Posted by Moishe Alexander
Housing starts in the Kitchener and Guelph Census Metropolitan Areas in 2010 will increase from the relatively low level recorded in 2009. In the Kitchener CMA, housing starts will reach 2,170 in 2010, up 12 per cent from the expected 1,930 starts in 2009. Housing starts in the Guelph CMA will increase by 16 per cent to 535 in 2010 from the forecast 460 starts in 2009. Slowly improving employment, more spill-over from the resale home market, low inventories and low mortgage rates will combine to push housing starts above the levels recorded in 2009. Starts of both single-detached and denser forms of housing will be up in 2010. Starts will move higher over the next few years, more in line with population growth and household formation.
Single-detached housing starts in the Kitchener CMA will increase by ten per cent to 1,100 homes, while Guelph CMA detached starts will grow by 10 per cent to 275 units. Although these increases in detached starts seem significant, starts will still be well below levels recorded in the first half of the decade. While the new construction market has been slow to react to the tighter resale market conditions after the first quarter of 2009, the expected spill-over demand from the resale home market will result in stronger 2010 starts. Mortgage rates will remain near historically low levels in 2010, although rising slowly throughout the year, and combined with little price growth for new detached homes, affordability will play a part in increased demand for detached homes. Inventories of new single-detached homes have not increased significantly, as was seen in the early 1990s. As a result, any demand for new detached homes must be met through new construction.