Canada continues to see a strong housing market, according to the Canada Mortgage and Housing Corporation. Housing starts jumped to new heights recently and surpassed industry expectations.
Image: PNWRA / Flickr
Housing starts hit 196,700 units in February, which is an increase – on a seasonally adjusted basis – from the 185,400 units started in January. This is good news for the market, because as we have mentioned in several posts, the market is currently experiencing some tightness due to the weakness of housing starts for most of late 2008 and early 2009.
Starts are also jumping because builders are anticipating the potential negative effect of the introduction of the HST later this year in British Columbia and Ontario, and they are trying to get products for all of the buyers who are trying to avoid the HST.
Ian Pollick, an economics strategist, says, “It appears that the new homes market is slowly coming back to life and may finally be benefiting from the resurgence in overall housing market activity.” However, he does not think this will continue past the second half of the year due to the fact that interest rates will likely rise.
The part of the market that is driving gains is the market in Toronto, and it is largely the condominium market that is pushing up starts. Urban multiple starts – housing starts for multiple unit homes like condos and townhomes – were up nearly 20%, while the single urban starts rose less than 1%.
With Toronto pushing growth, Ontario had the strongest increase in February, with a 29% jump. In Atlantic Canada, starts increased by 14%. The Prairies and British Columbia saw slightly slower increases with 10% and 8% respectively. And in Quebec, the news was actually negative: housing starts fell 14% in that province.
While these housing starts are good news, it will likely take some time before they begin to significantly replenish the depleted housing stocks. As well, in the short term, the increase in housing opportunities may encourage more people to jump into the market, exacerbating the tightness of the market.
That being said, now might be the time to start looking for a new home, particularly in the strongest markets. With concerns that the market might dip in the months of July in BC and Ontario, some developers are likely in the mood to get a deal done quickly – and from your perspective, cheaply.
Nelson Goulart
Broker of Record with Signature Service GMAC Real Estate
www.ssgmac.ca
Jay Banks
Good news. I believe that this number of house starts creates a potential for the housing market to remain strong. However, it depends or many other factors whether this potential will be turned into real results, for example another wave of rate hikes – it may discourage people from buying.