Housing starts were up in August all over the country, and the numbers are largely boosted by the Toronto condo market.
In total there were 19,860 housing starts in August. That puts the seasonally adjusted annual pace (SAAP) at 224,900 units for the entire month; and that’s taken everyone by surprise. Not only because it’s up from the 208,000 starts in July; but also because it’s up from the 201,000 SAAP that was predicted for August. So, what’s the reason for the increase?
A boon of condo pre-sales in major markets. And one doesn’t have to think too hard to guess what major markets those are. There’s been a buzz (or more like a panic) around the Toronto condo market for the past two years. People have been scooping up these units fast. And with so many people buying units that weren’t even built yet, those buildings had to go up some time. August was the popular month for many of them.
Mathieu Laberge, deputy chief economist at CMHC’s Market Analysis Centre says that while the numbers may seem high when compared with last month, there’s no need to think that this means we’re on the upswing once again and that starts are about to fly out of control. But, says Mr. Laberge, the issue is more with the numbers that were down in July rather than anything else. He says,
“The higher level of starts recorded in Atlantic Canada and B.C. reflect low levels of activity in July, rather than an increasing negative trend. Overall, though, moderation in housing starts activity is still expected for the remainder of 2012 and 2013.”
Some at TD Bank though, don’t agree. Senior economist Jacques Marcil thinks that these stats do show that we’re once again on the rise; and he thinks this will be a bad thing for the real estate market. He also hints that an interest rate hike might be needed to slow things down. Especially at a time when Canada most needs it. He says,
“The rest of the economy is growing much slower and as a consequence is not likely to be able to support this level of housing supply for much longer. While recent changes to mortgage insurance rules will likely limit the growth in demand for new homes, low interest rates remain an incentive for buyers to borrow and keep the housing market overvalued.”
What do you think? Are the results because July was just that slow; or do you think that we’re on another upswing, and Canadians don’t seem to be limiting their borrowing? Let us know by commenting below or, Liking us on Facebook and joining in on the conversation!