Canada Mortgage and Housing (CMHC) released their monthly stats on new housing construction today. The numbers are surprising, especially when you look at their charts. Sheldon and I are going to their "Housing Outlook" conference tomorrow so we’ll be loaded with stats and charts to share. But for now, back to today’s report…
"Housing starts within the Edmonton Census Metropolitan Area (CMA) increased by 40.3 per cent from September 2006 to 1,978 units. So far this year, total housing starts have increased by 5.7 per cent over the numbers reported after three quarters of 2006."
Units under construction are up almost 30% from this time last year, which means completions and new home inventory will rise in the months ahead.
As you can see, multiple starts are up 150% year over year in September, similar to what happened last November. Meanwhile single family home starts decreased in September for the third month in a row – a 24% decline from last September. Even with the declines, 2007 is expected to be the second best year on record for single family construction in the greater Edmonton area.
Unabsorbed inventory is on the rise for both single family (31% increase over last September) and multi family units, but multi-family inventory is still 58% below last September.
As for resale there was nothing new to report there that we haven’t already discussed on the blog. I did like this chart though, that demonstrates the number of new listings, compared to the total inventory since 2000. You can see a fairly standard pattern until 2006 when things went a little crazy:
The economy still looks very solid, with strong job creation and low unemployment:
"Edmonton’s labour market has experienced phenomenal strength so far this year with exceptional levels of job creation and extremely low unemployment. During the third quarter, job creation averaged over seven per cent representing a net gain of over 38,000 employed compared with the third quarter of 2006. Meanwhile, unemployment averaged just over four per cent, amongst the lowest of all metropolitan areas across Canada. Tight labour market conditions have contributed to strong income growth, with average weekly earnings up by 6.5 per cent on a year-to-date basis in September."
On the negative side, inter-provincial net-migration fell by 32% in the first 6 months of 2007, and has impacted demand for housing.
The full report is available here.
With:
-interest rates on the rise
-huge increase in listings
-everyone moving back to small town Saskatchewan
-US housing market slowdowns
There must be a price adjustment coming. Hopefully the strong economy will prevent a ’88 bubble:
http://answers.google.com/answers/threadview?id=216396
The biggest factor here is the net migration to Alberta. The reason for most of the drop in the first half of the year was people moving out to Saskatchewan and BC. I don’t think the migration in changed much at just that more people moved out recently. Since BC and Saskatchewan are both showing price pressure now as well this may be slowing the flow of people out of Alberta now. If this is happening then net migration numbers could actually be on the rise again? This could help absorb some more inventory. With Ontario and Quebec still getting hammered by the dollar job losses could pick up out East? There may be another slight dip in prices for October but inventory has not changed much and sales are up?
I find it amazing how greedy, stubborn, and determined some sellers still are. I just had a laugh when I reviewed the MLS.ca site and saw a loft near the downtown Grant McEwan campus advertised for 499K. I’ve been in those lofts and the open design is nice but the soundproofing is terrible. Who would pay half a million for something like that? ridiculous.
Hey Alberta Advantage,
You should be a realtor or better yet change your name to Alberta Bull.
I work in the service industry. In my line of work I see lots and lots of people moving out of Alberta. Primary reason when I ask them why they are leaving – price of housing.
If you have to buy property in Alberta in the near term and you don’t already own something….you’re in a tough spot.
Prices will retreat substantially, but that could take a few years with $96/bbl oil.
Ontario unemployment is a couple of points higher than Alberta’s.
Oil is very high – about $89 Canadian dollars.
For those who imply that the new construction was built shoddy…..Consider….
The quality of a new home with a reputable builder is code. The code is set by the government. Your new home must be inspected at various satges and be built to code.
Builders were not bldg any faster through this up swing. On the contrary, construction was slow as they waited for the tradespeople.
Materials and techniques are much better today then 20 years ago.
Usually the people with this theory are the people in older homes, not in newer homes. And yes every now and then something is not quite right, but no more (most likely less) than homes built in previous decades.
