CALGARY — Total housing starts in the Calgary region are forecast to finish this year up more than 33 per cent from the previous year, according to Canada Mortgage and Housing Corp.
In its latest Fall 2012 Calgary Housing Market Outlook, released Monday, the agency said total housing starts in the Calgary census metropolitan area will increase to 12,400 units this year before moderating slightly to 11,900 units in 2013.
This year’s level is the highest since 2007.
“Supported by low mortgage rates, strong job growth, and a sharp increase in net migration, demand for new homes in Calgary will remain elevated over the next two years,” said Richard Cho, senior market analyst in Calgary for the CMHC. “Supply in the competing resale market and inventories of new multi-family units have also declined from their previously elevated levels, further contributing to the pace of construction.”
Single-detached starts are forecast to finish 2012 with 5,700 units, up 12 per cent from 2011 levels.
“Demand for new homes will continue to improve in 2013 as prospective buyers and migrants take advantage of Calgary’s labour market, and some existing homeowners capitalize on their equity gains and move-up,” said Cho.
He said a large proportion of the new construction is taking place in the north and south ends of the city where there are a higher number of newer communities.
“With the increase in new construction activity and the decline in the unemployment rate, it is taking more time for some home builders to fill their vacancy positions compared to a year earlier,” added Cho. “The higher demand for labour is also putting some upward pressure on earnings.”
Tim Logel, president and partner of Cardel Lifestyles, said the number of people moving to the Calgary region is a good indication of future housing demand.
“What we’ve seen the number of homes in Calgary new and used . . . the number of listings year-over-year is down and because of that you’re seeing shorter times for a home to sell,” said Logel. “You could see more demand next year with maybe the same amount of supply because of in-migration.
“Overall, there’s a level cautiousness with homebuyers . . . The customers are noticing there’s not as much to choose from as they would have had a year ago.”
Logel said the homebuilder is challenged by labour these days as there’s not enough skilled people to build the homes today.
“And we ask ourselves what would happen if the demand did pick up. What would happen if the supply would drop further? Then there would be increased pressure on new housing,” said Logel, adding the availability of good land is also a challenge.
In 2013, CMHC forecasts single-detached starts to increase four per cent to 5,900 units.
Multi-family starts in 2012 are on pace to reach 6,700 units. With the start of many new multi-family projects this year, the number of units under construction has also increased. Some of these units will represent additions to inventory when completed and will inhibit construction in 2013. CMHC is forecasting multi-family starts to remain above historical averages in 2013, but to moderate 10 per cent to 6,000 units.
Labour market conditions in Calgary have been favourable, attracting migrants from other regions and increasing housing demand, added the agency.
Existing home sales in Calgary are on pace to increase 16 per cent in 2012 to 26,000 units, the highest level since 2007. In 2013, modestly higher mortgage rates, combined with a slower pace of job creation and net migration, will moderate sales growth. MLS® residential sales are anticipated to rise two per cent to 26,500 units.
The average price for the Calgary region is forecast to increase two per cent from $402,851 in 2011 to $411,000 in 2012. Balanced market conditions are expected to persist for the remainder of this year and into 2013. The average price in 2013 is expected to reach $422,000, up almost three per cent from a year earlier.