Suburbs show a housing completion boom

The recent report by the Canada Mortgage and Housing Corporation (CMHC) says the suburbs of Canada’s three largest cities are driving the increase in home construction activity.

According to CMHC, the number of move-in ready properties outside of city centres in Toronto, Montreal and Vancouver has started growing sharply. In addition to it, we can see the number of urban homes starts also rising.

Due to the availability of lots and affordable prices, housing completions are growing in a 30-kilometre radius around the city centres.

In case of Toronto and Vancouver, the number of housing completions was up significantly in areas 20-30 kilometres from urban centres. Meanwhile, Montreal saw this activity boom in areas even further than 30 kilometres.

“Toronto saw a high level of housing development in remote suburbs, but it has also shown a boom in housing construction in its active core,” – the report noted.

Such tendencies are causing two difficulties.

“First of all, the growing trend toward suburbanization may increase housing external costs (investments into infrastructure, roadway traffic and greenhouse gas emissions),” – CMHC says.

“Moreover, the relatively low level of housing development in areas with low-income households in Montreal (and partially in Toronto) could point to affordability issues in those areas.”

The average family income in Toronto, Vancouver and Montreal were respectively $98,635, $89,300 and $78,400.

CMHC believes that when income goes up in a city, people are more inclined to change their homes.

As a square foot of real estate is cheaper in more remote areas, consumers have a strong reason to move further from central locations and receive a larger house.

As a result, the richest families live in the suburbs, even in spite of longer commute period.

According to CMHC, the annual pace of housing starts was up by 23.1% last month, with single-family homes in Montreal getting closer to their highest level since February 2008.