Is the Calgary Real Estate Market Stabilzing?

CALGARY - Is it the light at the end of the tunnel for the home building industry?

After 31 consecutive months of year-over-year declines, Calgary home builders are starting to see some positive signs.

In August, for the second consecutive month, builders began more single-detached units than for the same month in 2008, according to data released Wednesday by Canada Mortgage and Housing Corp.

"To see not just one but two months of year-over-year growth is certainly a welcome sign," said Richard Cho, senior market analyst in Calgary for the CMHC.

"It is becoming clear that single-detached construction is gaining some strength. The economy has been improving with the steady number of full-time jobs being created in the last couple of months, which is an important factor in housing demand.

"In addition, we're seeing inventorylevelscomingdown. So it's no surprise that we're seeing an uptick in single-detached production."

Home builders are cautiously optimistic, said Don Dessario, president of the Canadian Home Builders' Association--Calgary Region.

The inventory of new homes has been reduced and new starts are addressing some of the demand now in the marketplace, he said.

"I think we've seen the bottom of the inventory glut and we see positive signs related to interest rates. Positive signs in the economy tend to bring on more consumer confidence to make a purchase," said Dessario.

In August, builders began construction in the Calgary census metropolitan area on 444 single-detached units, an increase of 33 per cent from the 334 units started in August 2008.However, multifamily starts declined by 60 per cent to 104 units from 260 the year before.

Total starts for the month were down by 7.7 per cent to 548 units from 594 units in August 2008.

For the fourth month this year, there were no apartment units started.

While there have been positive signs of recovery in July and August, year-to-date numbers remain below 2008 levels.

After eight months, new home construction for the city is almost 65 per cent behind last year's pace.

In August in Alberta's seven largest centres, there were a total of 1,512 units started, representing an increase of eight per cent from 2008 levels.

"After the Canadian recession came into fruition in late 2008, Alberta's residential construction sector practically went to sleep," said Dan Sumner, economist with ATB Financial in Calgary. "Although that trend continued into early 2009, the most recent months have seen housing starts claw their way back to life."

He said Alberta's "torrid" resale markets have likely propped up recent starts figures.

mtoneguzzi@theherald. canwest.com