'Correction' hits housing as starts stay in slump

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'Correction' hits housing as starts stay in slump
3 `0 K% y% P: s3 Q% l, H4 L, OBill Mah, The Edmonton Journal
Published: 3:05 am
6 u  Z: }' d4 H9 u0 g( w0 zEDMONTON - For the ninth month in a row, Edmonton-area home builders started fewer houses than they did at the same time last year.
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6 P1 z# m  ~9 NFor March, they began work on 205 houses. That's a whopping 61 per cent fewer starts compared to March of 2007, according to Canadian Mortgage and Housing Corporation preliminary figures released Tuesday.
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It begs the question: Is the Edmonton housing industry in a slowdown or a death spiral?

8 C6 C1 f8 l: p. ?  n3 b"We see it as a correction," said Pat Adams, president of the Canadian Homebuilders' Association Edmonton Region.
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"There is no fundamental in the marketplace which says this is other than a correction or a breather because everything is still strong. Unemployment is low, wages are high."
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2 R( n4 B8 f0 P) D- Y; _: {He added that construction on major Edmonton-area projects is starting soon. In his view, the market is about three-quarters of the way through a year-long correction caused by overbuilding.
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Tuesday's CMHC statistics showed housing construction ground down to a pedestrian pace in March for the Edmonton census metropolitan area.

Builders started on a total of 478 units in the Edmonton census metropolitan area in March, down from 1,169 units in the same month last year. Total housing starts for the first three months are 31 per cent down from the first quarter of 2007.

* ^0 A9 J  l2 zFor the first three months of this year, builders began 657 single-detached homes -- down 62 per cent from the first quarter of 2007. It's the quietest period for home builders since the first three months of 1996, CMHC said.
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, B! a7 |# \9 r: BA slide in multiple-dwelling home starts also picked up speed. Following a 15-per-cent year-over-year drop in February, multiple dwelling starts fell 57 per cent in March to 273 from 638, said the agency.
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"A large inventory of unsold spec homes combined with a well-supplied resale market has contributed to the slowdown," said CMHC market analyst Richard Goatcher.

The good news for builders is that supply -- homes under construction and unsold inventory combined -- started to drop last month, he said.
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"The bad news for the builders is the inventory numbers continue to mount so there's a lot of spec housing out there that they've got to move," Goatcher said.

9 ]' i' j2 w. k" j7 V6 a6 }" O"That's obviously what's holding back the starts numbers is that a number of builders are carrying a fair amount of inventory that they need to dispose of before they start any new housing."
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Goatcher said inventory should fall over the next couple of months.
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But the inventory of multi-family, now at relatively low levels, will rise rapidly because so many units are under construction, he said. "We expect the starts numbers for multi-family to do what singles did in the middle of last year; they'll start to drop off year-over-year as the year progresses."

' F+ ^) l) ]. |5 uAdams, who's also president of Park Place Communities, said even when starts for single-family homes rebound later in the year, they likely won't reach previous levels because prices for one-family homes are rising beyond what's affordable for many.