The Housing Start, Home Price and Labour Market Connection in February
Alex Carrick
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Seed Newsvine |
It is a little early in the year to be drawing profound conclusions from the year-to-date housing start figures for Canada’s 33 Census Metropolitan Areas (CMAs). Nevertheless, the following are some observations that encompass the latest numbers on housing starts, home prices and labour markets.
For some of the smaller centres in particular, because the overall numbers are relatively small, percentage changes can be exaggerated and, therefore, misleading. At this point in the year, it is probably best to concentrate on the largest cities. Canada has six urban centres with populations in excess of one million each − Toronto, Montréal, Vancouver, Ottawa-Gatineau, Calgary and Edmonton.
Ontario Housing Starts +20%
Beginning with Ontario, housing starts in Toronto were ahead 50% in January through February of this year, versus the same period last year. All of this increase was due to a surge in multi-unit starts (+99%). Single-family starts in Toronto (-4%) are down year over year. Toronto’s employment picture remains lacklustre. At +1.4%, the city is well under the national average (+2.2%) in terms of year-over-year job growth and, at 6.5%, somewhat above the national average (5.8%) with respect to its unemployment rate.
Ottawa (+27%) has also had a good record so far this year in terms of home starts. This corresponds with a high level of employment growth (+5.2%) in the nation’s capital. However, a number of Ontario centres have been struggling in terms of new housing, including Kingston (-60%), Kitchener (-48%) and London (-48%). Kingston (-1.5%) and London (-2.5%) were two of only three cities in all of Canada that recorded declines in employment in the latest month.
Alberta Housing Starts -24%
In Alberta, total housing starts in Calgary have been flat (+4%), with multiples (+149%) performing much better than singles (-44%). Existing-home sales prices (according to the Canadian Real Estate Association) show that residences in Calgary may be priced as much as 25% higher than in Edmonton. In Edmonton, total new home construction is down 17% so far this year, entirely in the area of singles (-62%), whereas multiple-unit starts have made a significant gain (+36%). Edmonton’s home starts should pick up as the year proceeds, given that the city is leading all others in terms of job growth (+6.0%) At this time, Calgary (+2.6%) is only in the middle of the pack when it comes to providing new jobs.
British Columbia Housing Starts +31%
Vancouver is by far the highest-priced city in the country for housing (i.e., 60% higher, on average, for existing homes than in Toronto and 50% higher than in Calgary.) The city is creating jobs at an above-average pace (+3.1%) and housing starts are up 47% year to date versus last year. Because housing is so expensive, the new starts are all in the multiples market (+61%), which is relatively lower-priced than the singles market, where starts have declined moderately (-6%) so far this year.
Atlantic, Québec and Saskatchewan
Finally, comments on some other regional markets are warranted. New Brunswick (+44%) is the early frontrunner among all provinces in terms of year-over-year housing starts. Saint John (+174%) has been the major contributor to this strength, although the base figure from last year was quite low. Saint John N.B. (+5.2%) is also among the leading cities in terms of job growth among all of Canada’s CMAs.
Montréal (+41%) and Quebec City (+41%) have contributed the same percentage changes towards the province of Québec’s total housing start gain so far this year of 23%. And Finally, Saskatoon in Saskatchewan has recorded a 69% increase in starts so far this year. It has also registered the largest year-over-year gain (+51.7%) in new house prices among all CMAs, as measured by Statistics Canada. Saskatoon is closer to the mineral riches in the north of the province than Regina.
