The upcoming nights may be silent, but Calgary’s days were full of another sound in November.
Driven by a surge in multi-family construction, local builders hammered out 1,693 new home starts in November, a 71 per cent increase over October.
“The gain in housing starts in November can be attributed to a heightened level of row and apartment construction,” said Canada Mortgage and Housing Corporation (CMHC) Senior Market Analyst Richard Cho. “We saw a number of condo apartment projects break ground last month, which were likely in the planning stages for several months before. It is not unusual to see swings in multi-family starts from month-to-month, especially if you have any larger projects start construction.”
Broken down by sector, singledetached homes showed the smallest monthly increase, with builders breaking ground on 595 new single-family homes in November compared to 511 during the same month of 2012. The multi-family sector saw a much larger increase, with starts increasing by an astounding 129 per cent from 479 to 1,098.
Housing starts in Alberta increased by 7.1 per cent year-over-year, marking the largest increase in the country. Nationwide, housing starts dropped by three per cent.
On a seasonally adjusted basis, Alberta homebuilders started construction on 42,206 new houses in the province, making October only the second time the total has exceeded the 40,000 mark since 2007. The figure, used by CMHC to account for considerable swings in monthly estimates is expressed as an annualized rate, meaning that if the pace of construction set in November was to continue for twelve months, there would be this many new homes built in a year.
Along with the increasing number of new projects breaking ground, numbers from Statistics Canada also show that singledetached homebuilders in Calgary were issued more permits through the first 11 months of 2013 than nearly anywhere else in the country. Trailing only Toronto, Calgary builders were issued permits for 5,648 single homes.
According to CMHC, singlefamily home construction starts in the province are projected to climb 4.4 per cent in 2014, with shovels in the ground on 19,100 homes next year.
“The strong pace of home buildingis matching demand as international and interprovincial migration grows at near-record rate,” said ATB Chief Economist Todd Hirsch. “Low mortgage borrowing costs, a healthy labour market, high wages and solid consumer confidence are also encouraging plenty of people to buy.”
Helping to push the demand for homes in the city and in the province has been Alberta’s thriving economy. In a report from The Conference Board of Canada, Alberta is projected to have the fastest growing economy in Canada in 2014 and was singled out as the biggest contributor to the nation’s economic growth over the last three years.
Thanks to the province’s “extremely favourable” economic conditions, which include investment in the oil sands and a very strong labour market, Alberta is expected to post “robust” GDP growth of 3.4 per cent in 2014.
“While many provinces have struggled in the past few years, Saskatchewan, Alberta, and Newfoundland and Labrador thrived as their primary resources were in high demand and fuelled solid economic growth,” said Marie-Christine Bernard, associate director, Provincial Forecast. “However, the prospect of a stronger U.S. economy will now help boost exports and improve the outlook for other provinces over the next two years.
Lured by Alberta’s job market – also the best in the nation – net migration to the province is expected to hit 95,100 by the end of this year and add another 68,100 more in 2014. According to Hirsch, the fact so many of those new residents are under the age of 30 bodes well for Alberta homebuilders.
“The strong economy encourages steady interprovincial in-migration to Alberta. These migrants tend to be people in their 20s and often at the age of starting young families,” said Hirsch. “A young population brings both economic benefits and challenges. The benefits are that young people spend disproportionately more than older people. They tend to be taking out mortgages on houses and spending money on things like eating out, new clothes for children and recreational activities.”