Canada’s housing supply is about to explode in growth as developers scramble to meet demand. Canada Mortgage and Housing Corporation (CMHC) data shows new starts surged in November. Most of the building is in cities where existing-home inventory is under pressure from elevated demand. Urban starts of new homes fell just short of hitting another record this year.
Canada Has Seen Over 300,000 New Homes Start Construction
Canadian new housing starts ripped higher last month. Seasonally adjusted annual rate (SAAR) starts reached 301,279 new homes in November. It’s a 25% increase from a month before and a 15% increase compared to last November. Last year was no slouch when it came to building either. It was significantly busier than pre-pandemic volumes of new home construction.
Canadian New Housing Starts
The seasonally adjusted annual rate of new housing starts across Canada.
Source: CMHC; Better Dwelling.
Most New Homes That Have Started Construction Are In Cities
Urban starts are the vast majority of new homes that are starting construction. About 279,400 of the starts were in major cities, up 29% from the previous month. Multi-family homes are 79% of the total as well, meaning a lot of condos are in the works. Plenty of supply is on the way, especially in cities pinched by elevated demand.
Not Quite A Record For New Urban Home Starts, But It’s Close
Not quite the record for urban starts, but Canada’s new housing supply is getting pretty darn close. Only one month has been higher, which was March 2021 — back when existing-home sales peaked. Last month was 46.8% higher than the median for November. If this seems like a lot of new homes are in the pipeline, that’s because that’s the case.
Even if you’re not buying into the demand-side issue, supply relief is on the way. Canada is now consistently building more housing than it was pre-pandemic. Combined with efficient-use measures such as vacancy taxes, relief from rapid price growth is ideally around the corner. That is, if higher rates don’t throttle price growth first.
People assume these houses are paid and therefore not considered additional supply, but people seem to be unaware how many real estate agents, mortgage brokers, Boomers, and foreign buyers purchase the units and try to sell them before they have to actually pay the whole amount.
What? They don’t check if you have the money to complete a pre-sale in Canada and start construction?
No. It’s broken up into 5 payments usually and you only have to have $5k down at reservation and then keep making payments or sell it to someone else. Sold at a discount overseas often to ensure home the liquidity is “absorbed” but doesn’t actually resolve supply problems unless paid at a premium.
Just beautiful by design if you think about it .P
My cousin (an agent) does this all of the time. Get a couple of pre-sales and then sell it for full price after its built.
Because lower income people don’t have the money but the government will lend them a mortgage when the units is complete for 5% down, you can collect basically the whole spread between the government-backed high-ratio mortgage and the 20% down required to complete a full purchase. Insane that high ratio mortgages even exist.
Build when it’s cheap (and people can pay the most). Acquire land when interest rates are on the rise to do it again. It’s the circle of real estate life. When it comes to large scale development, anyway.
Mom & pop builders looking to build one or two homes at a time don’t think about that kind of restraint since they don’t have the capital to think about anything else. Also probably why failures at these places are much smaller than big developments.
Buy presale when credit expanded, sell completed unit… when it’s shrinking? Genius. LOL
What I dont get is when you mention all these new people coming into Canada, where will they work? I find it hard enough to find a job as is.
Also can our health care system handle another 600k people per year.
The government does not have our best interest in mind…wake up people.
It’s more like a million and lots of students especially from South Asia live 10 people to one small 700sq ft apartment.