The 42-storey Arriva condo tower just south of downtown Calgary was to be the tallest residential building in Alberta, a much-touted development by Torode Realty Advisors.
Now, the project is in court protection from creditors, with only about half the units sold and 20 per cent of the tower built.
Arriva was a product of Canada's extended 2002-2008 home building boom, powered by Alberta and British Columbia, and now stands as a symbol of the crash that continues to ravage the real estate market in the West.
Nationally, new housing starts were up in March, a surprise to economists. But the increase that snapped six consecutive months of declines does not indicate a new trend, economists say, and was widely considered a blip. The supply of homes far outweighs demand for houses and condos, meaning a recovery in the home building market will be slow and extended.
The gain in new home starts in March was driven by condos in Ontario and Quebec, but the West continued to slide.
March saw only 744 urban housing starts in British Columbia - one-third of the 2,371 starts in March, 2008.
In the Prairie provinces, where Alberta led development, there were 967 starts in March, about one-fifth of the 4,768 a year earlier.
Stark signs litter Calgary, particularly in the Beltline community where Arriva is among eight condo projects now halted. The situation is similar in Vancouver, where big-name projects such as the Ritz-Carlton condo hotel are shelved, and desperate developers such as Amacon now offer huge discounts to attract buyers. At the yet-to-be-built Beasley, a 34-storey downtown condo, Amacon has slashed prices more than 30 per cent: one-bedroom units are now $250,000, down from $440,000; and two bedrooms are $497,000, cut from $755,000.
Canada Mortgage and Housing Corp. yesterday said new home starts in Canada, on an annualized basis, were at 154,700 in March - up from 136,100 in February, but far below the 200,000-plus level that was standard during this decade's long boom. (Economists surveyed by Bloomberg LP had expected a seventh-consecutive monthly decline to 130,000.) "The simple fact is there were more homes built than needed in the last seven years," said economist Douglas Porter of BMO Nesbitt Burns Inc. "And there really hasn't been any let up in the decline in the West."
CMHC said the construction of new homes "is now at a more sustainable level," describing the pace of building in the boom as "exceptionally strong."
But several economists described the increase in new-home starts as a negative for the home building market. "This is a step backwards in the push to work off increasingly bloated Canadian housing inventories," economists at Scotia Capital Inc. said in a report. Economists at Toronto-Dominion Bank said the housing market will slide for several years as weak demand slowly eats away at ample supply.
Beyond factors such as interest rates and the general strength of the economy, housing starts are closely correlated to the available supply of completed but unoccupied homes. There was a glut in the early 1990s, but supply was tight by early this decade, which is when the building boom exploded.
The expectation among many economists of extended hard times for home builders contrasts with some optimism elsewhere. In its budget Tuesday, the Alberta government forecast 22,000 housing starts in the province in 2009, double the current annualized rate.
But economist Dan Sumner of ATB Financial said housing starts were one of the first signs that the Alberta economy was headed for a slowdown, and began sliding in the summer of 2007. The trend won't change soon, he said.
"There is still an excess supply inventory that needs to be weaned in most Alberta markets," Mr. Sumner said in a report yesterday.
David Ebner