June’s Housing Start Level is 217,800 Units
The latest (June 2008) report on the nation’s housing market has just been released by Canada Mortgage and Housing Corporation (CMHC). June’s seasonally adjusted and annualized figure for housing starts was 217,800 units, which was down 4.3% from May’s level of 227,700 units. It should be added that both May and April were revised upward by about 7,000 units each in the latest set of data. Average seasonally-adjusted housing starts through the first half of this year (228,300 units) stand only slightly ahead (+0.7%) of the level achieved through the first half of last year (226,800 units).

“Multiple-unit starts” (+23%) is where the action is, as opposed to the “single-detached” market (-13%). These numbers are based on actual starts year-to-date in urban centres with populations of 10,000-plus. Despite the weakness in single-family starts, the build-up in unsold inventories has become most apparent in this market (see second graph below). The curve for completed but unabsorbed single and semi-detached units has been rising with a fairly steep slope for almost a year. (By the way, the inventory figures are a month behind the starts numbers.)  

The change in unabsorbed singles and semis was +5.0% in May versus April and +19% versus May of last year. Single and semi-detached units under construction increased slightly (+1.9%) month over month, but they were down (-2.9%) on a year-over-year basis. In the multiples market, completed and unabsorbed units fell 2.5% in May from April. Multiple units under construction were up only slightly (+1.3%) from the month before, but they were 18.0% higher than a year ago. It will only take a little softness in the multiples absorption rate (currently at 82%) for its unsold inventory figure to quickly shoot up again.

Housing Starts in Ontario Strong – The Province didn’t get the Memo
According to CMHC’s latest report, activity levels are much more regionally diverse than they have been for several years. The West has been pushed into the background while the East has come to the fore. In fact, traditional frontrunner Alberta (-23%), is now stumbling along in the rear. Only Saskatchewan (+16%) in the West is recording a notably strong percentage change in starts year to date in 2008 compared with the same period last year.

The leaders, in a virtual tie, among the provinces in year-over-year percentage terms are New Brunswick (+27%) and Ontario (+26%). Clearly Ontario did not get the memo about how its weak manufacturing sector, which has to deal with the high-valued Canadian dollar, would be holding back the economy this year.

15 Cities in Ontario – 10 Up and 5 Down
There are fifteen Ontario cities shown in the fourth chart below. Only five of those have recorded year-over-year percentage declines halfway through 2008. Three of the five − Kitchener (0.0%), London (-20%) and Windsor (-32%) − lie along the Highway 401 corridor that runs between Toronto and the motor city of Detroit. The other ten Ontario cities recorded percentage increases, with Barrie (+76%) leading not only the province but also the entire nation.

As for the six largest cities in the country by population, Toronto (+38%) was way out front in terms of percentage change. The placement order for the five runner-ups was: Ottawa-Gatineau (+20%); Calgary (+14%); Vancouver (9%); Montréal (+4%); and Edmonton (-45%). Edmonton was the weakest urban market in the country, particularly due to a drop-off in single-family starts (-68%) versus the first half of last year. Toronto got its strength from an exceptional performance in the multiple-unit (i.e., condo) market (+72%). Calgary (+87%) has also had an exceptional record in condo starts this year.

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