The Canada Mortgage and Housing Corporation released its second quarter Housing Market Assessment recently and the results continue to cause anger and confusion.
The worst grades were given to Saskatoon, Regina, Calgary and Toronto; all of whom were labelled as having strong evidence of problematic conditions.
In the case of Calgary, no big surprise here. With the oil industry being where it is, one could claim overbuilding and overvaluation and not be far off the mark. However, for all of those forecasters of doom and gloom, there still is building activity occurring, and when oil hits $50 and $55 this year, Calgary will be just fine.
The Toronto forecast is of little concern to the industry. Cries of overvaluation are being accompanied by record sales. If it’s selling, it’s not over-priced. Local market demand determines price, not number crunching in Ottawa.
Builders and realtors in Regina and Saskatoon are extremely upset at their ratings. Both cities have been marked for strong evidence of overvaluation and overbuilding. However, they question the degree to which these situations occur. For instance, if a particular number is established for overbuilt, are they one house over the mark or 1,000? No indication is given. If the market is considered overvalued, is it by five per cent or 25 per cent? Again, no clarification for builders, buyers or sellers.
According to the CMHC, these concerns used to exist in the Winnipeg market, but never to the extent of our neighbours to the west, and not to that degree anymore. Both the Winnipeg Realtors and Manitoba Home Builders Association had the same questions for the CMHC.
Of course, as projected, the local market established resale prices on its own, and local builders built according to demand, both current and projected.
Single-family detached new-home starts appear to be up this month and this year in Winnipeg and the surrounding area.
April’s good weather resulted in a 26 per cent increase in starts over last year in the CMA, which then resulted in a 12 per cent increase for the first four months of the year. The City of Winnipeg showed encouraging numbers, however not as much as the surrounding area.
Not surprisingly, while single-family detached starts showed a significant increase, multi-family starts exhibited a significant decline from last year.
In 2015, a concerted effort was made to compensate for years of shortages in the multi-family sector, so construction was brisk in this area, so much so that it greatly outdistanced the single family market. It has now settled back into a stable 50/50 split similar to the previous three years.
Mike Moore is president of the Manitoba Homes Builders’ Association
