While housing starts in 2006 were at their second highest in 20 years at over 227,000, the contrast has been striking in terms of single-detached starts between the West and the rest of Canada.
The 2007 Canadian Housing Observer published by Canada Mortgage and Housing Corporation (CMHC) reports that double digit increases in single-detatched housing starts occurred in British Columbia and Saskatchewan in 2006, and they soared to close to 20 per cent in Alberta. However, the situation is different east of the Saskatchewan border. In Central and Eastern Canada, single-detached starts dropped, continuing the decline that began in 2005.
For multiple-family housing starts, growth was widespread across the country reaching a 31 year high in 2006.
Other findings in the 2007 Canadian Housing Observer’s include:
New house prices climb over 43 per cent in one year in Calgary
There was considerable variation across the country in 2006 in regards to new house prices. While the New Housing Price Index (based on homes of constant quality) rose at 9.75 per cent in total, the increases ranged from 43.6 per cent in Calgary down to a small decline of 0.1 per cent in Windsor. High demand for new housing, higher building material and labour costs, as well as increasing land values all contributed to the increase in house prices. The average new single-detached house price rose by 11.9 per cent, more than two per cent above the increase in the New Housing Price Index . This difference is due to an increase in the quality of new homes being built, including more expensive locations, larger homes and homes with more features.
Existing home sales remained at record level in 2006
Resale house prices continued their upward climb in 2006. The average price increased 11.1 per cent from 2005 and reached $277,000. The largest increase was in Alberta (31 per cent). Existing home sales for the year were almost unchanged at 483,770 transactions from their record high of 483,800 in 2005.
The seller’s market continues
The Canadian Housing Observer examined the sales-to-new-listings ratio for new homes over the last twenty years to classify markets as seller’s, buyer’s, or balanced markets. The ratio, while dipping slightly in 2006, remained at around 60 per cent, well into seller’s market territory.
Urban centre vacancy rates vary widely
Windsor had the highest rental vacancy rate (10.4 per cent) of all of Canada’s 28 major centres in 2006. Calgary and Victoria had the lowest – at half of one per cent. There was virtually no change in the average across all centres which was down only one-tenth of one per cent to 2.6 per cent. According to CMHC’s new survey of vacancy rates in apartment condominiums offered for rent, these were lower than in the conventional rental market in all but one (Montreal) of the seven centres surveyed.
Rent increases are generally moderate – except in Alberta
When Edmonton and Calgary are taken out of the picture, the average rent increase for two-bedroom apartments across urban centres in 2006 was just 2.4 per cent. In contrast, Calgary rents for two-bedroom apartments increased by close to 20 per cent in existing structures, and those in Edmonton were up by 9.9 per cent. However, Calgary’s average rent of $960, for a two-bedroom apartment is still below that of Toronto’s ($1,067), and Vancouver’s ($1,045).
Big increases in renovation spending
Sales of existing homes are a leading indicator of renovation spending, since buyers typically carry out renovations in the first three years. The high level of sales of existing homes provided a solid foundation for renovation activity in 2006, which rose by nine per cent. The Canadian Housing Observer points out that another contributor to the high spending was low interest rates, given that mortgage refinancing is a popular way of paying for renovations (40 per cent of the proceeds from refinancing are used for renovation-related activity).