The credit crunch and global recession seem to finally be impacting Canada’s housing market, which until recently has been as robust in its growth as its American counterpart.
The Canada Mortgage and Housing Corporation estimates that 2008 was the seventh consecutive year that the country’s housing starts topped 200,000 units. However, last year’s 212,366 single- and multifamily starts were off by an estimated 7%.
“Pent-up housing demand, which built up over the 1990s, enabled Canadian housing starts to exceed long run demographic demand for the majority of this decade. This excess demand has gradually decreased, and CMHC expects construction levels in 2009 to be more aligned with long-run demographic demand,” the Corporation stated last month.
Yesterday, Statistics Canada, which serves the same function as the Census Bureau in the United States, estimated that the value of residential building permits in Canada fell in 2008 by 10.2% to C$40.89 billion (US$30.1 billion). Last year was the first in the last five years to see a national decrease in residential permit value, a harbinger of potential future construction activity.
Some of the steepest drops in value occurred in the country’s western metro areas. For example, permit values plummeted in Vancouver, British Columbia, by 66.5% to C$193.4 million Canadian dollars; by 59% in Calgary, Alberta, to C$199.8 million; and by 64.3% in Saskatoon, Saskatchewan, to C$48.5 million.
In Ontario, the country’s most populace province, permit values declined more modestly, by 4.7% to C$25.4 billion. However, Greater Toronto saw its permit values fall by 12.7% to roughly C$1 billion. That’s hardly surprising, though, given that buyer demand in Toronto has eroded in recent months. The Canadian Press reports that resales in Toronto last month were down 47% from a year ago, to 2,670 homes, with an 8% decline in average prices to C$343,632.
John Caulfield is senior editor at BUILDER magazine.