DAVE MacLEAN

Published on page B3, Tuesday March 10th, 2009

Housing starts increased
in February

Real estate Multiple-unit starts in Saint John climbed to 39 in
February from 10 a year earlier

New Brunswick bucked the national trend and showed an increase in housing starts last month, but an analyst says it's mostly due to an anomaly with small figures during a slow month and not the sign of an upward trend.

The Canada Mortgage and Housing Corp. released its February statistics Monday, showing the seasonally adjusted annual rate of urban housing starts decreased by 14.9 per cent last month, compared with February of 2008. Atlantic Canada was the only region where numbers moved in the opposite direction with a 10.8 per cent increase, boosted by a 23.3 per cent jump in New Brunswick.

The New Brunswick increase is primarily the result of a huge increase in multiple-unit starts in Saint John, which climbed to 39 in February from 10 a year earlier. That boosted the Saint John region's overall total to 52 units, compared to 27 last year - an increase of more than 92 per cent.

"I would always caution anyone looking at the numbers - if you're looking for an indication to what the market is doing - not to limit yourself to one month, especially not in the winter, when you could have a really bad weather month that could throw off your numbers," said Claude Gautreau, the CMHC's senior market analyst for New Brunswick. "Obviously, if you have one major project, or a couple of smaller ones, it can really increase that number in a hurry. So in a one-month period it can make your numbers look very good."

But Gautreau doesn't expect the numbers to remain high. In fact, the CMHC has forecast lower figures for 2009, but not because of the global economic situation. He says the cyclical nature of the business makes it natural for the province to experience a drop after several years of solid results.

"When you're coming off record or near-record highs, it's not abnormal to have declines in housing," he said. "If you go back over the span of a decade in Atlantic Canada, on an annual basis, year over year, there's been constant growth and fairly substantial growth. The housing market has always been cyclical, so sooner or later, if you've been adding more and more to your local inventory of housing ... at some point you have to pull back a bit, simply because you're adding stock too quickly and the market can't absorb it. That's what we saw at the end of 2008 and it's what we're seeing now.

"Fundamentally, what's been driving our market for the last 10 years - strong employment, in-migration and in recent years low mortgage rates - they're all still here today. That hasn't diminished or had any negative impact on the housing market. When your drivers are good and your market is slowing a bit, that's an indication that you're in a situation where supply and demand have to re-balance themselves.

"We're a bit past the peak and going into a soft decline now, simply because the market had been doing so well for so long that you need a cool-off. If not, you're going to be adding more and more and you'll reach a point where there's just too much out there."