Housing Starts Down, Commercial Construction Skyrocketing

March housing starts were down 59% from March '07 and were down 31% for the first quarter according to a report released by CMHC today. Single family homes are down for the 9th month in a row, representing the lowest level of activity since 1996. Completions meanwhile are actually up 13% from last year - that means more inventory coming on the market now, but less in the future. Completed, unoccupied homes stands at 902 (a record) - although I'd have to disagree with this stat. By unoccupied I think they mean unsold, since there are clearly plenty of new, unoccupied homes listed on the MLS as resale that the builders would consider occupied.

The sale price for a new single family home is up 33% from last year, setting a new record of $501,499, but CMHC cautions that most of these prices were negotiated before construction on the home even began.

As for multi-family starts, they're down as well - 57% since last March. Units under construction are up 42% from this time last year though, and CMHC expects unoccupied inventory to increase from the current "normal" levels.

"Condo resale inventories were looking very well supplied in March and new units will face stiff competition from these existing units that are in many cases priced below the current cost of new construction."

Meanwhile there are new retail developments popping up all over the city. Retail vacany rates have been steadily decreasing while rental rates are on the rise, so developers have responded to the demand by building all kinds of new space.

Windermere in South West Edmonton will add about 1 million square feet of retail space on about 100 acres featuring Wal-Mart, Home Depot and Canadian Tire making it Edmonton's second largest outdoor shopping centre, after South Edmonton Common which continues to grow.

The Meadows in South East Edmonton has about 500,000 square feet of retail space planned with another Home Depot and a Superstore.

Existing malls are also expanding (South Gate and Kingsway) and there are also large developments in Spruce Grove, Sherwood Park and Leduc.

Makes me wonder if the commercial guys have learned anything from the residential guys about over-building?