Condo construction on the rise as detached homes remain unaffordable
By Newinhomes on Dec 11, 2018
The Canada Mortgage and Housing Corporation released its housing starts results for November 2018, reporting the national housing starts trend increased last month.
Canadian housing starts trended at 210,038 units in November 2018, compared to 206,460 in October 2018. The trend is a six month moving average of seasonally adjusted annual rates (SAAR).
The standalone monthly SAAR of housing starts came in at 215,941 units, slightly higher than the 206,753 reported last month. The SAAR of urban starts went up 5% to 202,054 units with multiple-unit starts jumping 4% to 151,596 and single-detached starts jumping 8% to 50,458. Rural starts are estimated at 13,887 units.
"The national trend in housing starts increased in November, following four consecutive months of decline," says Bob Dugan, CMHC's chief economist. "While single-detached starts continued to trend lower in November, this was more than offset by a gain in the trend of multi-unit starts following several months of weakness."
In Toronto, November put up the highest housing starts trend in all of 2018 so far, due mostly to a surge in condo construction. Detached starts continued to trend downwards. In recent years, there have been fewer detached site openings and high prices, which equal fewer home sales, leading to less construction.
Interestingly, CMHC is reporting similar activity in Oshawa. The housing starts trend increased last month, making it the highest November in the last three decades. Multi-unit starts drove the increase in construction, more than offsetting the decline in detached starts. The high price of detached housing in Oshawa is encouraging more buyers to consider relatively affordable high density options.
Hamilton also had interesting results. Though housing starts in the city trended down for the second consecutive month, levels remained high with strong row townhome and apartment starts. When it comes to new townhomes at the same price point of resale detached homes, buyers are choosing to buy new because the detached homes at this price point require too much work.
Now that we’re seeing places like Oshawa and Hamilton shift to high density housing, we’re curious to see if new releases and openings are even more focused on new mid- and high-rise condos in 2019.
