Housing starts in Canada fell more than expected last month — except in B.C., the Canadian Mortgage and Housing Corporation said yesterday.

Across the country, starts fell nearly 11 per cent, to 195,000 single and multiple units from December’s level and it’s the first time since last May that starts dipped below 200,000.

“Before reading too much into this mildly disappointing result, it is critical to note that January’s unusually harsh weather likely put a significant dampener on starts last month,” said Sherry Cooper, chief economist for BMO Nesbitt Burns. “As the old saying goes, housing data around this time of year are as much a weather report as an economic report.”

But unlike the rest of Canada, January was another boom month in B.C. where starts jumped by 17 per cent from December, and 94 per cent compared to January, 2003. Most of the activity took place in Greater Vancouver.

“It’s not unusual for B.C. to be heading in different ways than the rest of the country,” said Keith Sashaw, Vancouver Regional Construction Association president.

“What we’re seeing is pent-up demand for housing, combined with more optimism and interest rates at historic lows.”

Cameron Muir, a Vancouver-based market analyst for CMHC, said housing starts in the Lower Mainland increased 140 per cent last month compared to January, 2003. New construction of multiple units in Vancouver account for almost all of the building, partly due to new fees city hall will charge developers and builders beginning later this month.

“The market is very robust — there is virtually no inventory,” Muir said. “Most of the units under construction have already been spoken for and builders and developers have very little inventory on the books to be built.”

At the beginning of 1999, Vancouver had 2,624 new unoccupied condos awaiting sale, Muir said. Today, there are 141 and only five are in the downtown core.

Multiple unit construction jumped dramatically in most of the Lower Mainland suburbs compared to last year’s figures. In January, 2003, there were 244 multiple units started; this year, the number rose to 1,235 — an increase of 406 per cent. In the same period, single detached housing starts dropped 11 per cent.

Economic forecasts for 2004 suggest that despite last month’s slip in the rest of the country, the new housing market should remain strong as interest rates stay low and employment rates continue to grow.

© The Vancouver Province 2004

New residential housing construction in Greater Vancouver soared 140 per cent in January, compared to the same period a year ago, but developers still can’t keep up with demand for homes.

The Canada Mortgage and Housing Corporation reported Monday a total of 1,619 units broke ground last month — the highest level for the month of January in nine years — in the Lower Mainland, up from 677 starts in January 2003.

“We haven’t seen this many January housing starts since 1995,” said Cameron Muir, CMHC’s senior Vancouver market analyst.

“Demand for new housing continues to outstrip supply in [Greater] Vancouver, with many home builders sold out of available inventory.”

Of the 1,619 new starts last month, condominiums accounted for 1,235 of them, compared to 244 units in January 2003 — a whopping 406-per-cent increase.

However, condominium developers find it virtually impossible to meet consumer demand, as the number of new condos that are finished and unoccupied in the region has dropped 95 per cent over the past five years.

CMHC tracking shows there were 2,624 units complete and unoccupied at the start of 1999. Currently, there are only 141, including only five units in Vancouver‘s downtown core.

Said Muir: “Low inventories are not only a result of strong consumer demand, but also a product of limited developable land, difficulties in finding skilled tradespeople and bottlenecks in the [project] approval process.

“The time between the conception and completion of a housing development has lengthened, making it more difficult for home builders to respond to demand in a timely manner.”

Across the province, housing starts climbed 93.5 per cent to 2,365 units in January, up from 1,222 units the previous year. Multiple starts last month totalled 1,588 units, a 235-per-cent increase from 474 units in January 2003.

For all of 2004, CMHC forecasts 27,000 new starts for B.C., up three per cent from 26,174 actual starts last year.

“Low mortgage rates, solid job growth and rising consumer confidence will continue to fuel home sales,” Muir said. “Strong economic fundamentals are expected to continue through 2004, keeping demand for housing robust.”

© The Vancouver Sun 2004

Name of project: Retro

Location: 8988 Hudson St., Vancouver

Developer: Aragon (Hudson) Properties Ltd.

