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Winnipeg Free Press - PRINT EDITION

Manitoba housing starts in deep recession

By: Murray McNeill

Posted: 07/10/2009 1:00 AM | Comments: 0 (including replies)

WINNIPEG'S once-robust housing industry seems to be developing a split personality.

One day after Winnipeg's resale-homes sector reported one of its best Junes on record for house sales, the new-homes sector reported another tough month, with single- and multi-family starts down 43.8 per cent from June last year.

And that came on the heels of year-over-year declines of 67.8 per cent in May and 53.8 per cent in April.

But despite the disappointing first-half numbers -- total starts were down 46.7 per cent in the Winnipeg area and 35 per cent in Manitoba after the first six months of this year-- a homebuilding industry official is predicting much better year-over-year numbers in the second half of 2009.

"We did not have a good second half last year because we were going into the recession, and this year it's quite the opposite," Manitoba Home Builders Association president Mike Moore said. "I think with each passing month people are feeling a little more assured.

"We're also getting good traffic in the show homes," Moore said. "They're just hesitant about taking the next step (and buying)."

Jeff Powell, Canada Mortage and Housing Corp.'s senior market analyst for Manitoba, agreed the second-half numbers should improve.

Powell said new-home sales ground to a virtual halt in the final quarter of 2008, so they've got nowhere to go but up in the fourth quarter this year.

He and Moore also cautioned against assuming that the 799 combined starts in the Winnipeg Census Metropolitan Area in the first half this year and 1,142 in Manitoba will merely double to 1,600 and 2,300 starts, respectively, by year-end.

In its most recent market forecast, released in mid-May, CMHC predicted 2,200 starts this year for the Winnipeg CMA alone, and 3,950 for the province. Moore said that's in line with what MHBA officials are forecasting.

Powell offered several theories for why Winnipeg's resale-homes sector has been outperforming the new-homes sector so far this year.

He said there's still a fairly large inventory of completed but unsold condominiums from last year's first-half building boom. Most developers are waiting for that to whittle down before launching any other major condo developments this year, he said. Also, most of this year's single-family- home buyers seem to opt for a less-expensive resale home instead of a new one, Powell said.

He said the average cost of a new home in Manitoba is about $350,000, and last month only nine per cent of the nearly 1,500 homes sold through the Winnipeg Realtors' Multiple Listing Service were priced at $350,000 or higher. "So it's a fairly small subset (of the market)," he said.

murray.mcneill@freepress.mb.ca

Republished from the Winnipeg Free Press print edition July 10, 2009 B4

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