Housing Starts to Slow

By 250 News

Housing starts nationally will ease this year to 213,425 units after reaching 227,395 units in 2006, according to Canada Mortgage and Housing Corporation’s (CMHC) second quarter Housing Market Outlook, Canada Edition report.

The report says residential construction will continue to decline in 2008 to 200,175 units, marking 7 consecutive years in which housing starts exceed 200,000 units.

At the provincial level, British Columbia home starts will remain above historical averages but will decline slightly. Demand for housing will remain high thanks to strong employment and income growth, as well as positive net migration. However, an increasing choice of existing homes on the resale market will mean less spill-over of demand into the new home market. Housing starts will decline from 36,443 units in 2006 to 34,700 units in 2007, and ease to 32,300 units in 2008. The average MLS^® price in British Columbia will grow by 8.7 per cent and 4.2 per cent in 2007 and 2008, respectively.

“Although fundamental factors such as high employment levels, income gains and low mortgage rates remain supportive of strong demand, housing starts will resume a gradual downward trend in 2007. The level of new home construction will decrease in all provinces with the exception of Saskatchewan,” said Bob Dugan, Chief Economist at CMHC. “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.” 

When it comes to sales of existing homes, the picture is very  bright.  The report says existing home sales across the country , as measured by the Multiple Listing Service , will register their best year on record with 487,500 units in 2007.      

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