High Sierra Investment

The Canadian condo market has been affected severely by the global financial plight, far more severely than other sectors of real estate in the country. While there have been an rising number of property starts in rural regions, and a strong, continuous increase in the construction of single occupancy houses, there has been a significant reduction in the number of starts of condominiums and apartments in cities all around Canada like  downtown Toronto condos. 

 

This drop in construction of multiple unit buildings has negatively affected the overall average for home starts in March, resulting in a drop of 1.5% in all types of house starts, nationwide. This meant the first decrease in house starts during 2010. January and February had strong development rates of 7.5% and 6%, respectively. There were 189,000 starts in January and 200,400 in February, but just 197,300 in March. 

 

The decrease in housing starts has been the largest in the urban parts of the country. Starts have gone up in some rural areas of Canada, despite the general decline in housing starts across the country in it entirety. There was a drop of 4.2 percent in metropolitan starts in March, while rural starts climbed from February’s 17,600 to a total of 22,100 in March. This reflects the adjustment in starts of multiple family properties, which are usually constructed within a city or in its suburbs. Single family houses are the norm in rural regions. 

 

There was an increase during March in the number of starts for single family buildings, of 6.9 percent, while starts of multiple unit buildings fell by 15.2 percent during the same month. Single family unit starts reached their highest point in four years in March, after eleven months of constant growth since their lowest level during April 2009. 

 

The Toronto area underwent a big decline in multiple occupancy building projects, with lower demand for building new Toronto condominiums and high rises over several months. This decline was evened out by an increase in starts of single occupancy buildings in rows and low rises in the Toronto area, however, reflecting the overall picture nationwide.

 

A knowledgeable market analyst from the CMHC (Canada Mortgage and Housing Corporation), Shaun Hildebrand, who focuses in the Toronto area, feels that things could soon change. The climbing call for for less expensive types of housing in the immediate area is likely to result in the construction of more condominiums, he said. 

 

The rate of multiple family property construction starts usually changes quicker than that of single unit building starts, and experiences greater ratios of fluctuation. Bob Dugan, chief market analysis economist for the CMHC (Canada Mortgage and Housing Corporation) considers the market for condominiums in Canada to be a variable one. 

 

The significant decline in starts of multiple occupancy real estate in March followed a drop of 0.5% in building permits in February, which was largely due to a reduction in applications for permission to build new apartments and condominiums.