Canadian Condo Market Looks Strong
The international economic downturn has hit the market in condominium construction harder than any other sector of the real estate market in Canada. Rural areas have experienced an rise in house starts, and there has been long-term growth in starts of single family buildings, but the rate of construction of apartment dwellings and condos in Canadian cities, like downtown Toronto condos, has declined.
There was an overall decline of 1.5 percent, for March, in the number of house starts, mainly due to the drop in multiple family real estate development. This represented the first time that there had been a drop in housing starts in 2010. January and February had strong development ratios of 7.5% and 6%, respectively. There were 189,000 starts in January and 200,400 in February, however just 197,300 in March.
It is in urban areas that the fall in house starts has been most severe. Starts have increased in some rural parts of Canada, despite the general decline in construction starts across the country as a whole. There was a slide of 4.2 percent in urban starts in March, while rural starts climbed from February’s 17,600 to a total of 22,100 in March. It is the transition in construction of multiple family dwellings, which are mainly built in urban areas, that has had an important influence on these numbers. Rural properties are often single family houses.
Starts of single occupancy residences increased during March by 6.9%, while there was a decrease of 15.2% in starts of multiple unit buildings. Single family property starts reached their highest point in four years during March, after eleven months of continuous growth since their lowest point during April 2009.
There has been a significant decline in multiple residency real estate construction in the Toronto area over a few consecutive months, with a marked drop in interest in building high rise apartment blocks and Toronto condominiums. Toronto is typical of the national situation, buy, since this drop in multiple occupancy properties was paired with a rise in the number of starts for single family low rise buildings and rows.
A knowledgeable market analyst from the CMHC (Canada Mortgage and Housing Corporation), Shaun Hildebrand, who specializes in the Toronto sector, believes that things may soon change. He said that building of condominiums was likely to rise shortly, in response to the increasing demand for affordable accommodation in the area.
The rate of multiple family property construction starts frequently evolves quicker than that of single unit residence starts, and sees greater ranges of fluctuation. Bob Dugan, head market analysis economist for the CMHC (Canada Mortgage and Housing Corporation) considers the market for condominiums in Canada to be a volatile one.
There was a fall of 0.5 percent during February in building permit demands, specifically impacting requests for multiple unit dwellings, which was an important factor in the decline in housing starts of these properties in March.
