While the Canada Mortgage and Housing Corporation is reporting housing starts in Victoria dropped significantly in July, there's a silver lining in the data, say industry observers.
There were 150 total housing starts last month, a 34 per cent drop from the 229 in July 2011. Year-todate, there have been 837 total starts, down 14 per cent from the 973 through the first seven months of last year.
"What jumps out is there was a 20 per cent increase in July for single-family homes and year-to-date we're down just one per cent, which is the stat I really look at," said Casey Edge, executive director of the Canadian Homebuilders Association in Victoria. "We were in doubledigit declines last year so it looks like we've bottomed out and we're heading in the right direction."
Last month, there were 73 single-family homes started in Greater Victoria, up from 61 in July 2011, while yearto-date 346 single-family homes have started coming out of the ground, down from 351 in the first seven months of 2011.
Edge said there remains some concern about the slowdown in multi-family construction. There were 77 units started in July compared with 168 in July 2011 and year-to-date multifamily construction is down 21 per cent. But Edge chalks that down to a busy summer last year with a number of multi-family projects getting underway.
According to Robyn Adamache, senior market analyst with CMHC, that busy summer does skew the numbers and Victoria remains on track for a modest gain over last year.
"Last year, there were 229 starts, which is a bit out of the norm for the last couple of years, while the 150 total starts in July of this year is about the monthly average for the last two years," she said, noting on average there are 130 homes started in Greater Victoria each month.
"In terms of this fall, we are probably going to see a continuation of the same. Our forecast currently is for a bit of an increase [in total starts for the year] in 2012. Both multi-family and single-detached should be a little above last year."
The Canadian housing picture suggests a cooling off of what had been a hot construction market.
Groundbreaking on new homes across the country fell to a seasonally adjusted annual rate of 208,500 units in July, according to the federal agency, a sharp slowdown from the 222,100 units in June and below the forecasts of analysts in a Reuters poll, who had expected 213,300 starts.
It was the first time in seven months that the rate of starts fell below the sixmonth trend, and a government decision to tighten the rules for mortgage lending, starting in July, was expected to contribute to further slowing as 2012 draws to a close.
"We do expect that the impact of tighter mortgage regulations announced in late June will slow housing demand, but the impact on the construction and starts data is unlikely to show up until later in the year," said David Tulk, macro strategist for TD Securities.
The bulk of the pullback in July housing starts came in the multiple unit segment, where starts in the volatile condo market in B.C. declined. Multiple unit starts dropped 7.6 per cent to 123,000 annualized units, the lowest level since February. Single unit starts fell 4.0 per cent to 64,000 annualized units.
The slowdown in July pushed starts below the average for the second quarter and suggested the housing sector may not drive Canadian GDP growth for much longer.
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