New housing already purchased and in the pipeline continues to propel the Canadian real estate market but worries persist about what happens when that tap turns off.
Canadian housing starts rose at their fastest pace in more than a year in May on a surge in condominium construction, CMHC reports
For now, the industry got another bit of good news Monday with Canada Mortgage and Housing Corp. saying new home construction or starts reached the lofty 200,000 level in May on a seasonally adjusted annualized basis.
CMHC said urban multiple starts, mostly condominiums, made up 114,346 of the 200,178 May figure. May starts easily outpaced the April number of 175,922.
“Gains in the multiple starts segment partly offset the moderation in activity that was observed in previous months, especially in Atlantic Canada and Ontario. As a result, the trend in housing activity remains close to its historical average and is in line with estimates of household formation,” said Mathieu Laberge, deputy chief economist at CMHC.
While these numbers paint a good picture, most of the construction going on today is of previously sold units rather than a sign of fresh interest in the housing market, said Benjamin Reitzes, senior economist with Bank of Montreal.
“Before you put shovels in the ground for multiples, you need to sell a majority of the units,” he said. “Some are concerned if all these units hit that market at the same time you will get a flood of units and a lot of them being owned by investors who will bail out.”