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Housing analysis sees bright spots in urban centres

Jonathan Hayward/ The Canadian Press

A new condo building is shown under construction in downtown Vancouver.

The Altus Group, a well-respected research team that specializes in Canadian housing, recently published its outlook for 10 Canadian cities.

The cities it looked at were Vancouver, Calgary, Edmonton, Saskatoon, Regina, Toronto, Ottawa, Montreal, Halifax and Winnipeg. In this article, I am going to look at the nine urban areas other than Winnipeg.

The factors relevant to housing that they analyzed included single-family homes and apartment starts, changes in employment, resale inventory, new and resale price changes and inventory levels.

As everyone knows, new home start numbers in Vancouver have climbed off the charts in recent years. For a 10-year period starting in 2006, the city averaged under 18,000 starts per year. However, 2017 and 2018 are each expected to realize 29,000 new home starts. That is astonishing growth for what has to be considered one of Canada’s most in-demand destinations.

Toronto has shown considerable growth demand, too, but still under 10 per cent. However, restrictive land-use policies and unwillingness on the part of government to accommodate demand will limit our largest city’s potential. From a good news perspective, it looks like Halifax is starting to rebound. Every remaining urban centre will show fewer average starts currently than the previous 10-year average.

Although apartment and condo starts are still stagnant in Calgary and Edmonton, their single-family detached market is growing.

With larger cities come larger gains in employment numbers. Vancouver experienced a massive increase in jobs in 2016 (more than 60,000), which should taper off back to norm going forward.

Calgary and Edmonton are a long ways off their heyday years, but the southern Alberta city is expected to rebound faster than the provincial capital. Saskatoon shared a bad last year. After a number of fairly flat years, the call is for Montreal to experience significant job growth.

Resale inventory is quite low in Vancouver, Toronto and Calgary. This is not good news for larger, robust cities as low inventories can result in bidding wars and escalated prices. However, the forecast is for resale home prices to fall in Vancouver (they couldn’t go any higher, could they?) while continuing to climb in Toronto. Ottawa, Montreal and Halifax will all experience respectable resale home price increases.

New home prices will be declining slightly in the urban centres of Alberta and Saskatchewan while everywhere else reflects small increases, not even at the rate of inflation. The new home market appears to be much more stable and predictable than the resale market throughout most of Canada.

These are all interesting projections. Time will tell whether they pan out or whether other factors come into play, which then cause the markets to change.

Mike Moore is president of the Manitoba Home Builders’ Association.

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