Housing Starts Reflection of Economy

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Business News

Business NewsTHUNDER BAY – REAL ESTATE – Housing starts in Thunder Bay, Census Metropolitan Area (CMA) were trending at 182 units in August up slightly from 145 units in July according to Canada Mortgage and Housing Corporation (CMHC). The trend is a six month moving average of the monthly seasonally adjusted annual rates (SAAR)(1) of housing starts.

“Weakening seasonally adjusted starts in Thunder Bay is a reflection of weaker employment levels and slightly increased resale listings. After a flurry of new apartment and condominium construction over the past three years, this market is pausing, partly to absorb the above-average number of condominium projects that are almost entirely still under construction in the local marketplace. Nonetheless with the late start to the construction season, the fall should still see at least an average pace of new construction,” commented Warren Philp, CMHC’s Market Analyst for Thunder Bay.

Mario Tegola from Re/MAX First Choice Realty in Thunder Bay says, “According to the report, the housing market is slowing down in most of Canada except for the Praires and BC. Our market in Thunder Bay is still steady but we have a lot more supply now then we did in the beginning of the year. Traditionally we slow down in late fall and winter months and I cannot see anything different this year. Prices have stabilized in Our City. 2015 should be the same as 2014”.

Across Ontario housing starts were trending at 56,277 units in August, compared to 57,658 units in July, according to Canada Mortgage and Housing Corporation (CMHC). The trend is a six month moving average of the monthly seasonally adjusted annual rates (SAAR) of housing starts.

The SAAR of total urban housing starts was 49,685 units in August, down from 67,057 units in July. More urban Ontario centers registered softer versus stronger activity in the latest month – led by declines in Toronto and Kitchener. For the year ending August, Ontario raw urban starts were one per cent below levels for the same period one year ago.

“They are overbuilding condos in a Toronto which could cause a decrease in construction of new units. This is not the case in Thunder Bay as we have a short supply of condos,” adds Tegola.

“While most segments of the housing sector posted declines, apartment starts declined more sharply thanks to elevated activity in the previous month in the GTA. A better barometer of activity is the six month trend measure which paints a picture of stability and a new construction market that is better in line with demographic demand in recent months,” said Ted Tsiakopoulos, CMHC’s Ontario Regional Economist.

CMHC uses the trend measure as a complement to the monthly SAAR of housing starts to account for considerable swings in monthly estimates and obtain a more complete picture of the state of the housing market. In some situations, analysing only SAAR data can be misleading in some markets, as they are largely driven by the multiples segment of the markets which can be quite variable from one month to the next.

The standalone monthly SAAR was 229 units in August down from 275 in July.