Fuelled by a red hot real estate market, home building in the London area is on a roll not seen since before the last recession, says the president of the London Home Builders’ Association (LHBA).
So far this year there have been 784 single family starts, up 42 per cent from the first seven months of 2015.
Trevor McKenzie, president of the home builders’ association, said the market is the strongest in almost 10 years.
“Our members say model home traffic and sales are solid. Consumer confidence seem very high in the housing market in the London region,” said McKenzie, president of McKenzie Homes.
A major factor driving building of single family homes in London is the hot resale market, he said.
London-area realtors have broken monthly sales records this year, and the number of homes on the resale market was down 28 per cent in July from the same month in 2015. Realtors say the fall listing is sparking bidding wars.
“What we’re hearing is that home buyers are getting caught in multiple-offer situations and they’re looking to new homes as an alternative,” McKenzie said.
Several residential developments are underway along the north end of London, he said.
The staple of the London new home market has been the single-family home on a 12-metre lot in the $375,000-$450,000 range.
The price range is attracting buyers from as far away as the Greater Toronto Area, where the average price for a detached home has spiked over $1.2 million in recent months, McKenzie said.
“We have seen buyers coming from much further east of here looking for more affordable housing . . . They are being pushed out of the GTA market.”
Although some GTA buyers are retired empty-nesters, McKenzie said many are working families. Some plan to make the long commute, but others are able to work from home or have a tech job that requires them to be in Toronto only one day a week, he said.
McKenzie said the potential of the GTA market could be fully tapped if plans for a high-speed link from London to Toronto are realized.
“The impact of that would be a tremendous economic driver for London and the home construction industry,” he said.
Canada Mortgage and Housing Corp. said there were 179 housing starts in London-St. Thomas in July, compared with 118 in the same month last year.
Builders started 138 single family homes last month compared with 93 in July 2015. Single family starts are considered the more reliable market indicator.
The multi-family sector also is doing well with 915 units started in the first seven months of 2016, compared to 647 last year.
But that sector’s pace will likely slow now that two large residential tower projects by Tricar and Medallion are underway.
“We are currently in a high period for multi-unit starts in London due to the occurrence of apartment starts, which tend to be heavily concentrated in just a few arbitrary months each year,” said Anthony Passarelli, senior market analyst with CMHC.
Across Canada housing starts fell in July from June, as construction of multiple units — typically condos — fell 13.3 per cent after an unexpectedly large gain in June.