A strong month for Red Deer’s residential construction sector has narrowed the city’s year-over-year gap in housing starts.

Canada Mortgage and Housing Corp. reported on Tuesday that work began on 45 homes in Red Deer during October — a 36 per cent improvement over the 33 starts in the same month last year. With two months remaining in the calendar year, Red Deer builders have now combined for 479 construction starts, about 4.5 per cent behind the 10-month tally of 502 in 2010.

Red Deer’s October 2011 total consisted of 33 starts on single-detached houses, up from 23 the previous year, and 12 starts on units in multi-family projects, as compared with 10 in the same month in 2010.

Among Alberta seven largest urban centres, only the Edmonton metropolitan area had a bigger year-to-year jump than Red Deer for October, at 66 per cent. The Calgary metropolitan area improved by 25 per cent, while the Regional Municipality of Wood Buffalo recorded a three per cent increase.

Grande Prairie was down 11.5 per cent in October, Medicine Hat slid 43.5 per cent and Lethbridge dropped 57 per cent.

For the year to date, only Grande Prairie and Lethbridge are up over 2010, at 12.5 per cent and one per cent respectively. The Edmonton metropolitan area is eight per cent lower for the January-to-October period, Wood Buffalo is down nine per cent, the Calgary metropolitan area is off 12 per cent and Medicine Hat has tumbled 55 per cent.

Nationally, CMHC identified a big drop in the number of single-family homes built in Canadian cities in October. Urban single-family starts were down nine per cent, while multiple-unit urban starts were up by 1.7 per cent.

“Not surprisingly, multi-unit starts outperformed in the month as they have been doing for a good year now,” said Robert Kavcic, an economist at BMO Capital Markets.

Single starts were at their lowest level in just over two years, he added.

“On the supply side, there’s a clear divide between singles and condos, with the latter looking more vulnerable if a correction does indeed come.”

Many Canadians are scaling down or choosing to rent as home prices and debt loads sit at record levels and economic uncertainty persists. For some first-time buyers in urban centres, a condo is the only affordable option.

“To put the yawning gap between single and multi-unit construction in perspective, single-unit starts have fallen 29 per cent since the end of 2009 while multis have risen more than 70 per cent,” Kavcic said.

The influx of multi-unit builds has led some economists to warn of overbuilding in the Canadian housing market, which could leave a glut of unsold homes on the market in the case of a downturn.

Meanwhile, the below-average building of single-detached homes makes that market even tighter and puts upward pressure on resale prices.

With interest rates low for years now, some economists wonder how much demand is left in the Canadian housing market.

Urban housing starts were down sharply in the Atlantic region and Quebec, and up slightly in British Columbia. Ontario and the Prairie region saw strong increases.

CMHC has said that low mortgage rates, the domestic economy and immigration remain positive factors for the real estate market, while uncertainty in the global economy and the U.S. economic recovery pose threats.

The average home price in Canada for 2011 is expected to be $363,900 in 2011, and reach $368,200 in 2012.

With files from The Canadian Press.

< Back to Home Page