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First-time buyers and empty-nesters help contribute to upswing in new condo starts
Dec 12, 2013
First-time buyers and empty-nesters are spurring on a surge in condominium construction, according to a new report by Canada Mortgage and Housing Corporation (CMHC).
CMHC reported that there were 1,567 new condominium starts in the Winnipeg Census Metropolitan Area (CMA — the city and 10 surrounding municipalities) during the first 11 months of this year, which was a 46 per cent increase over the 1,077 starts in 2012 for the same period.
“The trend in total housing starts rose in November,” said Dianne Himbeault, CMHC’s senior market analyst for Winnipeg, “bolstered by the strength of the multi-family sector, where condominium construction is at record levels.”
The condo starts this year easily broke the previous record of 1,077 starts in 2012.
“Demand for multiple-family units continues to be supported by growth in the number of younger households and empty-nesters,” she added.
While the number of condo starts is on the rise, so too is the number of existing sales of this property type.
WinnipegREALTORS® reported that by the end of November, 1,627 condo units were sold on MLS® for the first 11 months of the year, which was a 13 per cent increase over the 1,441 units that sold during the same period last year.
“Condos are by far seeing the best year-over-year increases of any property type,” said Peter Squire, the market analyst for WinnipegREALTORS®.
Still, condos only make up about 16 per cent of all existing home sales, which is dominated by the single-family, residential-detached housing.
“As is the case in other major real estate markets,” said Squire, “condominiums on average are more affordable than a stand-alone home on its own lot.”
For first-time buyers hoping to enter the housing market, condos offer an affordable option, while empty-nesters wanting to down-size to a smaller square footage dwelling are also looking towards condo purchases.
Typically, first-time buyers are seeking housing in the more affordable price range under $250,000, and on average condos are often priced well below that level.
CMHC reported that overall housing starts in the Winnipeg CMA stood at 4,811 units in November compared to 4,666 units in October.
Year-to-date at the end of November, there were 4,411 housing starts of all types in the Winnipeg CMA compared to 3,896 units for the first 11 months of 2012.
A total of 1,918 single-family housing starts were recorded for the first 11 months of last year, while the number for this year has jumped to 2,036.
Multiple-family starts (includes condos and apartments) hit 2,375 units by the end of November, while there were 1,918 such starts for the same 11-month period in 2012.
“The trend in housing starts has increased slightily since July, before stabilizing in November,” said Mathieu Leberge, the deputy chief economist at CMHC, about the national new home market.
“Overall starts have been following a trend similar to sales on the existing home market. As sales rise relative to listings of existing homes, buyers are increasingly meeting their needs in the new home market,” he added.
For November, CMHC reported that the seasonally-adjusted annual rate of urban starts increased in British Columbia and the Prairies, including Manitoba, and were essentially unchanged in Quebec and decreased in Atlantic Canada and Ontario.
Robert Kavcic, the senior economist for BMO Capital Markets, said in a recent report that, “Canadian home building activity might be a touch on the warm side, but builders still look pretty well behaved overall.”
He said housing starts are ahead of the amount needed to satisfy the present market demand, “But they’re comfortably below levels seen during the pre-recession period ... Notably, single-family starts now sit at the lowest level since August 2009, or the lowest in 17 years if looking past the brief recessionary period.” 
The prediction by bank analysts is for a “soft landing” for housing starts.
“The six-month moving average of housing starts is now 10 per cent lower than it was a year ago, which supports our argument of a soft landing for housing in 2014 and 2015,” according to a December 9 report prepared by TD Economics.