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Resale market hits new homes

Greater selection for buyers keeps single-family starts down: CMHC

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Home construction in the Sage Creek development. Single-family starts were down for the fifth straight month in May in Winnipeg.

WAYNE GLOWACKI / WINNIPEG FREE PRESS Enlarge Image

Home construction in the Sage Creek development. Single-family starts were down for the fifth straight month in May in Winnipeg. Photo Store

Winnipeg's resale homes market is raining on the new-home market's parade.

The number of single-family starts was down for the fifth straight month in May in the Winnipeg Census Metropolitan Area (CMA). And one of the reasons is a greater selection of existing, or resale, homes for buyers to choose from, a Canada Mortgage and Housing Corp. (CMHC) official says.

With more choice, some buyers are opting to purchase an existing home instead of a newly built one, Dianne Himbeault, CMHC's senior market analyst for Winnipeg, said in an interview.

Winnipeg Realtors Association (WRA) figures confirm there were 4,400 active listings on the local Multiple Listing Service (MLS) at the end of May, including 3,500 residential properties.

That (4,400) was a 22 per cent increase from a year earlier, when there were 3,700.

It's also the highest it's been in many years, said Peter Squire, the WRA's residential market analyst.

Squire said there was also a 34 per cent increase in the number of active listings in Waverley West, which is one of the city's newer housing subdivisions. There were 146 at the end of last month, compared with 109 a year earlier.

So if buyers are looking for a newer home and there's a good selection in a subdivision such as Waverley West, they may opt to buy one of them rather than wait for a new one to be built, he added.

But Squire also noted it can also work the other way when there's a shortage of resale homes to choose from, which was the case a few years ago. At that time, some buyers were purchasing a new home when they couldn't find a suitable existing one.

"I think that's always part of the reality," he added.

Himbeault said several other factors are also contributing to fewer single-family homes being built this year. They include slower population growth and a higher-than-usual inventory of unsold new homes.

She noted there were 279 unsold new homes in the Winnipeg CMA at the end of last month. Although that was down from 346 in October, which was the highest it had been in at least 25 years, it was still higher than normal.

Also some of the pent-up demand for new homes has been met in recent years when many builders were ramping up production, Himbeault added.

CMHC's May housing-starts report, which was released on Monday, showed a 25.8 per cent fall in single-family starts -- 193 units compared with 260 in May of last year. However, that was offset by a more than 10-fold rise in the number of multi-family starts -- 295 units versus a mere 28 units a year earlier.

May's decline, coupled with the four previous monthly declines, left single-family starts running 24.8 per cent behind last year's pace after the first five months of 2014 -- 707 units versus 940.

Manitoba Home Builders Association (MHBA) president Mike Moore said he's not concerned fewer single-family homes are being built this year.

He said MHBA officials were forecasting a decline in housing starts for 2014, and total starts "are right about where we thought they would be."

And even though the decline in single-starts has been greater than anticipated, Moore said they're still at healthy levels.

He also noted two of the province's biggest home builders -- Qualico and Randall Homes -- said in February they planned to build more homes on speculation this year so buyers wanting to move in to a new home right away would have more from which to choose.

That could partially explain why the inventory of unsold homes is still higher than usual, he added.

Spokesmen for Qualico and Randall Homes could not be reached for comment.

Nationally, housing starts in Canada increased to a seasonally adjusted annual pace of 198,324 homes in May, up from 196,687 in April.

The results were better than expected as economists had expected the pace to come in at 185,000, said Thomson Reuters.

CHMC said the increase came as the pace of urban housing starts climbed to 180,813 from 178,485 in April. Although the pace of multiple urban starts slipped to 117,709 from 118,640, single-detached starts increased to 63,104 from 59,845, the agency added.

 

-- with files from the Canadian Press

murray.mcneil@freepress.mb.ca

Republished from the Winnipeg Free Press print edition June 10, 2014 B4

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