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Winnipeg Free Press - PRINT EDITION

Housing starts decline

Manitoba still expected to fare better than most provinces

By: Murray McNeill

20/05/2009 1:00 AM | Comments: 1

The recession will be tougher than expected on Manitoba's new homes market, according to Canada Mortgage and Housing Corp.

The federal agency predicted in its spring forecast Tuesday there will be only 3,950 single and multi-family housing starts this year in Manitoba.

That would be a 28.7 per cent decline from 2008's total of 5,537 starts, and twice the percentage decline the agency was expecting in its February market report.

It would also be the province's worst year for housing starts since 2002, when there were 3,617 combined starts.

The agency admitted the tumultuous economic times are making it tougher to forecast new home construction levels in Canada.

The Crown corporation says there will be 141,900 new homes built in 2009, which would be an 11.4 per cent decline from the 160,250 it forecast three months ago and a 33 per cent drop from 2008's total.

"It's a pretty big revision," said Bob Dugan, chief economist at CMHC. "It's been a tough economy to forecast, and that's pretty true across the board."

Bank economists and home builders have been forced to repeatedly update their expectations this year as more and more dismal economic numbers come in, and CMHC is no exception.

"We were a little too optimistic for housing starts in the first quarter," Dugan conceded.

CMHC is still calling for new home construction to rebound in 2010, albeit more slowly than was first thought. The agency predicts there will be 150,300 homes built in Canada next year, representing an increase of 5.9 per cent from this year, and 4,250 in Manitoba -- a gain of 7.8 per cent.

While this year's projected decline in housing starts of 28.7 per cent might sound grim to some, Manitoba Home Builders Association president Mike Moore said the market here is still expected to outperform most other parts of the country.

He said CMHC is forecasting housing-start declines of 53 per cent in Alberta, 50.2 per cent in Saskatchewan, 42.5 per cent in British Columbia, and 31.6 per cent in Ontario.

The outlook also looks a little brighter for Manitoba's resale homes market.

CMHC saw no need to revise its February prediction of 11,800 sales this year through the Multiple Listing Service. That would be a decline of 12.8 per cent from last year's 13,525, and five percentage points better than the projected national average decline of 17.6 per cent.

It also upgraded its forecast for the average MLS selling prices this year, predicting a 1.7 per cent decline to $187,000, rather than the 3.5 per cent drop it was expecting in February.

That, too, would be substantially better than the projected national average price decline of 6.8 per cent.

CMHC said a number of factors are making it tougher this year for Manitoba's home builders. First is the recession, which is causing concern among many prospective buyers.

"Demand for single-detached homes has declined since October and has yet to display signs of improvement," said Jeff Powell, CMHC's senior market analyst for Manitoba.

However, home building industry officials said sales have started to improve since CMHC began compiling data for its latest report.

"Certainly sales had been quiet through the fall and early winter," Kensington Homes manager Tony Balaz said in an interview. "But I can also tell you that sales for April were great... and in May the sales have been good."

Balaz said the inventory of prebuilt, unsold homes has also declined substantially in recent months, which should help boost the number of new single-family starts.

He said its also important to remember the last few years have been unusually strong years for new home sales in Manitoba.

-- With files from Canwest News Service

murray.mcneill@freepress.mb.ca

CMHC revises forecast for Manitoba

The tough economic times have prompted Canada Mortgage and Housing Corp. to revise its expectations for Manitoba and the Winnipeg Census Metropolitan Area (CMA), which includes the city and 10 municipalities. The latest forecast:

Housing starts 2008 (actual) 2009 (forecast) 2010 (forecast)

Manitoba 5,537 3,950 4,250

Winnipeg CMA 3,009 2,200 2,350

MLS sales 2008 (actual) 2009 (forecast) 2010 (forecast)

Manitoba 13,525 11,800 12,400

Winnipeg CMA 11,854 10,500 11,000

Average price 2008 (actual) 2009 (forecast) 2010 (forecast)

Manitoba $190,296 $187,000 $194,000

Winnipeg CMA $196,940 $190,000 $197,500

-- Source: Canada Mortgage and Housing Corp.

Republished from the Winnipeg Free Press print edition May 20, 2009 B7

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