the affordability factor. Combined with federal stress-test rules for mortgages –designed mainly to address unstable real estate markets in Vancouver and Toronto – that make getting a mortgage more difficult for many first-time buyers, but may be contributing to the slowdown in the local Calgary housing market.
Watch for multi-family starts to continue to outpace single-family starts for the foreseeable future.
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About Jim Zang
Jim Zang is a professional writer/editor who has lived in Calgary his entire life. He has been reporting on the local housing industry since the early 1990s and is the former editor and associate publisher of a variety of housing industry and lifestyle publications in Calgary and region.