Calgary region housing starts forecast to rise in 2014

                                                                                                           By Mario Toneguzzi, Calgary Herald October 31, 2013

Total housing starts in the Calgary region are forecast to fall this year by 8.9 per cent before rising by 12 per cent in 2014.

The Calgary Housing Market Outlook, released Thursday by Canada Mortgage and Housing Corp., said starts will dip to 11,700 units in 2013 before increasing to 13,100 in 2014.

“Following a nine per cent reduction in 2013, total housing starts in 2014 are forecast to rebound with gains in both single-detached and multi-family construction,” said Richard Cho, senior market analyst in Calgary for the CMHC. “Continued job creation and heightened net migration throughout the forecast period will contribute to the demand for new homes.”

Single-detached starts in 2013 are on pace to reach 6,200 units, up four per cent from 5,961 units in 2012. “New home buyers are capitalizing on low mortgage rates and increased equity gains towards their next home purchase. In addition, new home inventories remain relatively low, creating opportunities for more units to be started,” said Cho.

In 2014, single-detached starts are forecast to increase five per cent to 6,500 units.
Multi-family starts are projected to decline 20 per cent to 5,500 units in 2013, mainly due to a decrease in apartment construction. But, an increase is expected in 2014. Rising house prices will have some buyers looking to the multi-family market where prices on average are lower, while others will be buying for lifestyle reasons, said the CMHC.

Meanwhile, with rental vacancies expected to remain low and rents increasing, demand for multi-family units from renters and investors will also increase. These factors are expected to push up multi-family starts by 20 per cent in 2014, reaching 6,600 units, it said.

By the end of 2013, existing home sales in Calgary are forecast to reach 29,200 units, up 10 per cent from 26,634 in 2012. In 2014, job creation and net migration will continue to be key drivers of the resale market, said the report. Employment growth in 2014 will remain strong for the fourth consecutive year, while migration will be coming off a record high in 2013. MLS residential sales are forecast to increase 2.7 per cent in 2014 to 30,000 units.

The average MLS residential price in Calgary is forecast to finish at $436,500 in 2013, up 5.9 per cent from $412,315 in 2012. Price growth should moderate to 2.4 per cent in 2014, with an average price of $447,000.