Articles

2008-09-10 - Housing Starts in 2008

Although housing starts will ease this year to 213,425 units after reaching 227,395 units in 2006, and down to 200,175 units in 2008, it will mark the 7th consecutive year in which housing starts will exceed 200,000 units. This is according to the Canada Mortgage and Housing Corporation’s (CMHC) second quarter Housing Market Outlook, Canada Edition report.

According to Bob Dugan, Chief Economist at CMHC, “The level of new home construction will decrease in all provinces with the exception of Saskatchewan,” where “the lower demand for homeownership will be mainly due to the rise in mortgage carrying costs and the erosion of the pent-up demand that built up during the 1990s.”

For the longer term, between 2009 and 2011, the annual number of housing starts will slow gradually to reach 188,300 units, a level that is more consistent with demographic fundamentals. Housing demand will continue to be supported by a positive economic picture and a healthy employment market which will attract a steady inflow of immigrants throughout this period.

In Ontario, housing demand across the province will remain healthy despite moderate economic growth, higher new home prices, increased choice in the resale market, and land constraints. Housing starts will slide from 73,417 units in 2006 to 68,000 units in 2007 and to 63,875 units in 2008. These declines should move housing starts in line with the average level over the last fifteen years.

Author’s comment:  With this as a backdrop, overall the outlook remains promising for the real estate market in Ontario for the short term.

Source: Canada Mortgage and Housing Corporation, http://www.cmhc-schl.gc.ca/en/corp/nero/nere/2007/2007-05-15-0815.cfm