Wed, 09 May 07
Housing starts in Ontario were down 16 per cent in April, prompting the Ontario Home Builders' Association to revise their building forecasts downward yesterday...
The builders group said it now expects 67,000 housing starts this year, down from its earlier estimate of 69,000. The revision comes on the heels of lower than expected starts totals released yesterday by the Canada Mortgage and Housing Corporation.
While there was a solid 73,417 starts by the end of 2006, builders had generally expected a slower pace this year, but not quite this slow.
"Home builders across Ontario continued to experience weakness in construction activity during April," OHBA president Brian Johnston said. "Starts continue to lag behind forecasts."
Ontario builders reported 4,791 starts in April compared to 5,670 last year at the same time.
The Toronto market is also down about 11 per cent from last April. While analysts had expected higher figures, those numbers are still very healthy and above historical norms.
Resale market ‘satisfying’ demand
One reason for the lower than expected construction levels is that the resale market is already satisfying much of the current demand, says the CMHC.
"Increased choice in the (resale) home market has prompted more people to satisfy their housing needs through the purchase of a resale home over the past three years," said Jason Mercer, CMHC senior market analyst.
Last week, the Toronto Real Estate Board reported that the resale market was on track for another near-record year.
There were 9,452 sales in April, the most recorded for a single month in the board's history.
Lower than expected condominium construction also continued to act as a drag on the level of total starts, said the CMHC.
"While the resale market has tightened, you have a situation that's quite the opposite in the new home market where it's been well below trend expectations," CMHC economist Ted Tsiakopoulos said.
However, that situation is expected to improve in the second half of the year, based on the strong multiple home sales in the second half of 2006, according to the CMHC.
"We know that there are quite a few condo sales in the bag, but for some reason they haven't gotten off the ground, which is impacting the numbers," Tsiakopoulos said.
Skilled labour ‘hard to find’
One issue could be structural. Home builders have had trouble finding skilled labour to work on high rises in the heated market.
"A lot of the skilled trades are shared across a number of projects, so it could be a shifting of resources from one site to the next, which takes time," Tsiakopoulos said.
Another positive for the Toronto market is that Statistics Canada reported area building permits are up a substantial 38 per cent in the first quarter of this year compared to the same three months last year. However, that's largely due to a spate of office, commercial, and hospital-related building rather than strictly residential building.
Nationally, housing starts are down 5 per cent in April from the same month last year.
"While not at record highs the new housing market is still quite positive," Tsiakopoulos said.
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