Canada kicked off another multi-year record for housing starts last month. Canada Mortgage and Housing Corporation (CMHC) data shows a large increase for housing starts in June. The rise pushes new housing starts in large urban areas to the highest level in over a decade.
Why Housing Starts Are Important
New housing starts are a critical indicator for the economy. When economies are booming, consumers upgrade their home and more people migrate. Building new homes means buying building materials, labor, and finished goods to furnish a home. It also means an increase in tax revenues for municipalities. That’s more credit (and bank interest), more materials, more tax revenue, and more jobs. The economy usually looks pretty good when these things are moving higher.
The opposite is also true – falling housing starts can mean economic weakness. The benefits that came with rising starts are no longer there. The jobs created disappear as well, as new houses complete. That’s fewer new jobs, stagnating tax revenues, fewer materials, and less credit growth. It doesn’t matter if they stop buying because of money, credit, confidence, or new houses face the wrong way. When supply catches up with demand, there’s a pullback in starts. Rising starts are a sign of economic growth, and falling starts are a sign of slowing growth.
Canadian Housing Starts Hit The Highest Level Since 2007
Starts of new housing in Canadian CMAs reached a multi-year high last month. The were 234,238 annualized starts in June, up 3.46% from the same month last year. The last time it was this high was in 2007, and even then it was for only the month of September. Before that we need to go all the way back to 1990 to see this many housing starts for more than a month.
Canadian Housing Starts
The number of new home starts in Canadian CMAs.
Source: CMHC, Better Dwelling.
Toronto Housing Starts Fall Over 36% From Last Year
Toronto housing starts made a sharp drop last month. There were 34,998 annualized starts in June, down 36.95% from the same month last year. Starts have been trending lower, with June printing the fewest starts since 2015. That isn’t to say supply isn’t coming, Toronto is still the king of units under construction. Soft demand for pre-sale units may be tapering demand for new projects though.
Toronto Housing Starts
The number of new home starts in Toronto CMA.
Source: CMHC, Better Dwelling.
Vancouver Housing Starts Rise Over 143%
Vancouver housing starts fell from the all-time high, but still pretty darn close. There were 41,504 annualized starts in June, up 143.31% from the same month last year. This is a few units off of the all-time high reached just one month before. That made this the second highest number of starts, and the biggest June since at least 1990. There’s supply in the pipeline, but this number is expected to taper as pre-sale numbers soften.
Vancouver Housing Starts
The number of new home starts in Vancouver CMA.
Source: CMHC, Better Dwelling.
Montreal Housing Starts Rise Over 22%
Montreal housing starts are still climbing, and are close to a new all-time high. There were 39,697 annualized starts in June, up 22.63% from the same month last year. Only three months have printed higher in the past 29 years. The amount of building is relatively high, compared to historic numbers.
Montreal Housing Starts
The number of new home starts in Montreal CMA.
Source: CMHC, Better Dwelling.
The number of housing starts in urban areas are near all-time highs. Toronto, the country’s largest market, was an exception – making a sharp drop on new starts. Even with a drop in starts, the city has one of the highest levels of units under construction on the continent.
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For those curious, I just looked up the Toronto homes under construction. 71,779 homes, just a 1,000 off of the all-time record. Not sure what completions look like, but the jump in preliminary starts might push us to a new record.
I’m thinking one more push to get all projects in the pipeline, and then a total collapse when jobs start to take an uptick. Don’t forget that people move here while there’s jobs.
Try posting something on LinkedIn, and see literally hundreds of applications with stellar qualifications flood in. Big change from last year in Toronto, when you had to beg people to join your company and engage in labor bidding.
this is a great news! we are having new immigrants coming in with good money. they all need a place to stay. this is a great city!
Ah, the 70% of his investments funds into real estate guy is back. More housing!
Because it’s not like one of the first things they teach Realtors is to be careful as housing under construction reaches an irregular high. It takes a long time to complete housing. It only takes a couple of bad economic prints to stop people from closing.
Watching Canadians harp about this time is different is amazing. Of course, it’s always different this time. The immigrants, the wage growth, the density, etc… until it isn’t.
Great watching this from down south. I couldn’t really appreciate the subtitles of a bubble, when I was actively involved in one.
