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Housing starts set to slow in 2018

Housing starts set to slow in 2018

Posted on: 10/30/2017 | Author: ATB Financial's Economics + Research Team

The Canada Mortgage and Housing Corporation (CMHC) has released its 2017 Fall Housing Market Outlook for Edmonton and Calgary. After surprising experts and analysts this year, housing starts in both cities are forecast to be impacted in 2018.

In Edmonton, housing starts are expected to be influenced by a slowdown in the apartment sector. According to the CMHC, new apartment builds, plentiful listings of condos on the existing home market as well as rising inventories of newly completed but unsold apartments all indicate that there is an oversupply of condos and rental units in Alberta’s capital city. As such, new home construction, particularly in higher-density housing could be affected.

Three hours south on the QEII, the CMHC anticipates that housing starts will moderate in 2018 as well. CMHC notes that low mortgage rates and a growing population have helped fuel demand for new homes, specifically for single-detached homes. But like Edmonton, multiple starts (semi-detached, row and apartments) in Calgary have been strong in 2017 and that means this pace is not expected to continue. The number of completed but unsold units has been increasing and reached a record high this last spring. A higher level of housing inventory will weigh on the construction of higher-density units in Calgary over the next couple of years.

However, after two years of economic decline and persistently low mortgage rates, job growth and improving consumer sentiment will boost sales in the coming years. This will eat away at unabsorbed inventory and should support advances in home construction in a couple of years.

Housing starts, graph

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