But a near-record number of housing units will still be built this year
Brian Morton
Sun
The total number of housing starts in the Greater Vancouver area has been revised downward by more than 1,000 units for 2005 and 2006, according to statistics released by Canada‘s national housing agency Monday.
However, Peter Simpson, CEO of the Greater Vancouver Home Builders’ Association, said the survey by Canada Mortgage and Housing Corp. means little because near-record numbers of housing units will still be built this year.
“That’s about where we thought we’d be anyway,” said Simpson in an interview. “Last year was the best year in a decade and this will still be on par with that. There are still a lot of projects to come on stream.”
According to the survey, the total number of housing starts forecast for the Vancouver area has been revised from 20,000 units to 19,400 units in 2005, and from 19,000 units to 18,500 units in 2006.
The survey noted that the new forecast is a result of a downward trend in single detached housing starts, which are forecast to fall 15 per cent from 5,614 units in 2004 to 4,800 units in 2005. Next year, single family starts will fall an additional five per cent to 4,600 units, the survey said.
However, multiple housing starts are expected to increase six per cent from 13,816 in 2004 to 14,600 in 2005.
CMHC noted that the revised forecast of 19,400 total housing starts in 2005 equals the 19,435 units in 2004 and close to the record 21,834 starts of 1989.
Monday’s CMHC survey follows one released by CMHC last week that said housing starts in the Greater Vancouver area were down by nearly half in April over the same month last year.
Simpson said he isn’t surprised that the largest downward trend is in single family housing, adding that the limited availability of land is contributing greatly to more expensive houses.
“When you’re looking at the amount of developable land, we have a lot of geographic constraints. So, the average price rises significantly and fewer people can buy [single family homes] and they’re turning to townhouses and condos.”
Cameron Muir, senior market analyst for CMHC, said in a news release that the numbers show that the Vancouver housing market is benefiting from pent up demand and economic growth.
“Increasing job growth, rising wages, and historically low mortgage rates are provoking confidence in the Vancouver housing market, locally, from across the country, and from around the world,” Muir said in the news release.
Nationally, CMHC forecast that housing construction will fall 7.3 per cent this year to 216,400 units and another 7.5 per cent in 2006 to 200,000 units.
However, all areas of housing activity will remain at what are still historically high levels, Canada Mortgage and Housing Corp. said.
“The outlook for housing starts remains upbeat for this year and next,” said CMHC chief economist Bob Dugan. “However, a slight rise in mortgage rates, eroding pent-up demand, slower employment growth, and waning spill-over of buyers from the existing home market are some of the factors that point to a gradual slowing in the pace of new home construction.”
Sales this year will slip 4.3 per cent to 441,000 units but that’s still the second-best year on record, and remain well above the 400,000 mark in 2006, it said.
The steady price increases of the past three years and an expected rise in mortgage rates will push mortgage carrying costs higher and cool the housing boom, it predicted.
Prices will rise 6.8 per cent to an average of $241,700 this year
COOLING DOWN?:
CMHC has revised its forecasts for housing starts in Vancouver for next year and 2006. Residential construction is to taper off slightly in 2005 in Vancouver, while overall housing starts in B.C. are expected to rise in 2005 but fall in 2006:
2004 2005* 2006*
Total starts (Vancouver) 19,435 19,400 18,500
Single detached homes (Vancouver) 5,614 4,800 4,600
Multiple housing starts (Vancouver) 13,816 14,600 13,900
B.C. total starts 32,925 33,600 31,600
Canada total starts 233,431 216,400 200,200
* Forecast
Source: CMHC
© The Vancouver Sun 2005