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Calgary Metropolitan Area Housing Starts to Increase in 2014

  • May 24, 2014
  • By Cody Battershill

Housing Starts, Price Gains and Current Market Conditions

After a reduction to approximately 12,600 units last year, the total amount of 2014 housing starts in the Calgary Metropolitan Area (CMA) is set to rise.

CMHC Multi-Family Housing Starts Calgary Alberta 2014

According to the Canada Mortgage and Housing Corporation (CMHC), CMA housing starts will increase by 16 percent to 14,600 units in 2014 - the highest since 2006.

While both single-family detached and multi-family will experience more housing starts, the latter of the two will see the most substantial gain.

The high number of CMA housing starts forecasted for the year is a result of:

  • Strong employment growth
  • Positive net migration
  • High income levels
  • Low mortgage rates

Highlights

CMHC Experts predict that 2015 will be a slower year in comparison to 2014.

Calgary MLS real estate sales activity  graph

Less inbound migration and slowed employment growth combined with readily available home inventories built in 2014 should reduce the need for new homes, resulting in an eight percent reduction of housing starts in 2015.

Single-detached absorbed price is predicted to increase by four percent in 2014 to $610,000 up from $588,179 the previous year.

Low mortgage rates, rising incomes and equity gains will support the price growth for recently constructed single-detached properties.

Competition between employers for skilled workers as well as rising prices for materials will also contribute to single-detached price growth in 2014 and 2015.

While multi-family starts decreased by 10 percent in 2013 to approximately 6,200 units, the expectation is there for it to rebound back up 29 percent to 8000 units in 2014.

This amount of multi-family starts is the highest number in the CMA since 1981.

Why Do Housing Starts Matter?

Housing starts are a key indicator of just how well a particular economy is doing. Analysis of housing start statistics can lead experts to some very important conclusions not only about how an economy is performing today, but also in the future.

Housing starts have an effect on many industries including:

  • Natural resource sector (raw materials)
  • Employment and construction
  • Manufacturing and real estate industries
  • Banking and mortgage industries

It goes to say that in a strong economy people will purchase new homes while they would do the opposite when things aren’t going so well.

Current Market ConditionsCalgary Home Sellers Guide

As you may already know, Calgary`s real estate market is currently in “sellers territory”. This means that it is a good time for people to sell their homes because of low supply contributing to a rise in prices and also causes buyers to make quicker decisions.

Calgary’s existing home market saw an increase of 12 percent in sales throughout 2013 to nearly 30,000 units. In 2012, that increase was much higher at 19 percent.

Record net migration levels and strong employment opportunities will contribute to more sales activity in 2014 and 2015.

Calgary MLS Average residential price growth

Residential sales are projected to increase by four percent from 2013 to 31,300 units, while in 2015 that number is said to increase another 3 percent to 32,100 units.

The average time a home spends on the market decreased from 42 days in March 2013 to 34 days in March 2014.

Average price of a home in the CMA has moved past peak levels in 2007 and is projected to have further gains in 2014 and 2015.

Residential prices grew by 6 percent in 2013 and are predicted to increase another 5 percent the following year to an average of $459,000.

Price gains will likely lead many home owners to list their homes for sale.

New listings are predicted to increase 2 percent to 43,600 units in 2014 and up another 3 percent in 2015.

*Information and graphs sourced from the CMHC

Questions about Calgary Real Estate?

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