Homebuilders struggling to keep up with demand

April 9, 2008
Winnipeg Free Press
Written by: Murray McNeill

Multi-family dwelling starts in the city are down, but builders are working to keep up with the demand for new homes.

Local homebuilders are working at a blistering pace as they scramble to keep up with a strong demand for new homes.

Canada Mortgage and Housing Corp. figures released Tuesday show there were 2,650 new single and multi-family housing units under construction last month in the Winnipeg Census Metropolitan Area (CMA), which includes Winnipeg and 10 bedroom communities.

That's the highest number of units under construction in any month since April 1989, when there were 3,397, CMHC market analyst Regine Durand said in an interview.

It's also 1,100 units above the five-year monthly average of 1,550 units.

Manitoba Home Builders Association president Mike Moore said builders are extremely busy.

He noted housing starts hit a 20-year high last year in Winnipeg, which had builders hopping as they entered 2008. And several bouts of bitter cold and the ongoing shortage of skilled tradespeople slowed construction a little during the winter, which contributed to the build-up in unfinished projects.

But now that warmer weather is here, Moore said builders are whittling away at the backlog and gearing up for more projects. "The second quarter (of the year) is expected to be very busy, and the third quarter."

The CMHC figures show there was a 34-per-cent decline in housing starts last month in the Winnipeg CMA, but Moore and Durand blamed that on a reluctance by builders to take on too many more projects until the backlog is reduced.

"Once... the builders finish up more of those unfinished ones, the starts should start to pick up," Durand said.

Moore said he's not aware of the backlog causing longer delays in getting homes completed. He said he suspects the increase in unfinished projects is being offset by the decline in new starts.

CMHC said there were 142 new single and multi-family starts last month in Winnipeg. That compares with 214 in March of last year. The 34-per cent decline left starts running 24 per cent behind last year's pace after the first three months of the year.

The biggest contributor to the decline was a 75 per cent drop in multi-family starts -- 21 units compared with 84 in March 2006. Single-family starts were down seven per cent -- 121 compared with 130.

It was much the same story for the first three months of the year. Multi-family starts were down 47 per cent (178 units compared with 335), while single-family starts were off by 3.2 per cent (358 compared with 370).

Nationally, Canada's housing market also cooled a little in March, with starts slipping to a seasonally adjusted annual rate of 254,700 units from 255,600 in February, CMHC said.

Durand, who works out of CMHC's regional office in Calgary, and Jeff Powell, senior market analyst for Manitoba, said it's important to remember that 2007 was an unsually busy year for multi-family starts in Winnipeg.

"Some cooling is to be expected after the 45 per cent increase in multi-family construction seen in 2007," Powell said in a statement.

He said this year's first quarter total was still a 15 per cent improvement over 2006's first-quarter, and 2006 was a strong year for new home construction.

At the start of the year, CMHC predicted a roughly one per cent increase in housing starts this year for Manitoba and Winnipeg.

Durand said even if that number is revised down in CMHC's next forecast in mid-May, it's still going to be another good year for local homebuilders.

She said economic growth is strong, employment levels are high, average weekly earnings are on the rise, and the population is growing thanks to an ongoing influx of new immigrants. Resale home listings are also near-record lows.

"We have lots of factors that should support a strong demand for new homes," she said.

murray.mcneill@freepress.mb.ca

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