The Canada Mortgage and Housing Corporation (CMHC) released its housing starts report for February 2018, announcing that new home construction has held steady compared to the previous month.
On a national level, housing starts trended at 225,276 units, compared to 224,572 in January. The trend is a six month moving average of seasonally adjusted annual rates (SAAR).
“The national trend in housing starts has been very stable since November 2017, masking offsetting trends for multi-unit and single-detached dwellings,” says Bob Dugan, CMHC’s chief economist. “Multi-unit starts have trended higher in recent months in most major urban centres while single-detached starts have trended lower.”
In Toronto, the high prices for a new single-family home have caused a spike in new condo construction as buyers gravitate to more affordable options. Obviously, this also results in fewer single-family starts.
The increased resale supply is also affecting the demand for new housing in Toronto. The Toronto Real Estate Board (TREB) recently reported that new listings increased 7.3% to 10,520 in February 2018. While it’s great that resale supply is growing, TREB points out that this amount of inventory is still well below the 10-year average.
In addition to more new condo sales and construction in Toronto, the high single-family home prices are also driving people out of the core of the Greater Toronto Area (GTA) to areas like Oshawa.
According to CMHC, Oshawa hit an 11-month high in February with regards to single detached starts. Construction of multi-units slowed, following a spike in the second half of 2017. We wouldn’t be surprised if single-family home construction was increasing in other areas on the outskirts and neighbouring the GTA.
The standalone monthly SAAR was 229,737 units, up from 215,260 in January. The SAAR of urban starts went up 7.1% to 211,211 units, with multiple-unit starts increasing 15% to 154,535 and singles decreasing 9.8% to 56,676. Rural starts are estimated at 18,526 units.
With record high condo sales last year and the demand for more affordable housing still strong, expect condo construction to remain steady throughout the year.