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Condo construction: A tale of two cities

Condo construction: A tale of two cities

Posted on: 9/5/2018 | Author: ATB Financial's Economics + Research Team

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Housing construction is a good economic barometer. But can the level of activity be out of sync with actual economic conditions? And what might that suggest about future housing prices?

A prime example is the level of condominium construction in both Calgary and Edmonton. The graph below presents condo starts over the last ten years, represented by the average monthly totals over the previous 12 months. This type of moving average helps give a better picture of activity, rather than looking at the monthly data which can be erratic and volatile month-to-month.

The global downturn of 2009-10 is evident in both cities — new condo construction nearly ground to a halt. The boom period between 2011 and 2014 is also on display with a smart rebound to an average of 600 new condos each month in both cities.

More recently, the oil price downturn in 2015 saw a commensurate pull-back in condo activity to around 300 per month in Calgary, and 200 in Edmonton.

In 2018, however, condo construction is ramping up in Calgary but easing in Edmonton. Given that economic recovery in both places has been steady but only gradual, the two cities may be on different paths. With many more condos currently being built, Calgary’s market may be slower to recover. Prices in the Edmonton condo market, with fewer new units currently under construction, may stabilize and rise more quickly in 2019.

Condo construction, graph​​​​​

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