Housing starts in the Edmonton region in 2009 will fall below 2008 levels, predicts the Canada Mortgage and Housing Corporation (CMHC) in its spring market outlook.
“Based on the activity that we saw in the first quarter, we’re a bit more conservative in our outlook,” explained senior market analyst Richard Goatcher.
In the Edmonton region, housing starts are down 63 per cent overall in the first quarter and 27 per cent for single-family homes. The agency is now predicting Edmonton-area housing starts will decline to 3,250 units in 2009. It’s also projecting the Alberta economy will shrink by 2.3 per cent this year, before posting a 1.5 per cent gain in 2010.
In its first quarter forecast the agency had projected 0.7 per cent shrinkage in Alberta’s gross domestic product (GDP) and projected housing starts to remain on par with 2008 levels.
Current building activity is actually lagging behind the usual demand that would be evident due to Alberta’s population and migration patterns, the CMHC says. Builders are adjusting their production while the market absorbs already completed houses in response to lower demand.
“Typically, we would have more housing starts than what we’re seeing,” Goatcher said. “That means we’re going to have some pent-up demand that will start to express itself in 2011, 2012 once the economic recovery really gains traction.”
In 2010, a gradual turnaround in the economy of the Capital region will bring a 26 per cent improvement in housing starts to 4,100 units, he said. Anyone waiting for a bold prediction of economic recovery will have to look elsewhere.
“We’re not going to see a big, strong rebound in terms of housing demand. It’s going to be more a gradual improvement,” Goatcher said.
He’s especially pessimistic about the multi-family sector, where inventories are still rising and a number of incomplete projects are bogged down in the Edmonton region. The figures for single family, on the other hand, are a little conservative and leave the door open for an improvement if builders have a strong fall season.
“I’m hopeful that we’re going to be proved wrong,” Goatcher said.