November 10, 2011 – Weekly Market Update
Market Update – Recent news cautiously suggests that the Alberta economy is improving. Job growth and the resulting population growth, a more balanced re-sale housing market and now higher construction starts are all good indicators of that improvement.
An increase in construction starts is particularly good news since construction is one of the industries that drives our economy. New construction not only creates a lot of jobs directly in the industry, it creates jobs and growth for the thousands of businesses that provide the materials, supplies and equipment needed. Any improvement in construction starts will translate into a stronger economy in Alberta, and a stronger economy means a stable housing market.
Starts Pulse Higher – Dan Sumner, Economist, ATB Financial
Activity in the energy patch has had trickle down effects on many sectors of Alberta’s economy recently, but residential construction has remained slow. However, with data out this morning showing that housing starts notched higher for the second time in three months that might be changing.
Builders began construction on 28,400 (SAAR) urban housing units in October 2011, the second highest amount since March 2010. Residential construction has generally been quite subdued in Alberta over the past year (and really since the recession began) but in August and now October starts have climbed above the 28,000 mark.
The very weakest segment of Alberta’s residential construction market over the past three years has been condominium construction—weighed down by an oversupply of units started during the boom. However, it appears that the surges in both August and October were thanks to a rise in multiple dwelling starts (i.e. condominiums).
Edmonton appears to be the winner in October with multiple dwelling starts jumping from less than 300 in September to nearly 800 in October. Back in August a surge in multiple dwelling starts in Calgary was behind the jump.
With two months of data now pointing towards some life in Alberta’s residential construction market, the case for a pickup in construction activity is being strengthened. That said, multiple unit dwelling starts can be very volatile and there are certainly no guarantees the recent rise will be sustained into the New Year.