Builder: Aragon Construction Management Corporation

Architect: Nigel Baldwin Architects

Size of project: 133 units in a five-storey, concrete building

Price range: $146,900 to $281,900 excluding GST

Floor plans: Junior one-bedrooms, one-bedrooms, two-bedrooms, two-bedrooms-and-den; Sizes range from 482 to 865 square feet

Special amenities: Fully equipped exercise room, central landscaped courtyard, water feature, central location, concrete construction

Previously on site: The site of the old Grand Central Hotel; this site was considered the centre of Marpole in 1912

Monthly maintenance: $105.17 to $197.81

Construction starts: The project is already under construction

Date of occupancy: Mid- March 2004

Presentation centre: #102 – 8988 Hudson St., Vancouver. Open noon to 5 p.m. daily except Fridays

Contact information: 604-263-8949

© The Vancouver Sun 2004

Land, land everywhere, but not a square foot to develop. That’s almost the lament of home builders and commercial developers today as an emerging land crunch in the Lower Mainland is beginning to keep many real estate professionals awake at night, wondering how they are going to build affordable housing.

Land prices, which remained fairly constant during the last downturn in housing markets, are now skyrocketing, with land owners’ expectations pushing the envelope of reality.

When these soaring land costs are factored in as the largest cost component in the price of housing, the proforma doesn’t work.

Simply put, land prices are beginning to push housing costs beyond the price point of many consumers.

Concert Properties C.E.O. David Podmore said it best at the recent 20th annual forecast luncheon of the Urban Development Institute.

“We are finding it virtually impossible to find land at sensible prices that are workable, even when measured against the current inflated sales volumes.”

While supply and demand should regulate land prices, the fact is that demand for new housing is driven by many external factors. They include international immigration influenced by world affairs, job creation, the demographics of aging and other forces.

Greater Vancouver Regional District statistics forecast population in the region will grow by more than 475,000 people over the next decade.

Housing this new growth means supplying 213,000 new homes, or more than 21,000 new homes per year. Annual housing starts topped 25,000 last year and 27,000 predicted for this year.

Steady demand for new homes in the Greater Vancouver area over the last 30 years pushed average annual housing starts to the 30,000-plus mark. Finding land to build 30,000 new homes on in the next few years may become next to impossible.

It’s not that we don’t have an abundance of open space in the Lower Mainland. While densities have increased in recent years, especially in Vancouver‘s inner-city, our metropolitan region is still relatively sparsely populated. There’s considerable open space in the region in the form of expansive farmland in the Fraser delta and lower Fraser Valley. There’s also an abundance of forested mountainside land skirting the entire region.

However, we have made some conscious planning decisions, many of them with great foresight and wisdom, to limit sprawl, protect our valuable agricultural lands and preserve our precious natural eco-systems.

With external factors driving continued population growth and developable land in limited supply, land owners can continue to hold out for higher prices.

What’s the solution? Better utilization of developable land.

We need to use every square foot of developable land available and we need to be more resourceful and more creative in land use. Higher density development is one way of achieving this. Another is making use of land that might have traditionally been set aside for one use but is capable of accommodating alternate or multiple uses.

For example, under-utilized land owned by churches can be re-developed for housing, like the First Memorial Church project a few years ago at Burrard and 16th in Vancouver or the Blundell United Church project in Richmond where a new seniors’ residence was built in conjunction with a new church.

We need to look at creatively developing the last few remaining large tracts of land outside the agricultural land reserve, where sustainable development practices can be deployed to protect those things the community most values, but where development can be integrated with existing communities.

More than 20 years ago, a 500-acre plus tract of land in the middle of the developed Tsawwassen peninsula was removed from the Agricultural Land Reserve to relieve the shortage of developable land for housing in the Greater Vancouver area. It sits vacant to this day as an isolated open space in the middle of a suburban community.

Mountainsides on the north shore and in the northeast sector of the region are also logical places for more intensive development. Hopefully, revised streamside setback regulations will open up new avenues for more thoughtfully planned development in these areas.

Finding land to accommodate growth in our region is going to take some creative planning and sensitive development.

Bob Ransford is a public affairs consultant with COUNTERPOINT Communications Inc. He specializes in urban development issues. He is a former real estate developer and serves as a Director of the Urban Development Institute-Pacific Region. Contact him at [email protected]

© The Vancouver Sun 2004

OTTAWA — Housing starts are expected to reach 203,900 units this year, the third highest level since 1989, says Canada Mortgage and Housing Corp.

