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Winnipeg Free Press - PRINT EDITION

New housing market hit

February starts plunge 36.4% from '08 in Winnipeg area

By: Murray McNeill

Posted: 03/10/2009 1:00 AM | Comments: 0 (including replies)

They added plenty of fuel to the fire during the six-year housing boom, and now those influential baby boomers are playing a big a role in cooling down the market.

New Canada Mortgage and Housing Corp. figures issued Monday show that single-family housing starts fell for the second month in a row in February in Winnipeg and its 10 bedroom communities.

Manitoba Home Builders Association president Michael Moore said while builders are concerned, no one is panicking because the bitterly cold weather in January and early February kept potential buyers out of show homes.

"In the last half of February, it (traffic in the show homes) started to pick up again" with the onset of warmer weather, he said.

However, one builder who specializes in custom homes in the $550,000 to $1-million range blamed the 21.4 per cent decline in part on nervous baby boomers who saw their investments take a beating in the stock market and are now delaying the purchase of their dream retirement home.

"People think that if you have enough money to build a new home that you'll still build," Jason Arlt, vice-president of Arlt Homes Ltd., said in an interview.

"But it depends on where you are in your life. If you're a baby boomer and thinking of retiring in a few years, you're definitely thinking twice about it. We certainly have some clients who had been working with us and have chosen to wait."

But while some builders are feeling the fallout from the downturn -- there were 77 single-family starts last month compared with 98 a year earlier -- it's business as usual for others.

KDR Design Builders Inc. president Diego Vassallo said his firm, which builds custom homes ranging from $400,000 to more than $1 million (both plus land), is busier than in early 2008 when the market was booming.

"We've had a lot of solid leads and a lot of interested buyers coming through our (show) homes," Vassallo said. "So I see a very solid spring for sales."

But Vassallo noted that all of KDR's clients are in their 30s, 40s and early 50s, rather than approaching retirement. Arlt agreed younger consumers don't seem as worried about their investments and are more inclined to proceed with new-home purchases.

The new CMHC figures show that last month's slowdown in new-home construction was even more pronounced on the multi-family side, where starts fell 59.4 per cent from a year earlier. That left combined starts (single- and multi-family) down 36.4 per cent to 103 units from 162 in February 2008.

The slowdown here was part of a broadly based trend that saw the pace of new-home construction in Canada drop to levels not seen since earlier this decade.

CMHC said housing starts fell for the sixth straight month in February, down 12.3 per cent to a seasonally adjusted annual 134,600 units. That's after falling 10.9 per cent in January.

February's figures were also down 30 per cent from a year earlier, and lower than most economists expected.

"Last month's collapse in housing starts in Canada is surprising by its scope," Desjardins economist Helene Begin said in a note to clients.

CMHC blamed the drop on fewer sales and an increase in listings of existing homes. That is causing builders to park their bulldozers and wait for signs of recovery.

Arlt said he remains hopeful that Arlt Homes' sales will start to rebound in the second half of this year.

"I think once things steady out with the stock market... lots of people that have been on the fence will choose to build again," he said.

murray.mcneill@freepress.mb.ca

-- with files from The Canadian Press

Weather, economy blamed for slump

New-home construction in the Winnipeg area fell for the second consecutive month in February, with industry officials blaming the decline on everything from unseasonably cold weather to consumer concerns about the recession and recent stock-market meltdown.

Here is how last month stacks up against February 2008:

Total starts: down 36.4 per cent to 103 from 162

Single-family starts: down 21.4 per cent to 77 units from 98

Multi-family starts: down 59.4 per cent to 26 from 64

Here is the year-to-date comparison, also for the Winnipeg Census Metropolitan Area:

Total starts: down 41.4 per cent to 231 units from 394 in the first two months of 2008

Single starts: down 16 per cent to 199 from 237

Multi-family starts: down 79.6 per cent to 32 from 157

-- Source: Canada Mortgage and Housing Corp.

Republished from the Winnipeg Free Press print edition March 10, 2009 B5

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