Homebuilders kept busy last month as the industry continued to climb out of recession.
About 580 new homes cropped up around Edmonton last month, according to the Canadian Mortgage and Housing Corporation (CMHC), or about 160 more than the previous January. It's the seventh month in a row where home sales have improved compared to a year ago.
Most of these new homes are single-family units, said CMHC analyst Richard Goatcher, which are now in tight supply. Last year you could go to a show home and ask to buy the house across the street, he said; now you'll have to wait seven to nine months.
Look to condos and apartments if you want a quick buy, he continued, as they're still in a slight surplus. "You will not see the deals in single-family."
Cautious optimism
Builders overstocked on single-family homes prior to 2008, Goatcher said, and held off on building more until about last summer to get rid of the excess. "In my mind, they probably waited a bit too long to get going again."
Builders are now hard at work, he said, constructing more than twice as many single-family units in the Edmonton region last month than they did the year before. Multi-family construction dipped by about a third due to a slowdown in new apartments.
About eight new homes were built in St. Albert and Morinville last month, Goatcher said, which was typical for this time of year. Neither saw any new multi-family construction.
Business has picked up considerably for Landmark Homes around Edmonton, says spokesperson Chen Chunning. "We're about double from last year," he says, with his division (Urban Landmarks) building about 60 homes last month.
Builders struck about 52 per cent more homes in Alberta's seven biggest cities last month than the year previous, according to CMHC. Calgary, Edmonton, Grand Prairie and Red Deer saw most of the growth.
Chunning and Goatcher fingered pent-up demand and low interest rates as the cause of the rally, which started last summer. Chunning wasn't sure how long it would last. "We can't forget the fundamentals," he said, adding if builders overbuild, or labour prices spike, the industry could see another slump.
Canada's economy is still pretty soft, Goatcher noted, with few jobs available and little overall growth. Many owners are sitting in homes bought during the boom of 2006, he said, and won't be house shopping until prices get back to those boom levels. "We need to see resale prices improve over a month-to-month basis before we start to see trade-up behaviour."
Home starts should continue to rise over the year, Goatcher said, but won't hit the 1,200-a-month levels of the recent boom. "We'd be lucky to see activity levels that are half of that."
See www.cmhc.ca for the full report.
