By Lanny McInnes
The Canada Mortgage and Housing Corporation (CMHC) recently released statistics on housing starts for the first six months of 2019.
The number of single-family detached housing starts in Winnipeg between January and June decreased by eight per cent compared to that same time frame last year.
When compared to the first half of 2017, prior to the implementation of the City of Winnipeg’s impact fee, single-family detached housing starts in Winnipeg have decreased by 29 per cent.
In 2018, housing starts began to return back to what is generally considered a more normal level compared to the elevated housing starts experienced in 2017.
Total housing starts in the Winnipeg metro area were down 32 per cent during the first half of 2018 compared to the previous year.
According to the CHMC, the decline was most pronounced for multi-family housing, where production through June 2018 declined by 38 per cent from the same period of 2017.
This year, multi-family housing starts have seen a rebound, with a 64 per cent increase year-to-date.
Multi-family construction for the first half of 2019 has even surpassed 2017 levels.
These housing starts include a number of new rental apartments being built across Winnipeg.
One major factor in this market reaction was the expansion of the federal mortgage “stress test.”
The new minimum qualifying rate — or stress test — introduced in 2018 for all homebuyers, including those that have down payments of 20 per cent or more, effectively reduced the size of the mortgage Canadians are able to take on, given a certain down payment and income.
According to Statistics Canada, the stress test’s effect on consumer behaviour was a factor in a decline in residential investment, as the marketplace adjusted to quickly changing consumer demand over the past year and a half.
The market also saw a shift in the type of homes people were able to purchase.
Statistics Canada reported investment in single-detached homes declined over 2018, while investment in rental apartments rose.
Investment in row housing also declined, while investment in semi-detached homes stayed relatively flat.
The CMHC’s housing-start data for the first half of 2019 would indicate this trend has not only continued, but has increased, too.
This significant and quick shift away from home-ownership options and toward investing in the rental market signals more than just a simple change in market tastes over the past 18 months.
This type of dramatic shift likely indicates that during 2018 and the first half of 2019, more Canadians found the goal of home ownership out of their reach.
With Manitoba’s residential construction season now in full swing, it will be very interesting to see if some of the market trends we saw in and around Winnipeg over 2018 and into the first six months of 2019 will continue throughout the summer months and into the fall.