Canadian Real Estate Supply: A Look at Housing Starts by Province

Could the Canadian real estate market experience some relief in the coming months and potentially heading into 2022?

The country’s housing sector has been on fire, with every housing market and most property types recording huge gains. Yet, with all the talk of government interventions and the Bank of Canada (BoC) expected to begin a campaign of raising interest rates, many industry experts believe only one thing will douse the red-hot Canadian real estate sector: more supply.

According to data from the Canadian Mortgage and Housing Corporation (CMHC), housing starts surged 21.6 per cent in March compared to the same time a year ago. The latest monthly reading exceeded forecasts and touched a new record.

The seasonally adjusted annualised rate of housing starts topped 335,000 units in March, surpassing the median estimate of 250,000 units. Most of the increase was attributed to multiple urban starts, rising 33.8 per cent to 222,358 units. Single-detached urban starts also edged up 3.6 per cent to 78,615 units.

“The national trend in housing starts increased in March, reflecting very elevated levels of activity in January and March 2021,” said Bob Dugan, CMHC’s chief economist, in a news release. “Multi-family SAAR starts rebounded strongly following decline in February, with Toronto and Vancouver registering particularly large gains in this segment. Single-detached SAAR starts also contributed to the increase in the overall trend in March, but by a relatively modest amount in comparison to Multi-family starts.”

Market analysts believe this could be the beginning of the long-anticipated cooling of the flaming hot Canadian real estate market.

“Red-hot demand for real estate propelled a record month for housing starts in March. While the market will need a long stretch of supply growth to have a meaningful effect on prices, the March numbers are a solid start,” said Shelly Kaushik, an economist with BMO Capital Markets, in a research note.

But what do the housing starts in each province look like right now? We have compiled the CMHC data to determine which areas of the country could see some relief from tremendous price growth.

Housing Starts in the Canadian Real Estate Market, by Province

Newfoundland and Labrador (Annualised March 2021)

  • Housing Starts: 887
  • Completions: 54

Prince Edward Island (Annualised March 2021)

  • Housing Starts: 438
  • Completions: 83

Nova Scotia (Annualised March 2021)

  • Housing Starts: 4,348
  • Completions: 378

New Brunswick (Annualised March 2021)

  • Housing Starts: 1,201
  • Completions: 193

Quebec (Annualised March 2021)

  • Housing Starts: 69,768
  • Completions: 20,412

Ontario (Annualised March 2021)

  • Housing Starts: 119,049
  • Completions: 70,945

Manitoba (Annualised March 2021)

  • Housing Starts: 4,350
  • Completions: 754

Saskatchewan (Annualised March 2021)

  • Housing Starts: 5,731
  • Completions: 116

Alberta (Annualised March 2021)

  • Housing Starts: 27,637
  • Completions: 10,782

British Columbia (Annualised March 2021)

  • Housing Starts: 67,564
  • Completions: 30,091

Past Peak Momentum?

Has the Canadian real estate market peaked? After the nation’s housing sector recorded another hot month in April, some financial experts believe the industry may have hit the top, at least when it comes to market momentum.

Robert Kavcic, the senior economist at the Bank of Montreal (BMO), suggested that April might have been the peak for market momentum. Kavcic alluded that mortgage pre-approvals that were frozen at record lows are beginning to subside, with the Bank of Canada (BoC) hinting at policy tightening.

This analysis matches recent commentary from Desjardins, Canada’s largest cooperative financial group. The financial institution’s affordability index for the first quarter of 2021 concluded that a significant price hike would be challenging to achieve from this point.

But while the Canadian real estate market could experience a modest cooling down period in the long term, it might not mean valuation growth will slam on the brakes tomorrow, or in the future when life returns to (relative) normalcy. Rates are still historically low, demand remains strong, supplies are limited, and homebuyer trends continue to evolve. As a result, it could be some time before homebuyers witness a drop in prices, which would be offset by higher borrowing costs anyway, since the central bank will likely pull the trigger on a rate hike by this point.

Housing affordability has become a serious issue in Canada. Money columnist Pattie Lovett-Reid calls the situation “a personal and political problem,” while the Financial Post described it as “gravity-defying.” Either way, newcomers in the home-buying frenzy may need to continue to sit on the sidelines hoping that detached, semi-detached, and condominium prices come back down to earth.

At least bidding wars are beginning to calm down, which could be a sign of good things to come for families trying to achieve the Canadian dream of home ownership.

The post Canadian Real Estate Supply: A Look at Housing Starts by Province appeared first on RE/MAX Canada.



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