The projection is down from a 15-year high of 218,400 units in 2003, the agency said Thursday.

“Consumer confidence remains high while mortgage rates remain low by historical standards,” Bob Dugan, chief economist at CMHC, said in a statement. “These factors, combined with accelerated economic growth and continued job creation will contribute to the continued strong performance of the housing market this year,” he said.

“Gradually rising mortgage rates in the latter half of 2004 will also ease the pace of new home construction, particularly in 2005 when starts are expected to reach 191,800 units.”

The resale of homes is expected to be below last year’s record pace, the agency said.

© The Vancouver Sun 2004

OTTAWA — The value of building permits issued by towns and cities across the country topped the $50-billion mark in 2003 for the first time, says Statistics Canada.

“In total, municipalities issued $50.8 billion in building permits, up 7.5 per cent from the previous record of $47.3 billion set in 2002,” the agency said Thursday.

“It was the eighth consecutive year in which the value of permits increased. The torrid demand for new housing drove construction intentions to their new peak.

“Permits in the housing sector hit a record of more than $32 billion, up 8.3 per cent from the previous high of $29.6 billion, also set in 2002. Municipalities authorized 223,106 new dwellings in 2003, the highest since 1988, when 234,132 units were authorized.”

In the non-residential sector, builders took out $18.8 billion worth of permits, up 6.3 per cent from 2002.

Records were smashed in every province except Prince Edward Island and Alberta in 2003, the agency said.

Among 28 metropolitan areas surveyed, Toronto and Montreal were tops in annual growth calculated in dollars.

“Projects for industrial and commercial buildings were behind the gain in Toronto, while in Montreal the increase came from the very strong demand for new dwellings. The metropolitan areas of Oshawa, Ont., Winnipeg and Quebec also posted sizable gains.”

The agency also said that for 2003:

– Institutional construction intentions rose 1.5 per cent to $5.8 billion.

– Commercial intentions rose 7.8 per cent to $9.3 billion, their highest level since 1989.

– The industrial component rose 10.7 per cent to $3.6 billion.

– The greatest growth in dollar value was recorded in Toronto, where permits hit $4.2 billion.

– Non-residential permits in Calgary reached $1.0 billion.

© The Vancouver Sun 2004

OTTAWA — The housing boom should continue into this year, according to two federal agencies.

“Consumer confidence remains high while mortgage rates remain low,” said Bob Dugan, chief economist at Canada Mortgage and Housing Corp., which predicted yesterday that construction would begin on 203,900 homes this year, down from a 15-year high of 218,400 in 2003, but still the third-highest level since 1989.

“These factors, combined with accelerated economic growth and continued job creation will contribute to the continued strong performance of the housing market this year.”

The CMHC report also said B.C.’s housing starts are expected to remain solid this year and that it’s expected to be one of just two provinces that will see an increase in starts over 2004. The other is New Brunswick. (see table).

The upbeat forecast was issued as Statistics Canada reported most provinces and several cities “smashed records” in 2003 for both residential and non-residential building intentions, issuing permits for nearly $51 billion worth of construction, the first time the $50-billion mark has been broken.

“The torrid demand for new housing drove construction intentions to their new peak,” the agency said, reporting that residential permits soared to an all-time high of more than $32 billion — 8.3 per cent above the previous record high set only a year earlier.

And the boom continued through December, it said, noting the value of residential permits reached an all-time monthly high. “Home-builders will be busy at the beginning of 2004,” it predicted.

Meanwhile, non-residential permits issued last year also hit a peak of $18.8 billion, up 6.3 per cent from 2002, led by record institutional construction plans, and reinforced by strong commercial and industrial building plans.

In terms of total construction plans, all provinces, other than Prince Edward Island and Alberta, posted records, led by Quebec.

Leading the construction boom among cities were Toronto, thanks to industrial and commercial construction projects, and Montreal, as a result of strong demand for new dwellings. RBC economist Carl Gomez said total construction intentions in December were stronger than expected and capped off a banner year for the construction industry.

