Housing starts in the Calgary Census Metropolitan Area (CMA) increased by six per cent in January. According to Canada Mortgage and Housing Corporation (CMHC), builders broke ground on 1,328 homes in January, an 84.7 per cent increase from January 2013’s 719 units.
“The trend in total housing starts moved higher in January due to increased production in both the single-detached and multi-family markets. The rising trend in housing starts has been supported by heightened net migration and job growth, as well as a decline in new home inventories,” said Richard Cho, CMHC’s Senior Market Analyst for Calgary.
In Alberta, seasonally-adjusted housing starts hit 39,210 in January, marking a small increase from December. Over the last 12 months ending January 2014, total housing starts are up 9.2 per cent compared to the previous 12-month period.
The seasonally adjusted annual rate (SAAR) in Calgary for January was 14,322, compared to 13,996. The trend is a six month moving average of the monthly total housing starts. The figure is expressed at an annualized rate and is also adjusted for seasonality, meaning if the rate of construction in January was maintained for twelve months, it would be the total number of home builders broke ground on in one year.
“Alberta’s residential real estate market has held up remarkably well compared to other parts of the country,” said Todd Hirsch, chief economist for ATB Financial. “According to the CMHC and Statistics Canada, the province is experiencing a healthy balanced market In terms of both prices for existing homes and new housing construction. The main drivers are Alberta’s strong economy and the rapid pace of interprovincial in-migration.”
According to Statistics Canada, Alberta saw its highest level of net interprovincial migration in 2006 when the province welcomed more than 46,000 new residents. Through the three quarters of 2013,
the province added 37,498 new residents. While final numbers for the year aren’t in, Alberta’s five straight quarters of 10,000+ growth make it a reasonable bet that the province will set a new record in 2013.
Looking to the future, CMHC is predicting starts in the city to continue to rise into 2014 and beyond. After starting construction on 12,584 new homes in 2013, CMHC expects Calgary builders to add 14,100 new homes in 2014, with starts moderating slightly to 13,500 in 2015. Alberta starts are expected to moderate slightly, rising from 36,011 in 2013 to 37,100 in 2014 before dropping to 36,400 in 2015.
“The rate of housing construction in Alberta may slow throughout 2014. The economy in other parts of Canada is forecast to perform slightly better than last year which may cause the rate of migration into Alberta to slow,” said Hirsch. “Still, the high levels of income and consumer confidence in the province— and favourable mortgage rates—will ensure home builders have plenty of business on their hands.”