Laura,
Totally agree with you, I am building a new home with one of the builders in Edmonton. There are following advantages in new homes:
1- There are so many new materials in the market and much better than that of old houses.
2- New homes are more energy efficient, windows are more energy efficient, insulation techniques have been improved at lot etc.
3- You get better drainage and plumbing system, better electrical wiring according to codes which is much safer.
4- Plans of new homes are based on open concept look more roomy, allow more natural light due to large windows.
5- No possibility of hazardous materials like we have could have asbestos in the old houses.
6- Inspections at varoiuos stages, Structure warranty, builder warranty.
7- Using of Engineering Jiosts which are quiet and allow more open space.
8- Older homes used to have lot of nails, due to old techniques.
Only thing you need to do to find a good builder for workmanship.
Hehe…record inventory….record multiple housing starts…I dont care if the migration increases by 200% which it wont, who is gone buy all this stuff???? And where the hell are the buyers now
))
I totally disagree with your new home theory –it is too generalized. Sure it’s nice to have brand new windows and everything- but it doesn’t matter if it’s not installed properly and you have to take it out and redo it down the road. Sure it should be done to code- but how busy are inspectors these days? Some inspectors poke their head in and say- ‘Looks good’ and quickly move onto the next house down the line cause there are hundreds to see. Some inspectors do take their time- but more so with the average home owner doing renos then with builders. Also, the builder may have 30+ yrs experience, but the guys actually working on the house have 3 months experience. Some builders are cutting corners. Vapor barrier isn’t fully taped, missing insulation, and low-grade shoddy finishes. The counter-tops, carpet, and cheap vinyl that I see in most new homes these days are going to look tired in 3 yrs. There is no quality in workmanship. Some Spec Builders at the last minute are trading hardwood for cheap laminate, installing flimsy cabinets, and buying Plain Jane fixtures. All this for just under half a million dollars.
As for saying that materials and techniques are ‘much better today then 20 yrs ago’- I disagree for the most part again. Who knows- in 5 hrs you may find out that the glue in you lino is toxic, that your spray foam insulation causes cancer, and that the formaldehyde in your subfloors and baseboards are toxic. When asbestos was used back when- they didn’t know at the time the health risks associated with it. 20 yrs ago, the treated wood used in your fence and playgrounds had high levels of arsenic.
Our builders are good, some are bad. Some new homes flood and have foundation issues (SE Edmonton) depending on the soil type where they are built- where some older inner city homes 60 yrs young have never seen water. Don’t generalize.
Laura said “1- There are so many new materials in the market and much better than that of old houses.”
You sure about that? Is vinyl one of these new materials that you are talking about? I moved here from Toronto where we lived in a solid home built in the 1920s. The amount of vinyl siding used on newer homes in Edmonton is scary and in my opinion incredibly ugly. What if vinyl siding turns out to be hazardous or at least not fire retardant. Where will that leave then new home buyers? What about the tiny lot sizes on new homes compared to the older homes? I would gladly trade a larger lot with mature trees for an open concept new home that sits on my neighbour. Look at the batch of condos built in Vancouver that landed up leaking 10 years later.
I disagree, new is not alway better and can be worse.
I am leaving this province, as I cannot afford a house. Bye, bye. Greediest province of them all.
Greg
Ontario, Quebec…other provinces, other countries, elsewhere, don’t forget Alberta is the Canadian Economic Engine at the moment, there’s still lots of work here ;->.
I don’t know if it’s just me but in Edmonton I have been seeing a lot of licence plates from other provinces lately, more than usual, it’s wierd.
Heu Neil …maybe the new licence plates belong to the 8000 workers laid of from the big three auto makers…
)) …..bad Greg – it is not nice to laugh at other misery…
Seriously it is not….strong loonie…high vloume and oil prices….money to burn….ughh….recession in the USA……I think we will see net migration into Edmonton increase in the spring….jst a feeling I have
….