Inside the numbers: Apples and oranges
December 11, 2019
While it’s true that smaller cities and towns have their own lifecycle – which may or may not be affected by market factors affecting larger centres – they may also have fewer energy sector workers and housing prices might be lower –but it’s still interesting to look at them just for comparison’s sake. Do lower prices necessarily result in higher sales volume, and therefore more starts? Let’s take a look.
In Calgary we see that, upon closer inspection, the overall picture isn’t as bad as some may think. Considering the state of the energy sector and consumer confidence levels after the voting in of another Liberal federal government, a decrease in housing starts of five per cent from last year isn’t that bad.
The numbers are pretty consistent across the board, with a 10 per cent drop in all categories except row housing, which shows a 35 per cent increase and, obviously, has become a very popular option with both buyers and builders.
Up in Airdrie, where new-home prices usually check in a good 10 per cent less than Calgary averages, things are more of a mixed bag. Everything’s down, but with no rhyme or reason to the numbers other than the fact that apartment home starts – traditionally the least expensive to purchase – are up.
Don’t read too much into this, though, as the sample size of eight homes isn’t enough to base any conclusions on.
Looking west to Cochrane, it’s a nice view of the Rockies, but not a pretty picture of housing starts. From what was once a booming market just a couple of years ago, starts in Cochrane have dipped quite dramatically across all housing categories. It seems even lower market prices aren’t enough to drive demand as the numbers actually make Calgary’s chart look good.
Meanwhile, down south in Okotoks, things are still rolling along quite nicely, thank you. The town, with a population of nearly 30,000, saw a modest decrease in single-family starts, which was balanced out by the addition of six new row home builds. It’s a small sample size, to be sure, but up is up.
One thing to note in Okotoks, however, is the ongoing lack of new affordable housing. There hasn’t been an apartment condo start in Okotoks in the last two years, which will prevent younger buyers from being able to stay in, or move into, the community. If Okotokians want their kids to be able to live in town, they need to start looking for an affordable housing solution.
Now for the numbers that are going to shock many Calgarians – Edmonton housing starts are up. How can this be? No doubt some of the difference can be attributed to the fact that more energy sector head offices are located in Calgary, and hence more jobs lost – while there are more government jobs in Edmonton.
In total, housing starts in Edmonton have outpaced Calgary by more than 1,000 homes so far in 2019. They have, however, experienced larger decreases in both the single-family and semi-detached categories, with the entire difference and then some being made up by a doubling of apartment starts over last year.
What’s it all mean? It means that pretty much across the board, it’s still a buyers' market out there. Starts are down because demand is low, and when demand is low, the prices drop. If you’re one of the lucky ones in Calgary and area who is still working, it’s not a bad time to buy.[caption id="attachment_1270717" align="alignnone" width="840"] Source: CMHC[/caption]