While we’ve been busy talking about the rise of real estate once again out West, and how areas such as Calgary and Edmonton are booming, starts in Ottawa have dropped in September of this year when compared with housing starts in the nation’s capital city in September 2011.
The chart below shows the latest stats coming out Canada Mortgage and Housing Corp., showing that starts on all types of housing were down this month. And while the amount of starts in Ottawa for the first nine months of 2012 are higher than in the first three quarters of 2011, most of that activity happened in the beginning of the year – before the rule changes to mortgages in Ottawa were made.
Very similarly to what’s going on in the rest of the country (perhaps excluding out West,) the biggest drops in Ottawa housing starts were found in single-detached homes. Sandra Perez Torres, senior market analyst for Eastern and Northern Ontario at CMHC, says this is today people are looking towards the most affordable housing they can find. This is often in multi-unit homes and resales.
“Although low mortgage rates and full-time employment gains keep supporting demand, housing prices direct consumers towards more affordable dwellings,” says Ms. Perez Torres.
The CMHC stats also broke down the regions of Ottawa in which the starts were happening. Old Ottawa made up the most starts, followed by the area in southern Ottawa, Nepean. Gatineau brought up the rear with the fewest starts, although this region is officially in Quebec.
And while Ottawa may currently seeing more housing starts than at the same time last year, that may not be the case once 2012 is over and the final tally comes in. The new mortgage rules have done their work here, and this is one city in which the market is expected to see a cooling.
Mathieu Laberge, deputy chief economist at CMHC, issued a statement along with the stats indicating just that.
“As expected, the number of multiple starts in Ontario, particularly in Toronto, reverted back to a level more in line with the average pace of activity over the last six months,” he said. “Following a period of elevated housing starts activity due to strong volumes of multi-family unit pre-sales in 2010 and 2011, the pace of housing starts is expected to moderate.”
British Columbia also experienced a dip in starts in September, but most other provinces saw slight increases. Atlantic Canada, Quebec, and the Prairie provinces all saw boosts in their housing start levels.
This could also indicate that not only are the new mortgage rules working, but that they’re actually targeting specific markets. Ontario and BC were the two provinces with the most overheated markets before the new rules came into play. Now that they’re the only two with dips in starts, it does seem as though qualified buyers in markets that weren’t quite so hot won’t be nearly as affected.