CMHC released the January new home construction tallies in their "housing now" report today. Edmonton area home builders are rolling along for the 7th consecutive month, posting higher starts than the same month last year. Here are the highlights:
- Housing starts in the Edmonton area totalled 577 units in January compared with 413 units in January 2009.
- Edmonton area builders began construction on 397 new single family homes in January, up considerably from the 147 units reported during the first month of 2009.
- Multi-famiy starts decreased on a year over year basis, following two months of improvement. Semi-detached, row, and apartment starts totalled 180 units last month, representing a decline of 32%.
- Housing starts in Alberta’s seven largest centres were up 52% from last year. Increased activity in Calgary, Edmonton, Grande Prairie and Red Deer offset year-over-year reductions in Wood Buffalo, Lethbridge, and Medicine Hat.
“CMHC anticipates continued strength in new single- detached productionin the coming months as the local economic conditions improve,” notedRichard Goatcher, CMHC’s Senior Market Analyst based in Edmonton. “Despite January’s decline, CMHC looks for gradual improvements inmultiple starts this year, compared with 2009 levels, as new unitinventories head lower and rental apartment vacancies also subside,”added Goatcher.
I wonder if the builders are overly confident in the current market. We were expecting a stronger start than we've seen in terms of sales this year. That being said, inventory of new homes is down to almost nothing and builders are trying to re-stock their shelves. Traffic in new show homes is reported to be quite good so perhaps the builders are just responding to demand. Time will tell!
Certainly will be an interesting year. If the builders have miss read the demand then we are back to an over supply of houses not moving. What are the immigration numbers into Edmonton looking like?
How wonderful. Homebuilders will cause another glut of houses and drive prices down further. Just what we need.
You should try out disqus comment system for the blog. It is far superior.
Globe & Mail & Wall Street Journal – Canadian RE bubble.
-How many people think that Jim FLAHERTY will bring 10% down with 30 yrs mortgage on March budget?
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Wall Street Journal
Housing Rebound in Canada Spurs Talk of a New Bubble
http://online.wsj.com/article/SB10001424052748703808904575025100730017666.html
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Globe & Mail
Most housing watchers insist Canada is not in a bubble just yet. But tight supply, extreme valuation, and easy credit have some fearing the worst
http://www.theglobeandmail.com/report-on-business/the-making-of-a-housing-bubble/article1460610/
Mix in easy mortgage conditions luring more people to jump into home ownership – the current national rate of 68.4 per cent stands at an almost 40-year high and a full percentage point above the U.S. level – and you have the recipe for a classic bubble.
“Housing values are anywhere between 15 and 35 per cent above the levels that I would label as being consistent with fundamentals.”
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High prices, low mortgage rates, insatiable demand. . . Are we looking at a bubble?
http://www.theglobeandmail.com/report-on-business/the-making-of-a-housing-bubble/article1460610/
Rock-bottom interest rates and impending HST in Ontario and B.C. are adding fuel to already hot market
http://www.theglobeandmail.com/report-on-business/home-prices-on-course-to-hit-record-highs-in-2010/article1460606/
Hey Kendal – thanks for the suggestion! I would love to switch but it looks like it doesn’t work with Typepad.
I think new home prices are ridiculous. Builders are taking advantage of naive consumers.
I know one builder in particular whom purchased building lots at a discount last spring and built a bunch of spec homes.
One particular model was selling for $340,000 in Terwillegar Towne.
Now a spec home of that same identical model on the same street is $391,000.
Must be nice to pocket that extra $50,000!
Buy now or be priced out forever! (So says the Show home rep)
My advice would be to consult a realtor prior to purchasing a new home.
I’m not sure what your point is? Home prices have gone up and new home builders sell homes for whatever the market will bear. Are you saying that a house that was selling on the used market in Feb of 2009 is the same price today? When houses are hard to sell, and builder inventory is high, homebuilders need to squeeze margins and take much less profit so the carrying costs of empty houses sitting around don’t take them under….and there were rumours in 2008/2009 that some builders were close to that! You had builders filling in foundations and either ending or drastically scaling back their spec programs. In 2008/2009 I’ll bet there were areas you could have gone into and offered a builder 315,000 for that 340,000 house and you would have got it.
I also don’t follow you on your logic regarding wanting a realtor in on a new home deal. You do realize that now 2 people are earning a commission on the sale. How do you see getting that house for a lower price?
I completely agree. My brother-in-law bought a 1862 sq. ft. spec. home in a newer area of St. Albert for $425000 last Spring and now that identical model on a similar lot a few streets down is going for $480000. Half a million dollars for a move-up home is really out of a lot of people’s reality.
Even though my fiance and myself could take on that type of mortgage, there is no way we could without sacrificing our current lifestyle(which isn’t even that extravagant!).
If the builders have miss read the demand then we are back to an over supply of houses not moving.