Building Permits, September 2021

The total value of building permits rose 4.3% to $10.1 billion in September, led by Ontario (+6.3%). Construction intentions in the residential sector were up 8.2%, while the non-residential sector decreased 3.2%. On a constant dollar basis (2012=100), building permits increased 3.4% to $6.9 billion.

Ontario drives residential permits up

High-value permits for two new condo buildings valued at over $300 million in the cities of Mississauga and Toronto helped push Ontario’s multi-family permits up 40.4% to $1.7 billion in September. At the national level, multi-family permits rose sharply, up 18.6% to $3.9 billion. Conversely, construction intentions for single-family homes declined 2.7% to $3.0 billion, mainly reflecting decreases in Ontario and Quebec. Overall, the residential sector rose 8.2% in September to $6.9 billion.

Non-residential permit values down

Construction intentions for the non-residential sector were down 3.2% to $3.3 billion in September, despite climbing 55.0% in Alberta.

The value of institutional building permits dropped 30.6%, mostly due to a 35.3% decline in Quebec. The decrease in Quebec followed a strong August when a $116 million permit was issued for a hospital expansion in the city of Verdun.

Commercial building permits fell 12.4% to $1.6 billion in September, mostly due to declines in Ontario. Industrial building permits jumped 72.1% to $987 million, a record high for the series. Alberta’s growth of 382.9% led the way, reflecting a permit valued at $400 million for the expansion of Calgary International Airport’s Airside Maintenance Centre.

Third quarter construction intentions continue to ease

The total value of building permits saw a second quarterly decline, down 3.8% to $29.8 billion in the third quarter compared with the previous quarter. However, building permits were 14.3% higher compared with the third quarter of 2020.

The value of residential building permits fell 5.4% to $20.2 billion in the third quarter of 2021, with declines in both single-family and multi-family dwellings. In contrast, on a year-over-year basis, the residential sector was up 16.5%.

Construction intentions for the non-residential sector edged down 0.2% to $9.6 billion compared with the second quarter. Industrial building permits rose 33.8%, helped by large projects such as the Calgary International Airport’s Airside Maintenance Centre expansion and a wind turbine blade manufacturing plant in Quebec. However, declines in the commercial (-3.2%) and institutional (-14.4%) components pulled the sector down overall for the quarter.

On a constant dollar basis (2012=100), building permits fell 6.6% to $20.4 billion in the third quarter, and were down 3.1% compared with the same period a year earlier. The year-over-year decrease in constant dollar terms mainly reflects higher construction prices in 2021.

Source: Statistics Canada

Canada’s Housing Market Soars Again in October, With Sales Jumping Nearly 9%

The Canadian Real Estate Association says home home sales across the country saw their largest month-over-month increase since July 2020 in October, even as new listings fell by about 20% from a year ago. The association says seasonally-adjusted sales reached 53,746 in October, up about 9% from 49,485 in September. On a non-seasonally-adjusted basis, sales totalled 52,538, down 11.5% from 59,344 last October.

Realtors and economists interpreted the year-over-year drop in sales along with the shrinking inventory levels and rising prices as a sign of further market tightening. While buyers rushed to buy properties at the end of 2020, this year is shaping up to be different.

“Buyers are very discouraged, very tired, and they just feel like they’re constantly being priced out,” Nasma Ali, a broker with Remax Hallmark Realty, said. “A lot of buyers are starting to say maybe it’s not in the books for us this year, and maybe we should take a break and start looking in the new year.”

They’re discouraged because fewer homeowners are willing to put their homes on the market. “The people who do want to move up are crippled because they can’t find anything to move to until they can sell their house,” said Ali.

New listings in October amounted to 61,128, down almost 20% from 76,046 at the same time last year. Sherry Cooper, Dominion Lending Centres’ chief economist, doesn’t see improvement in listings coming. “Canada continues to contend with one of the developed world’s most severe housing shortages,” she wrote in a note to investors. 

“As our borders open to a resurgence of immigration, excess demand for housing will mount.”

That could lead to sellers fetching even higher prices than they experienced in October. The non-seasonally adjusted national average home price was $716,585, up 18.2% from October 2020. Excluding the Greater Vancouver and Greater Toronto Area from that calculation cuts more than $155,000 from the national average price.

Federal mortgage insurer Canada Mortgage and Housing Corp. has warned that the country‘s housing market is overvalued and overheated. It has singled out Hamilton, Toronto, Ottawa, Halifax, Moncton, and Montreal as highly vulnerable to a price downturn.

BMO Capital Markets senior economist Robert Kavcic thinks the increasing prices mean it’s time for the government and regulatory bodies to rein in current conditions. “The Canadian housing market is well overdue for higher rates, and momentum is still pointing upward until it gets them,” he wrote in a note to investors. 

He saw the October numbers as a sign of the market being “fully firmed up” after a “slowing” in the summer. “The market is still drum tight, and demand is still feasting thanks to low mortgage rates, a strong job market, expectations of continued price gains, and probably some additional activity ahead of mortgage rate hikes (especially for those with a contract in hand),” he said.

Ali sees some of the buyer exhaustion easing up at the start of the new year, especially if rates remain low, but she believes supply will still be hard to come by for months. “January, February there are going to be way more buyers and we will have all the people that are tired and fatigued now coming back in January and February and we still no inventory,” she said. “So it’s not going to get better in January, but I think in spring, when there’s more inventory, it will get a little bit better.”

Source: Globe and Mail
Source: CTV News

Canada Mortgage and Housing Corporation Says Pace of Housing Starts Slowed in October

Canada Mortgage and Housing Corp. says the annual pace of housing starts in October fell compared with September. The national housing agency says the seasonally adjusted annual rate of housing starts was 236,554 last month, down from 249,922 in September.

The annual pace of urban starts fell 3.7% to 214,797 as starts of apartments, condos and other types of multiple-unit housing projects dropped 5.3% to 156,781. The annual rate of single-detached urban starts rose 1% to 58,016. CMHC estimated the annual rate of rural starts at 21,757.

The six-month moving average of the monthly seasonally adjusted annual rates of housing starts was 264,264 in October, down from 270,661 in September.

“The six-month trend in housing starts declined from September to October, as the retreat in total starts from their earlier 2021 levels continued,” said Bob Dugan, CMHC’s chief economist. “For SAAR housing starts in Canada’s urban areas, a slight increase in single-detached starts didn’t offset a larger decrease in multi-family starts in October and led to a decline in overall starts for the month. On a trend and monthly SAAR basis, however, the level of housing starts activity in Canada remains high in historical terms. Among Vancouver, Toronto and Montreal, Vancouver was the only market to register growth in total SAAR starts in October, due to a rebound from the prior month in the multi-family segment.”

Source: The Star
Source: CMHC