The Six Largest Cities in Canada

Housing starts in Canada between 2002 and 2008 were exceptionally strong. They averaged more than 220,000 units annually over the seven years. This compares with an annual average of 150,000 units during the 1990s. It is interesting to look at the nation’s six largest cities and see how they fared during the boom times for housing. This story will also consider six second-tier cities, by population, and how they have done as well. Local economic factors and population shifts have played big roles in certain urban areas.

If setting a new record for starts is the criterion, then Calgary did best of all. That city’s housing starts in 2006 of 17,000 units was an all-time record, higher even than the 15,400 units achieved in 1978. The province’s booming oil and gas sector was the reason. But starts in 2009 are likely to be less than half that level, at a current forecast figure of 7,200.

Edmonton is closer to the Oil Sands than Calgary and its housing starts were exceptional from 2002 through 2007. In 2008, they plunged like a drill bit. However, even in 2006, at 15,000 units, they never did quite reach the city’s record-high level of 17,100 units recorded in 1978 during another surge in oil prices and energy-related economic activity. The 1970s were good years for Alberta as OPEC jacked up the world price of oil and the alternative potential of the Tar Sands gained more attention internationally.

Vancouver made a significant contribution to national housing starts in 2002 through 2009. But Vancouver had strong housing in other periods as well, most notably the late 1980s and early 1990s. That was when East Asians were relocating to Canada’s West Coast in anticipation of Hong Kong being turned over by Britain to China.

Montréal and Ottawa had only modest strength in the seven years. Montreal’s most recent cyclical high of 28,700 units in 2004 was still well below the city’s record of 42,000 units in 1987. However, Montréal (-26%) and Ottawa-Hull (-19%) are the two major cities in the top six with the lowest declines in actual starts so far this year versus the same period last year.

That leaves Toronto, traditionally the largest housing market in the country. Toronto had a remarkably long stretch of good homebuilding activity. It began in 1999 and carried forward for ten years through 2008. On several occasions (2001, 2002, 2003, 2004, 2005 and 2008), annual starts almost reached as high as the 46,500 units realized in 1987. Toronto’s condominium market has been particularly noteworthy for defying gravity. But in the latest month, condo starts were -70% both month to month and year over year. (story continued below)

Major Cities – Housing Starts – Long-term History

Montréal Housing Starts

Ottawa-Gatineau Housing Starts

Toronto Housing Starts

Calgary Housing Starts

Edmonton Housing Starts

Vancouver Housing Starts

Data source: Canada Mortgage and Housing Corporation (CMHC).
Charts: Reed Construction Data - CanaData.

Six Second-tier Cities by Population

It is also interesting to consider whether some of Canada’s second-tier cities, by population, had similar kinds of housing booms during the good times. (Looking at the set of graphs below, the answer is revealed quickly.) Québec City had strong starts between 2002 and 2008. London and Kitchener also performed okay, generally speaking.

On the other hand, there was hardly a ripple of increase in Hamilton. Halifax had a burst of activity in 2002 and then tailed off. And Winnipeg saw only a modest climb in starts over the seven years. That city’s highest level during the period (3,400 in 2007) came nowhere near matching the 6,500 figure in 1987 or the 9,700 units in 1978.

As for 2009 starts, five of these six smaller cities have had declines so far this year of between 33% (Kitchener) and 45% (Québec City). The city with the smallest drop in year-to-date actual starts versus last year has been London Ontario, at -15%. Population changes are having an effect. Population change in all of the provinces has settled down.

Interprovincial and International Population Shifts

In the boom times, interprovincial population shifts were in favour of Alberta to secure employment in the Oil Sands. Lately, recession has sent many workers home and Québec and provinces in the Atlantic are seeing population gains for the first time in many years.

At the same time, and paradoxically, the earlier resource boom caught the attention of immigrant arrivals. They are now scattering more widely across the country, as opposed to simply settling in Ontario, which was their former inclination. Less interprovincial migration and more varied (i.e., by geography) immigration are likely to be the trends of the future. These will have impacts on regional housing markets going forward.

Major Cities – Housing Starts – Long-term History (continued)

Halifax Housing Starts

Québec City Housing Starts

Hamilton Housing Starts

Kitchener City Housing Starts

London Housing Starts

Winnipeg City Housing Starts

Data source: Canada Mortgage and Housing Corporation (CMHC).
Charts: Reed Construction Data - CanaData.