Home construction expected to stay flat

By Collin Gallant on November 9, 2017.

cgallant@medicinehatnews.com @CollinGallant

Residential construction in and around Medicine Hat will end 2017 at another new low, according to a new housing forecast, but slight recovery could be on the way next year.

As well, fewer new home listings have helped protect the value of existing homes, according to the Canadian Mortgage and Housing and Mortgage Corporation.

The federal agency states in its fall Alberta housing forecast that local house building may be flat for several years.

“Housing starts are expected to rise in 2018 and 2019, but they are rising from a historically low level,” Timothy Gensey, CMHC’s market analyst for the prairie region, stated in a release.

“Sustained economic growth is expected to gradually lift throughout the forecast period,” it notes.

Only 70 -75 new starts will be recorded in 2017, CMHC predicts, compared to 103 in 2016. Local builders called that year the worst ever.

The recent high was 196 new home starts in 2014. The high-range forecasts are for only 105 homes in 2018, and then 125 in 2019.

Local observers have pointed to an apparent upswing in lot sales — which indicates construction plans for the following year — a sign of an improving home-building sector.

The forecast does not include commercial construction. The city of Medicine Hat’s planning department states that category will track higher for 2017, and also new home building permits are up (from 40 this time last year to 45 presently). CMHC discerns home starts when foundations are poured, not when permits are issued.

Local multi-family housing as well will likely finish the year lower than in 2016, according to CMHC.

Unit starts could hit a low point of 35 this year, but return to the 2014 boom year level in 2019.

The agency says the average local price has returned to 2014 level of about $271,000, and will make gains of between one and two per cent in each of the next two years.

In terms of rental property, it predicts a vacancy rate of five per cent this year, dropping to four in two years time.

Medicine Hat is not alone in the province with a prediction of lower but steadier activity. Grande Prairie, Lethbridge and Red Deer are forecast for mild recovery.

In Fort McMurray, homebuilding is expected to remain at 900 per cent of 2016 levels as buildings destroyed in wildfires that year are replaced over a three-year period.

Up to 1,025 new homes could be started this year. Resales prices however, are expected to continue their freefall. An average price of $597,000 in 2014 could go as low as $390,000 in 2019.

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