Housing starts to hit 3,300 by year's end

The Starphoenix, October 31, 2014 -

Housing starts in the Saskatoon Census Metropolitan Area (CMA) are on pace to hit 3,300 units in 2014, up 11 per cent from 2,980 in 2013.

"Declining new home inventory so far in 2014 has prompted a faster pace of starts this year," said Goodson Mwale, Canada Mortgage and Housing Corporation's senior market analyst for Saskatchewan, in a media release.

"However, with the volume of units under construction recently rising to a 34-year high, there is a risk of higher inventory in the months ahead. With slower employment growth and lower net migration also expected through 2016, this will have a moderating effect on housing starts in Saskatoon over the next two years."

According CMHC's Fall 2014 Saskatoon Housing Market Outlook, a total of 3,125 and 3,050 housing starts are forecast for 2015 and 2016, respectively. That is a decline from 2014, but is still among the highest in more than 30 years.

CMHC forecasts more multi-family units with a slight decline in single-detached starts (1,600 units in 2014 from 1,658 a year earlier).

"A shift in housing demand towards lower-price options offered by the multifamily sector, as well as competition from a well-supplied resale market, has reduced single-detached construction this year," Mwale said, adding single-detached starts will decline further to 1,550 units in 2015 and 1,500 in 2016.

Multi-family starts are on pace to reach 1,700 units in 2014, up 29 per cent from 1,322 in 2013.

"This will mark the first time in 10 years that multifamily starts will have surpassed single-detached starts," said Mwale.

With units under construction at a 30-year high in the summer of 2014, inventory is expected to rise in the coming months, thus moderating multi-family starts to 1,575 units in 2015 and 1,550 in 2016, the report said.

With market conditions remaining largely balanced in 2014, the average MLS price is projected to rise 2.8 per cent to $341,300. In the next two years, the average MLS price is forecast to reach $348,000 in 2015 and $352,000 in 2016.

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