Monday, February 2, 2009

New Construction

Thought I'd take a quick look at the new construction stats for Edmonton today, as CMHC released their latest report last Friday. Lots of good stuff in there, but I'm only going to look at a handful of numbers from Table I... starts, unabsorbed units and under construction units to be exact.

Here is how those graph out over the last few years...

New ConstructionThere has been a lot of talk recently about the drop in housing starts in the city, and rightly so as they are at the lowest levels experienced in at least seven years, and only about 1/3 to 1/2 of what they usually are. Starts were cooling throughout '08, and it appears that will continue well into, if not right through '09.

The number of unabsorbed units are also growing, but are well within historical norms. What may be a bit alarming is the number of units still in process. While the number of under construction units have fallen drastically since peaking in late '07, they are still above pre-boom levels... there is obviously no shortage of housing already available in the city already, so with 11,409 still coming down the pipe, the glut is only going to grow.

While we should expect to see unabsorbed inventory continue to climb, I expect a great many of these units were already bought on spec, so with the obvious downturn it'll be interesting to see how many people start walking out on their deposits, as has began to happen in Vancouver.

I also would not be surprised to see the dilemma of "accidental landlords" become something of an epidemic... as there is already a great deal of vacant listings on MLS coupled with the very low resale levels, a lot of these owners will be stuck with either renting them out of going through foreclosure.

Beyond the housing situation, one has to expect the layoffs in construction to keep on coming, as more and more projects are finishing, new starts are no longer keeping up. Good news for homeowners looking to get small jobs done though, should be no problem finding someone to do those jobs now, unlike a year ago when you couldn't even get someone to return your calls.