Canada

Canadian New Home Starts Jump, Pushed By Montreal and Vancouver

Canadian real estate developers are putting a lot of shovels in the ground. Canada Mortgage and Housing Corporation (CMHC) numbers show a large jump in the number of new homes starting construction. The rise is led by a big increase in Montreal and Vancouver. Toronto, which leads North America in active cranes, is starting to see starts fall behind typical volumes for the city.

New Home Starts Rise 10% Across Canada

The number of new home starts across Canada fell on a monthly basis, but made a large increase from last year. There were 209,122  starts (SAAR) in July, down 10.44% from last year. This represents an increase of 10.10% compared to the same month last year. For context, this is 17% higher than the median rate of growth over the past 10 years. There’s a lot of housing in the pipeline, in contrast to previous years.

Canadian Housing Starts

The number of new home starts in Canadian CMAs.

Source: CMHC, Better Dwelling.

Toronto Represents Over 1 In 10 New Home Starts, But It’s Slowing

Toronto, the city with the most cranes in North America, is starting to see starts slow down. There were 33,027 starts (SAAR) in July, down 5.47% from the month before. This represents a decline of 17.16% from last year, and starts are now 10.89% below the 10-year median. Soft condo pre-sales recently are weighing on the number of new project launches.

Toronto Housing Starts

The number of new home starts in Toronto CMA.

Source: CMHC, Better Dwelling.

Vancouver Represents Over 1 In 10 New Home Starts, And It’s Rising

Vancouver is starting to build a lot more units – much more than they have in previous years. There were 31,852 starts (SAAR) in July, down 23.24% from the month before. This represents an increase of 26.05% from last year, and starts are 60% above the 10-year median number of starts. This trend is likely to slow, as developers delay projects due to soft pre-sale absorption.

Vancouver Housing Starts

The number of new home starts in Vancouver CMA.

Source: CMHC, Better Dwelling.

Montreal New Home Starts Rise Over 38%

Montreal is experiencing a building boom, with starts very much above typical volumes. There were 24,959 starts (SAAR) in July, down 37.18% from the month before. This represents an increase of 38.14% from last year, and is 23.86% above the 10-year median number of starts. Strong demand for resales and tight inventory should push this number higher near-term.

Montreal Housing Starts

The number of new home starts in Montreal CMA.

Source: CMHC, Better Dwelling.

Canadian real estate developers are launching a lot of projects – more than typical. Toronto, one of the busiest cities for active building, is starting to see starts drop off. Montreal and Vancouver are both seeing much higher volumes than typical.

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6 Comments

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  • Reply
    Jimmy 5 days ago

    How textbook is this? Exactly 3 years from the pre-sale boom, all of the units begin to hit construction all at once, while the global macro market deteriorates.

    • Reply
      GTA Landlord 5 days ago

      Is this sarcasm, because it’s exactly out of a textbook. New home builds remove resale demand, which is how prices correct.

      Judging by 3.4% income growth (if you believe StatsCan), we’re seeing a lot of wage inflation. They’re just terrible at calculating CPI.

  • Reply
    Matt 5 days ago

    Anyone want to explain to a wanker like me what this means?

    • Reply
      GTA Landlord 5 days ago

      From the real estate business end, it has to do with replenishment. When they go up, they create more jobs.

      When they go down, they take away jobs. Considering half the country’s GDP growth is coming from this sector, slowing down isn’t an option. But it’s going to happen, since pre-sales over the past couple of years have dropped. New condo units are already dropping on a per square foot basis at the contract price. The contract price is distinctly different from the offering price, which is what Joe and Linda Boomer looking for retirement yield, using negative cap math, are willing to pay.

    • Reply
      Mtl_matt 5 days ago

      That builders will build as much as they can for as long as they can.

  • Reply
    straw walker 5 days ago

    Vancouver has a lot of projects in the pipeline, a lot more than usual, as in concrete condos. These are the units where the presale flipping was out of control..
    The question is; will many of these presales now complete? A number of “investors” have 5 and 6 presale agreements so it is basically impossible for them to complete.
    I think the Banks financing these projects, are going to look more closely in the future, as to financing requirements.

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