Housing starts in Canada were 25.4 per cent lower in April of this year than they were the same month last year, a clear sign that Canada's housing market has slowed considerably.
According to data from Canada Mortgage and Housing Corp., housing starts ran at an annualized pace of 182,754 units this April, compared to 244,900 in April 2012. Housing starts fell 2.5 per cent from March to April, led by a decline in multiple urban starts (condos) of 3.5 per cent.
Regionally, April’s seasonally adjusted annual rates of urban starts decreased in Atlantic Canada, Ontario and British Columbia. They increased in Quebec and the Prairies.
A slowdown of this magnitude will likely take a toll on Canada's employment numbers. Will Dunning, an economist with the Canadian Association of Accredited Mortgage Professionals, recently estimated that Canada will lose 190,000 jobs as a result of the housing slowdown.
Analyst Ben Rabidoux, known for his bearish views on Canadian housing, recently noted that the proportion of Canadians working in jobs related to construction has grown to about 7.4 per cent, from around 5 per cent in 1998. That makes the country's economy particularly vulnerable to a housing slowdown, he argued.
Many international investors have been looking at Canada's housing market slowdown and predicting trouble ahead both in terms of employment levels and the performance of Canada's banks, which rely heavily on mortgage lending. A California hedge fund recently went "all in" against Canada's banks and housing sector, putting 95 per cent of its clients' assets into bets against Canadian banks and the loonie.
Bets against Canada's banks recently hit what is believed to be an all-time high.
But economists at the major banks and at industry associations largely argue that Canada's housing market is in for a soft landing. CMHC recently predicted the housing market will remain weak through the first half of 2013, and will bounce back in 2014.
The most recent data shows home sales in Canada have fallen about 15 per cent over the past year, even as prices have remained flat.
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