Edmonton new houses exercise anticipated to choose as much as meet demand

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Canada Mortgage and Housing Corp.  expects to see new builds continue to pick up pace in the coming year. Canada Mortgage and Housing Corp. expects to see new builds continue to pick up pace in the coming year. Photo by David Bloom /Postmedia

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New homes starts slowed in February, according to new data, but builder activity is likely to accelerate in the months ahead driven by record sales and prices in the resale market, a market analyst predicts.

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“My expectation for the new homes market is we will see more strength as the year progresses,” says Taylor Pardy, senior analyst with Canada Mortgage and Housing Corp.

CMHC recently released new homes data for Edmonton, finding starts fell in February from 967 the same month in 2021 to 816 starts — a drop of more than 15 per cent.

Pardy notes the decrease is not unusual given much of the activity in 2021 came from apartment starts — 309 units. That figure dropped to 171 starts this past February, a 44 per cent decline.

Yet, he adds, multi-family starts activity often varies from month to month as new projects — generally in development for years — can begin construction at any point in the year.

For single-family detached homes, however, starts increased from 409 to 422 last month, a modest rise of about three per cent, year over year.

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Row and semi-detached starts, however, were down — though not as much as apartments, CMHC figures show. Starts for row fell from 163 to 157, year over year, while semi-detached fell from 86 to 66 starts, or about four and 25 per cent decreases respectively.

Recent declines aside, Pardy points to strong demand for homes likely to boost activity in the coming months.

“One way to measure often indicating future starts growth is unabsorbed inventory,” he says. “When that gets really low, builders generally ramp up production.”

Unabsorbed single-family homes, he adds, was at 589 units in February, noting monthly levels pre-pandemic were often more than 1,000 units.

Realtor Brad Richardson agrees the new homes market is likely just getting started as supply-demand imbalances remain relatively new to the Edmonton market.

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“It started about six months ago when we began seeing a real inventory problem, and ever since, there have been a lot of buyers looking for homes they may not be able to find.”

More recently, city records for resales and average price were broken, likely prompting builders to boost starts activity, says Richardson, with MaxWell Progressive Realty.

According to Realtors Association of Edmonton data, 2,258 resales took place in February, eclipsing the previous record for the month set in 2007. Meanwhile, the average price of a single-family detached home — the largest market segment — reached an all-time high at $493,000.

“So having more new home inventory will certainly help the cause of the buyers looking for a home,” Richardson says.
Pardy agrees, further noting the “new home market is sort of a pressure release valve” that can ease problems caused by under-supply on the resale market.

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While starts have not yet taken off, developers are likely taking note of the resale market activity, which should lead to an increase in construction as the year progresses, he adds.

Furthermore, the market could see large gains in the coming months as multi-family development picks up for purpose-built rentals and condominiums, increasingly in demand housing options with single-family home prices rising.

“When you look at the multi-family market, larger projects that start in the course of the year can really turn the tide on starts numbers,” Pardy says.

“So barring any major increases in supply chain and labor constraints, we’re anticipating builders will really ramp up activity.”

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