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Toronto housing starts down sharply
New-home construction ends 2007 on a low note
A stormy December put the big chill on home building as Canadian housing starts sank to the lowest level in almost six years while developers struggled to break ground during an abnormally snowy month.
Housing starts hit an annualized rate of 187,500 units, down from 233,300 in November. Still, despite the December hit, starts finished the year up 1 per cent from 2006 at 229,600, and just shy of the record set in 2004, according to figures released yesterday by the Canada Mortgage and Housing Corp.
"With weather exerting a negative influence on building activity in December, the sharp drop in housing starts shouldn't be seen as a prelude to a U.S.-style meltdown," said BMO Nesbitt Burns economist Robert Hogue.
"Nonetheless, the sector's strong momentum of the last several years is expected to slow moderately, as rising economic uncertainty throws some sand in the housing engine."
The CMHC expects starts to decline to 214,300 units this year, while the Royal Bank of Canada forecast 210,000 starts. "The strong price gains recorded in 2007 began to stress affordability, suggesting that Canada's housing market will cool," said senior bank economist Dawn Desjardins. "Still, against a backdrop of a strong labour market, rising wages and low interest rates, the slowing is likely to be modest."
Of all cities, Toronto registered the biggest hit, with starts down 51 per cent from November.
Most of that decline was due to multiple family home starts such as condominiums, according to the federal agency. "It was difficult for builders to shift resources to new projects," said Jason Mercer, CMHC senior market analyst.
Last year, sales of new condominiums were at a record, but those numbers haven't translated into official starts – recorded when the builder pours the concrete foundation – because of the difficulty that some builders are having moving from single detached housing to highrise construction, the CMHC said. As a result, Toronto starts declined 10 per cent in 2007 compared with 2006 to 33,294.
In 2007, resale markets were on fire, making it the best year on record for sales, and 11 per cent higher than the previous record set in 2005.
However, both new home sales and home resales are also expect to cool in 2008.
"Slower economic growth is forecast in the upcoming years and housing affordability is under pressure from increasing development charges and reduced land availability," said Ontario Home Builders' Association president Mark Basciano.
January 10, 2008 | Permalink
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Comments
House looks a deep dip to me
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Posted by: Dan | Jan 12, 2008 6:52:13 PM
So perhaps this warm January weather will mean record starts for the beginning of this year? O.K., that's tongue in cheek but it would follow the same reasoning.
Posted by: Marg Scheben-Edey | Jan 11, 2008 7:38:21 PM
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