Housing starts increase 24 per cent to 5,093 units in first quarter
Michael Kane
Sun
Vancouver-area housing starts rocketed 30 per cent last month compared to the same month last year, Canada Mortgage and Housing Corp. reported Monday.
Over the first quarter, starts are up a sizzling 24 per cent to 5,093 units, despite worries about affordability and rising costs for land, labour and materials.
In the Fraser Valley, starts soared nearly 64 per cent in the first quarter to 2,358 units, led by a 92-per-cent expansion in multiple unit construction.
“We’re well on our way to matching last year’s pace of construction which was the second best in a decade,” said Peter Simpson, chief executive of the Greater Vancouver Home Builders’ Association.
“If homes just sat there and nobody was buying them, then we would be concerned, but everything that is placed on the market is sold. There is still huge interest from first-time buyers.”
CMHC said the average price of a single detached new home ranges from $317,770 in Chilliwack to $426,953 in the Abbotsford region and $636,745 in the Vancouver metropolitan area which stretches from Bowen Island in the north to White Rock in the south and Maple Ridge and Langley to the east.
Senior market analyst Cameron Muir said the pace of construction should help affordability because more choice reduces the likelihood of bidding wars.
“It is a pretty good testament to the ability of the construction sector to continue to increase their output over time,” Muir said. “The more housing starts that we see is good news for the beleaguered home buyer who is faced with ever-increasing prices and low inventory levels, both on the new home side as well as on the resale side.”
Muir expects house prices to soften next year as a result of increasing supply and eroding affordability.
Figures for March show single detached starts increased 56 per cent to 546 units in the Vancouver area while multiple starts rose 23 per cent to 1,470 units compared to the same month last year.
Single detached starts also led the way over the first quarter, rising 41 per cent to 1,424 units, while multiple starts were up 18 per cent to 3,669 units.
In the Fraser Valley, single detached starts were up 38 per cent to 1,062 units, compared to the first quarter of 2005, while multiple starts almost doubled to 1,296 units.
Muir said home buyers are looking to the Fraser Valley for less expensive alternatives to markets closer to the core and builders are ramping up activity in response.
“Despite a limited supply of land and skilled trades workers, home builders are managing to increase production,” he said. “Starts last year slowed from the year before because of capacity constraints but the substantial increase in the first quarter bodes well for the supply of new housing this year.”
Muir noted that suburban buyers of single detached homes have enjoyed greater percentage gains over the past 15 years than owners on Vancouver’s West Side which is generally perceived to be the market that grows most rapidly.
While the average West Side home has doubled in value over 15 years, White Rock is up 160 per cent and Langley is up about 155 per cent. In general, Muir said, the closer to Vancouver, the lower the gain.
Urban B.C. starts overall increased 27 per cent to 7,934 units in the first quarter with single detached starts up 28 per cent to 2,789 units and multiple starts up 26 per cent to 5,145 units.