Housing starts in Toronto dropped last month
By Lucas on Dec 08, 2016
The Canada Mortgage and Housing Corporation (CMHC) released its housing starts figures for November 2016, announcing that starts stayed steady, but there was a drop in Toronto.
The national trend measure of housing starts was 199,135 units, basically unchanged compared to October's 199,641. The trend is a six month moving average of seasonally adjusted annual rates (SAAR).
“Housing starts kept a steady pace in November as upward trends observed in British Columbia and the Prairies offset downward trends recorded in Ontario, Quebec and the Atlantic provinces,” says Bob Dugan, CMHC Chief Economist. “We’re also seeing that housing starts are on track to have moderated in 2016 compared to 2015 in most centres where we detected overbuilding.”
There was a very brief moment a couple years ago when pundits believed that Toronto was overbuilding, but then inventory started to drop and prices started to rise, and this trend hasn’t stopped.
The standalone monthly SAAR for November was 183,989 units, down from 192,297 in October. The SAAR of urban starts dropped 5% to 166,828 units. Multiple urban starts decreased 7.7% to 105,915 units, while single-detached starts stayed steady at 60,913. Rural starts are estimated to be around 17,161 units.
Housing starts in Toronto CMA
Housing starts in Toronto Census Metropolitan Area (CMA) trended at 39,195 units, staying steady with October's trend of 39,689. But, when it comes to the standalone monthly SAAR, there was a big drop in November with only 30,425 starts. In October, there were 48,035.
“Toronto’s housing start trend declined slightly in November due to a slowdown in new apartment construction,” says Dana Senagama, CMHC Principal Market Analyst for the GTA. “However, single-detached home starts picked up pace as limited resale listings for low-rise homes continue to cause demand to spill over into the new home market.”
The only problem with the extra demand for new low-rise homes is that the GTA is quickly running low on supply. According to the Building Industry and Land Development Association (BILD), there were only two months of inventory in the new low-rise market as of the end of October 2016.
Though apartment starts were down, the City of Toronto still had the most starts out of every region in Toronto CMA. Milton came in second with new low-rise starts, and Brampton came in third with mostly detached starts.
How long will the new home market struggle to sustain the “spill over” from the resale market?
