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By: Alex Carrick on February 6th, 2017

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Canadian Housing Starts Forecasts in 7 Graphs

Economic News

An earlier Economy at a Glance set out a U.S. housing starts forecast in 7 graphs. It only seems fair and appropriate that the same now be done for Canada.

2017-02-01-US-Housing-Starts-Graphic

The Canadian graphs, with Excel-generated trend lines beginning way back in 1960, are for Grand Total, Single-Family, Multi-Family, Quebec, Ontario, Alberta and British Columbia.

Ontario (14.1 million people as of October 1, 2016), Quebec (8.3 million), B.C. (4.8 million) and Alberta (4.3 million) have the largest population counts among the nation’s ten provinces.

Most of the U.S. home starts graphs featured downward sloping trend lines. The same isn’t true for the Canadian charts. In fact, only Quebec has a 60-years-plus trend line that’s on a decline; and furthermore, the descent is barely visible.

The single-family starts trend line is flat and all the others are ascending.

Canada has had the advantage of favorable demographics. The size of the population has been growing rapidly, even in recent times when depressed commodity prices have held back gross domestic product (GDP) growth.

The most recent population count for the country as a whole was +1.3% year over year. By way of comparison, the U.S. rise has been only about half as fast, +0.7%.

Among the four featured province’s, Alberta’s population has continued to climb the fastest (+1.6% from the end of Q3 2015 to the end of Q3 2016) despite a slump in the energy sector that has sent workers scurrying to find jobs elsewhere. (A decade ago, when mega Oil Sands project construction was in its heyday, the province’s pace of population growth was often above +3.0% y/y.)  

Ontario (+1.5% y/y), has been just a stride slower than Alberta in the most recent time frame;  B.C. (+1.3%) has been next; and Quebec (+0.9%) has struggled to keep up, but it really hasn’t done so badly relative to many other jurisdictions around the world − e.g., Russia, Germany and Japan all have falling resident counts.

Net international migration to Canada over the past four reported quarters has been +338,600. Let’s express this in a way that is more attention grabbing. Immigrants have accounted for nearly 75% of the nominal increase in the nation’s total population since 2015. In other words, while one out of every four new individuals can be explained by births in excess of deaths, a stunning three out of every four has been due to arrivals from foreign lands newly setting foot in Canada.

There has been another key distinguishing difference between Canadian and U.S. home starts over the past decade. Canada’s residential real estate market experienced a decline in the Great Recession, but to nothing like the same gut-wrenching extent as America’s.

Overheated pricing in a couple of regional markets of late, specifically those in Vancouver and Toronto, have inspired public officials in Ottawa and B.C. to curb demand through tightening the mortgage approvals process and through penalizing offshore buyers who, it is suspected and feared, may be mainly engaging in speculation.  

Current limitations on supply, however, will continue to drive groundbreakings on single-family home construction (Graph 2). Single-family housing starts can be expected to climb gently throughout the forecast period out to 2021.

The stock of multi-family units (Graph 3), especially condominiums, which has been moving briskly higher in Canada since the mid-1990s – with the exception of 2009 – should continue to maintain a strong upward-sloping pattern over the next five years.

Grand total housing starts (Graph 1) are therefore likely to stay consistently above the 200,000-unit threshold.

Quebec (Graph 4) may have a housing market that has occasionally wandered away from, but has always returned to, an equilibrium of around 42,000 units, but ‘la belle province’s’ economy is now providing jobs at a more rapid pace. The year-over-year employment improvement in Quebec in December 2016, at +90,000, was number one among provinces in the nation, beating both second place Ontario (+81,000) and third place B.C. (+72,000).

Ontario’s home starts (Graph 5) will be aided by population increases higher than previous norms. The number of immigrant arrivals in Ontario in the latest four quarters was 115,000. If the tidal wave continues, it points to the need for a lot of extra housing.

There’s no denying that Alberta (Graph 6) has had a tough past two years, but OPEC is choosing to restore supply management of crude reserves and the corner may have finally been turned on miserably weak energy pricing. Looking forward, the residents of Alberta will be able to make commitments to new home purchases with a greater sense of confidence. The steep declines in capital spending in the province, that cost so many on-site workers their jobs, are mostly a thing of the past.

B.C. has so many positives in a multitude of areas – mineral and energy resources, high-tech innovation, eye-catching scenery to lure tourists and an elevated status as Canada’s gateway to the Pacific Rim – that it would be difficult to argue for residential construction, government-initiated disincentives notwithstanding, having anything less than a propitious long-term future.  

Graph 1: Grand Total Canadian Housing Starts

Grand Total Canadian Housing Starts

The last data point is 2021.

Data source: Canada Mortgage and Housing Corporation (CMHC).
Chart: ConstructConnect.

Graph 2: Total Single-family Canadian Housing Starts

Total Single-family Canadian Housing Starts

The last data point is 2021.

Data source: Canada Mortgage and Housing Corporation (CMHC).
Chart: ConstructConnect.

Graph 3: Total Multi-family Canadian Housing Starts

Total Multi-family Canadian Housing Starts

The last data point is 2021.

Data source: Canada Mortgage and Housing Corporation (CMHC).
Chart: ConstructConnect.

Graph 4: Quebec Total Housing Starts

Quebec Total Housing Starts

The last data point is 2021.

Data source: Canada Mortgage and Housing Corporation (CMHC).
Chart: ConstructConnect.

Graph 5: Ontario Total Housing Starts

Ontario Total Housing Starts

The last data point is 2021.

Data source: Canada Mortgage and Housing Corporation (CMHC).
Chart: ConstructConnect.

Graph 6: Alberta Total Housing Starts

Alberta Total Housing Starts

The last data point is 2021.

Data source: Canada Mortgage and Housing Corporation (CMHC).
Chart: ConstructConnect.

Graph 7: British Columbia Total Housing Starts

British Columbia Total Housing Starts

The last data point is 2021.

Data source: Canada Mortgage and Housing Corporation (CMHC).
Chart: ConstructConnect.