Spoiler alert: After a really epic bubble, things never go back to normal. There’s elevated prices in NYC, but rather than improving density, people are just going – screw it. After the 2006, there were very few companies willing to set up shop, meaning everyone committed *OUT* of NYC to work. Talk about idiocy. Density in one place, taking a suburban train out to work.
Well Canada is a having a recent population boomlet — as BMO reported last summer, as a record 380,000 moved to Canada in 2017.
No surprise.
Population growth is cyclical with employment. The number of people that stay in a region once the employment trend reversed doesn’t just reduce, but economic immigrants migrate.
1990 population analysis actually tells us a lot. Yes, I realize with the username “FOMO,” you’re clearly just a troll without any actual interest in facts, you’re just waiting for your turn to reiterate what already believe. I’m leaving the comment for others instead in learning, instead of just workplace masturbating on the Internet.
Im not sure how these numbers make sense.
According to zolo stats vancouver is crashing so why are housing starts shooting up? Wouldnt they be cancelled?
And using Toronto zolo stats condos are rising rapidly still, so why are starts down instead of shooting up?
Is this opposite world ? lol
Classic BD comments.
Good news is bad news, bad news is bad news.
Housing starts are up because most everyone understands the worst is over. Sure, prices seem inflated still but it will soon be seen as normal as everyone adjusts to the depreciation of CAD. This is what happens in a socialist society, when over 50% of the population gambles everyone loses.
“Housing starts are up because most everyone understands the worst is over”
Is that what people outside of the industry are saying these days?
There’s a rush to initiate builds in places like Vancouver. If they don’t, by the time they build them, a considerable number of people won’t be able to close without topping up the deposit. This is the same problem Toronto detached homes are/were having.
Appraisal comes under, the buyer needs to find the money to cover the shortfall, or sell the assignment immediately. Right now condo apartments in Vancouver are down 10%. That means for the next project to start, the 20% downpayment you needed, now becomes 30% to move in. If they fall further, well… at a certain point your downpayment is gone. Then who closes?
You are missing the point. Price points will be maintained as we sacrifice the value of CAD to sustain them. It’s happening all around us. Everything is increasing in ‘cost’, not just real estate.
Perspective means a lot here.
It appears you don’t have enough money to worry about the currency of your investments, and you’re acting like everyone else doesn’t. You know how you judge “jealous” renters? Wealthy people judge people like you as middle class schmucks.
“This is what happens in a socialist society”
This isn’t what happens in a socialist society. It’s what happens when there’s a misallocation of resources, and voters are holding pitchforks to preserve the value of their home. Outbound FDI is up for a reason. Enjoy your pesos. Maybe when they’re worth as much as the Bolivar, you’ll be wealthy in your mind.
You are correct, perspective is everything and yours is completely biased to your inner needs to put down those you know nothing about in order to make yourself feel intelligent.
I’m not going to go on about my wealth, how I obtained it through decades of hard work building a business and then selling it, or what I am invested in. Or even what think about those who attempt online attacks knowing absolutely nothing about anything.
I don’t know exactly what I did to set you off, perhaps it’s my post name which springs bias in your brain.
Facts are what they are. CAD is setup to fall against USD and GBP over the next decade due to the masses overindulging in debt. As we are a socialist society the needs of the masses are most often protected at the expense of the few. Plan your future accordingly.
Thanks for the attempted put downs, it makes you look very intelligent. Do you have anything productive to add to this thread?
The lure of the megacity continues….until something else shines on the distant horizon. Sitting on the GO Train…folks are talking about selling their Toronto condo to invest in downtown Montreal, sigh.
Lure of the megacity? You understand statistics show the young people that move to Toronto migrate out shortly after graduating, right? We get a big influx of foreign students, and then the ones with talent leave for better jobs in SF or Austin.
The immigration ponzi only works out for so long.
Enjoying housesigmas sold below bought section. Seems it is catching up to some and there should be more of those flooding the market soon as cost of living, increased property tax and other obligations come into play. When you can’t keep interest payments up you are already in trouble. Also noticed more ads for interest only mortgages and some homeowners offering loans on MLS listing to make the sale happen
So is this the chapter of the book where we start to see skeleton high rises standing in random neighborhoods for a decade to come before they are bought on the cheap and the cycle starts all over again…like it did in 1996.
Gotta meet the demands for all that juicy money laundering.