With employment and economic growth expected to improve in the last half of 2013, the Canada Mortgage and Housing Corp. (CMHC) anticipates housing starts to re-gain momentum.

However, in both single-family and multi-residential homes, the total annual housing starts will likely be lower in 2013 in comparison to 2012. According to the CMHC’s Second Quarter 2013 Housing Market Outlook, multi-family starts are expected to decline to 103,100 units in 2013, from 131,170 in 2012.

Multi-family starts moderated in the second half of 2012, reflecting the softening in economic fundamentals following the solid employment and economic growth that provided strong support to housing demand from 2010 through early 2012. This moderation is expected to continue through the first half of 2013, leading to an overall decrease in multi-family starts. In Ontario, Quebec and the Atlantic region, lower population growth among the 25 to 34 year age group in 2013 is also expected to lead to a slight moderation in demand from first-time homebuyers, who are more likely to enter homeownership through the less expensive multi-family housing segment in large centres.

The CMHC predicts a modest increase in multi-family starts in 2014. With improving economic conditions, there is an expectation for increased housing demand.

However, builders will be aware of the level of inventories of multi-family units and react accordingly. Specifically, the ratio of newly completed and unabsorbed multi-family housing units per 10,000 population stood at 3.5 units in the first quarter of 2013, above the historical average of 3.3 units. The inventory of multi-family units has declined since the first quarter of 2011, when it stood at 3.9 units.

Multi-family starts are expected to range between 98,200 and 108,000 units in 2013, and between 94,700 and 118,300 units in 2014.