All eyes have been on Toronto’s housing and, more specifically, condo market lately and it has a lot of people worried. Finance Minister Jim Flaherty has stated that he’s worried about “the last condo buyer in Toronto;” and everyone’s worried about some kind of bubble the city’s in with more condos going up every day, home prices ever-climbing, and the fear that someday soon when the bubble finally bursts, homeowners are going to be left with underwater Toronto mortgages.
The concern, even for those who don’t think Toronto is in a bubble, is certainly there, and evidence does show that the housing market will need to eventually correct itself and return to normal levels. But why then, when condo industries are booming in other parts of the country, are people not as concerned? The current stats coming out of Calgary certainly beg the question.
The Canada Mortgage and Housing Corporation has just released stats that housing construction starts in Calgary climbed a whopping 207.2 per cent in April 2012 compared to April of 2011. While April of last year saw only 556 starts, this year there were 1,708 housing starts in the Calgary region, including outlying towns such as Cochrane and Airdrie.
A boost in construction is always good, but that’s a drastic boost and yet, no talk of a bubble in Calgary. And certainly not any talk of one bursting. In fact, most are excited and inspired by the number of starts.
“The latest statistics are good news for the Calgary housing market, which has been suffering from the downturn for several years,” says Carol Oxtoby, president of the Canadian Home Builder’s Association – Caglary Region.
Lai Sing Louie of CMHC gave a few reasons for the housing boom saying, “We felt the (growing economy,) job creation and in-migration would all benefit the housing market and these factors have been stronger than expected.”
And one home builder, Wendy Jabusch, vice-president of Brookfield Homes, echoed those sentiments saying, “Our purchasers are telling us they have confidence in the future. Combined with the low interest rates, they have been comfortable making a purchase decision.”
So sales are up, starts are up, and that’s a good thing. But still, why is there no hint of concern? Sure, there aren’t nearly as many starts in Calgary as there are in Toronto, and Calgary may have a long way to go before they can even touch Toronto’s stats. But given the reasons given by the experts in the field such as in-migration, which is people moving to Calgary from other parts of the country; job growth; and low interest rates – do these not all point towards continued growth? And while growth in any market is good, Toronto is one example of how it can also be cause for concern.
Calgary also has another similarity to Toronto in that most of their starts came from multi-family housing such as town houses, condos, and apartment buildings. That stat climbed to 1,151 starts this year, compared to just 138 last year. And for the first three months of 2012 compared to last year? Multi-family starts went from 705 in the first quarter of 2011 to 3,095 in the same period for 2012.
Homeowners out West may not need to worry about underwater Calgary mortgages just yet. But could this be the first signs of a bubble in Calgary? 207 per cent. If that pace continues, it could certainly seem so.
