Brian Morton
Sun
Housing starts in the Greater Vancouver area were down by nearly half in April over the same period last year, according to statistics released by Canada‘s national housing agency Monday.
However, the chief economist of Credit Union Central of B.C. said the drop in starts isn’t surprising because a large number of multiple-unit projects all started in the same month last year, boosting starts in April 2004 to a record level.
“[The April 2005 number] is down, but it’s off a very big April 2004,” said Helmut Pastrick in an interview. “There was a huge surge in multi-unit apartments and townhouses [in April 2004]. The trend is still heading upwards.”
According to the Canada Housing and Mortgage Corp. survey, all housing starts in the Vancouver metropolitan area fell 46 per cent to 1,348 units in April over the same month last year.
Multiple housing starts declined 49 per cent to 974 units, according to a news release issued by the CMHC, while single-detached starts dipped 36 per cent to 374 units compared to the same month last year. From January to April 2005, housing starts dropped 12 per cent compared to the same period in 2004 — to 5,460 from 6,177 starts.
The CMHC survey said it’s no surprise that housing starts in Greater Vancouver in April were below April 2004 levels, because “numerous large multiple projects were coincidentally started in the same month last year, boosting multiple starts to a record level.”
The survey also said that multiple starts in Greater Vancouver last month were the second highest for the month of April in 10 years.
“April 2004 had the strongest numbers ever for multiple units,” said Cameron Muir, senior market analyst for CMHC, in an interview. “We expected the numbers would be down. In April 2004, there were 1,898 multiple units in Greater Vancouver. Last month there were 974. That was a large decline, but it’s not bad historically.”
He said the large drop in starts from March to April is not very significant, because multiple units “swing wildly month to month. It’s hard to gauge one month as a trend.”
While multiple starts continue to be strong, the survey noted the number of new single-detached units under construction has been trending down for several months.
Muir said the main reason behind the decline is rising land and building costs.
He said that in the Fraser Valley, new single-detached home prices now exceed $500,000 in some areas, making it unaffordable for many. “The market at that level of pricing is smaller. As a result, there’s a shift towards multiple units.”
CMHC also noted that 20 years ago, just 44 per cent of housing starts in Greater Vancouver were multiple units, such as apartments and townhouses. Today, three-quarters of all housing starts are multiples.
According to the CMHC news release, B.C. saw urban housing starts, multiple starts and single detached starts all decline 23 per cent over the same month last year.
Year-to-date housing starts across urban B.C. fell seven per cent to 8,947 units over the same period last year, with most of the decline attributed to a drop in single-detached starts.
Peter Simpson, CEO of the Greater Vancouver Home Builders’ Association, said in an interview that the April numbers may be “the calm before the storm.”
He said there are a lot of projects in the Lower Mainland coming on stream and the numbers should shoot up when they do.
“We still believe we’ll be slightly better than last year,” he said. “We’re not seeing a trend [down]. If it continues, then I’d say that something is happening.”
Simpson agreed that expensive single-family homes are having an impact on the market. “We have the highest prices in Canada and that’s nothing to be jubilant about.”
Another reason for the falling numbers, he said, is that many smaller builders with multiple sites on the go are slowing down because of a shortage of skilled trades.
Pastrick said one reason the building boom likely won’t abate is that B.C. now has a net inflow of people from other provinces.
Citing Statistics Canada, Pastrick said 54,730 people from other provinces moved to B.C. in 2004, compared to 47,650 from B.C. who moved out of the province. “That’s a net inflow of 7,080.”
Meanwhile, George Pahud, president of the Real Estate Board of Greater Vancouver, said in an interview that the Greater Vancouver market is still very strong and he sees nothing to worry about with the drop in housing starts.
“We’re about 1.5-per-cent below what we were in 2004 with regards to sales [for the first four months of 2005],” he said. “As far as we’re concerned, the market is as strong as it was in 2004.”
According to the board’s statistics, sales of properties reached 4,043 units in April 2005, compared to 4,103 in April 2004.
Pahud said demand is being driven by low interest rates, a positive job market and confidence in the economy.
VANCOUVER BRINGS DOWN THE HOUSING STARTS:
As housing starts declined sharply in the Vancouver census metropolitan area last month compared to April 2004, they rose even more sharply in Kelowna and Prince George census areas. While Prince George saw a 164.3-per-cent increase April 2004-April 2005, this was driven by just 23 housing starts. Kelowna, however, recorded a 146.2-per-cent April-to-April increase driven by 326 more starts.
Housing starts, April 2004-April 2005, percentage change:
Vancouver -45.6
Victoria -14.2
Abbotsford -2.1
Kelowna +146.2
Prince George +164.3
Other centres +2.0
Urban B.C. average -22.7
© The Vancouver Sun 2005