Total Starts are Ahead +9% Year to Date
Canada Mortgage and Housing Corporation (CMHC) announced today that March 2008 housing starts, at 255,000 units seasonally adjusted and annualized, were almost exactly the same as February’s level of 256,000 units. January’s figure was also relatively high at 228,000 units. Therefore, the average in first-quarter 2008 was 246,300 units, an increase of 9.0% versus the average in the first quarter of last year.

Housing starts in Canada have continued to be buoyant, while they have fallen more than 50% (peak to trough) in the United States. The subprime mortgage problem has not reared its head to anything like the same extent in Canada as in the U.S. Plus, there is a disconnect between the U.S. and Canadian economies that is providing homebuilders with the confidence to proceed with building plans.

The Word “Lower” Figures Prominently in Three Ways
The word “lower” figures prominently in Canada’s current economic environment: (1) lower prices generally, due to the strength in the value of the Canadian dollar; (2) lower taxes, enacted in provincial and federal budgets and economic statements and also due to the cuts in the Goods and Services Tax; and (3) lower interest rates, as the Bank of Canada follows the Federal Reserve on a downward path.

Remarkable Strength in Multiples
CMHC’s latest available figures on city housing starts are actuals and not seasonally adjusted. What is most remarkable is the strength in the “multiples” category. Calgary and Toronto lead the way. Calgary multiple starts are ahead by a factor of three so far this year (3,600 units so far in 2008 year versus 1,100 units year to date in 2007). Toronto multiples are double last year’s level (6,400 units versus 3,100 units).

Other cities with large increases in multiple-unit starts have been Ottawa-Gatineau (+53%), Montréal (+47%) and Vancouver (+24%). Kelowna B.C. (+240%) and Quebec City (+63%) are smaller urban markets that have also contributed to the strength in multiples.

The Toronto housing market still has a lot of clout in the country. Toronto’s total starts (8,945 units) are two-thirds higher than the level in second-place Montréal (5,400 units). Toronto has also had more housing starts so far this year than the boom cities of Calgary and Edmonton combined.

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