After months of gains new home builders in the greater Edmonton area finally slowed down in May. Starts are still way up over the last few years, but decreased from June:
Edmonton New Home Starts May 2010
The Housing Now Report released today by CMHC shows a decrease in multi-family starts this month as well. It will be interesting to see what happens to resale inventory once all these new homes are completed. So far this year over 4400 new homes have been started, compared to 1462 last year.
What has changed since March 2009 that has increased new home construction so much? Is it just more people looking to buy new? Have new home prices come down in price? Has land come down in price? About how many of these home have been purchased already?
My understand is that their inventory was extremely high after the 2007 run up, and it took a couple of years for it to get back down. Eventually the inventory got so low they had to build it up again, and with more interest from buyers and busier show homes they did just that. I don’t know how many of these homes have already been purchased – CMHC releases a quarterly report that is more in depth with that type of info. We’ll have to wait until it comes out to answer that question.
That is correct, it took about 2 years to absorb the excess inventory from 2007. This is why we are seeing additional construction activity this year. The key question to ask is how many of those housing starts were built on spec. I don’t think many were given that the market fundamentals aren’t what they were pre-2007.