ALBERTA: Show home traffic spells "good news"

Maybe the suburban streets aren't jammed like Deerfoot Trail at rush hour, but there are more cars pulling up in front of builders' show homes these days.

And it's inevitable some of those lookers will actually put pen to paper and sign on for a new home. According to builders contacted, show home traffic is increasing -- and that spells good news.

The industry is trying to shake off the recessionary blues, and the recent bouts of cold weather, while looking forward to warmer temperatures and the possible return of something close to a normal spring market.

Sure, housing construction starts are way down from historic levels, and that can be attributed to the disappearance of buyers in the last three months of last year.

It was about that time that what was happening in the United States started to spill over the border, infecting both the Canadian economy and consumer confidence.

There were 184 construction starts of single-detached homes in the Calgary area during February, along with 22 multifamily units, says Canada Mortgage and Housing Corp.

"I'm surprised we had that many singles," says Allan Klassen, president and managing partner of Albi Homes. "Those were probably the slowest two months in our history."

But builders have endured worse Februarys. In 1989, work started on 149 detached homes and in 1994, only 20 multi-family units got underway -- 20 more than were started in the same month in 1984.

As for the current market, it's slow, but based on visitor traffic levels at show homes, at least there is some renewed interest among consumers.

"Traffic is up about 300 per cent since the beginning of January and sales in February (pre-sales and spec homes) were equal to what they were a year ago," says Klassen.
Spec homes are built in advance for people who don't want to order a home and then wait for it to be constructed.

The way March has started, it could well exceed the numbers for the same month in 2008.
Single-detached housing starts were down 36 per cent in February from the 288 reported last year, says Lai Sing Louie, senior market analyst for CMHC.

As well, the January to February count is off by 40 per cent.

"Once the inventory of completed and unabsorbed units declines to manageable levels, we expect to see the housing market expand again -- in 2010," he says.

Like Albi Homes, general manager Dave Hooge of Stepper Homes is also seeing a change.
"February activity for us has been much improved in terms of traffic and agreements written," he says.

Granted, the numbers he's talking about are nowhere near being what you'd call typical

February numbers, but they are much improved over December and January, he says.

"There seems to be a sense that buyers want to take advantage of great pricing combined with great interest rates while they can -- and they are less willing to wait," says Hooge.

While traffic is up, consumers are still being cautious, says Sam Attia, general manager of Landmark Homes (Calgary) Inc.

There is definitely more interest among consumers, but many are still taking time to weigh their options before making any decisions, he says.

Spec homes are attracting much of the buyer interest, rather than pre-sales, he says.

"There is still a concern about having to sell their existing homes," he says. "So when that home is sold, they tend to buy a spec to get a quick possession."

In terms of multi-family housing, there were 22 starts in February, down from 589 a year ago.

That will pretty much tell the tale for 2009. From 7,051 starts in 2008, CMHC has slashed that to 1,700 units of all types. "A lower level of demand, and rising inventory levels, has prompted developers to rapidly adjust new construction activity," says Louie.

(prepared by Marty Hope/Calgary Herald)
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Housing construction starts
Single-family Multi-family Total
February 2009 184 22 206
February 2008 288 589 877
Percentage change -36.1 -96.3 -76.5
Year-to-date 2009 388 61 449
Year-to-date 2008 651 937 1,588
Percentage change -40.4 -93.5 -71.7
Source: Canada Mortgage and Housing Corp.


The Calgary Herald