The harsh winter weather in January across much of Canada may have slowed the pace of construction last month, he said.

“Nevertheless, the low interest rate environment being supported by the Bank of Canada, along with a lack of housing inventory in some markets . . . continues to point to very healthy housing activity this year, although perhaps not the record-breaking activity we saw last year,” Gomez said.

CMHC also cautioned it expects interest rates will begin to rise in the latter half of this year, which, along with a more balanced market, will temper building activity towards year end, resulting in a further dip in housing construction next year to 191,800.

PROVINCIAL HOUSING OUTLOOK

2003 2004 2005

Total Housing Starts Actual Forecasts Forecasts

Newfoundland and Labrador 2,692 2,500 2,300

Prince Edward Island 814 750 700

Nova Scotia 5,096 4,100 3,800

New Brunswick 4,489 4,625 4,200

Quebec 50,289 48,000 45,200

Ontario 85,180 78,000 72,500

Manitoba 4,206 3,700 3,600

Saskatchewan 3,315 3,050 3,035

Alberta 36,171 32,200 29,500

British Columbia 26,174 27,000 27,000

Source: CMHC

© The Vancouver Province 2004

The landmark Westcoast Transmission office building — considered by architects to be one of Vancouver‘s most earthquake-resistant structures because of its unique design — will undergo a $20-million redevelopment to convert it into an upscale residential tower.

Spurred by the current hot demand for luxury condominium living along the city’s Coal Harbour waterfront, building owner Anthem Properties announced Wednesday it plans to replace the office space inside the existing 12-storey facility with 180 state-of-the-art condos.

Anthem president and CEO Eric Carlson said when his Vancouver-based company purchased the Westcoast building, at 1333 West Georgia, in 1998, it originally intended to keep it as rental office space.

Explaining his company’s business plan change, Carlson said: “We bought it as a revenue property, and it came with a blue-chip, long-term tenant — Westcoast Energy — occupying most of the building.

“When Westcoast merged with Duke Energy and restructured, we lost our major tenant. Our initial reaction was, ‘Let’s go find another one.’

“Then our market research told us the building is too far from the [city’s] core business district, and it would be a tough sell. In a [downtown Vancouver] market with 13-per-cent vacant office space, Coal Harbour just isn’t a good location for renting [premium] office space.”

Cognizant of the area’s attraction as a high-end residential community — in the past year, Coal Harbour condos have been selling at prices ranging from $400,000 to $6 million — Carlson said Anthem decided to transform the location from a drawback into a marketing opportunity.

“Just look at the quality of life,” Carlson noted. “An area that used to be railway tracks and welding sheds is now seaside bistros and bike paths.”

So Anthem brought in two marketing specialists, MAC Real Estate Solutions’ Cameron McNeill and Jason Craik, to evaluate potential for converting the building to condos.

“Our research tells us that it will be a very desirable place to live, and we expect demand for the new condos to be overwhelming,” McNeill said in an interview.

“It’s a landmark building, it’s got all the Coal Harbour amenities and Stanley Park nearby. This is the kind of project that sells out before you even begin construction.”

Said Craik: “The project does not make sense as a commercial building. The (Coal Harbour) neighbourhood has grown up around this landmark and today, it will be extremely valuable as residential space.”

While neither the design of the strata units nor the pricing has been finalized, McNeill and Craik expect to be offering studios, one bedrooms, one-bedroom-and-den, and two-bedrooms, all with nine-to-10-foot ceilings.

Prices are projected in the range of $450 to $600 per square foot, meaning a 1,000-square-foot unit would cost about $600,000.

Marketing is scheduled to launch in mid-March.

Anthem estimates 400 new jobs will be created when it begins construction on the conversion this fall, right after the last business tenants vacate their premises. Condo owners would take occupancy in mid-2005.

Carlson said the building is to be renamed “QUBE” to reflect its unique “cube on a pedestal” shape. The over-all appearance of the building will remain unchanged.

Designed by architects, William Rhone and Randle Iredale, and structural engineer Bogue Babicki, the Westcoast Transmission Building opened in 1969 as Westcoast’s head office.

The structure they adapted was that of a suspension bridge, hanging the floors from aluminum-clad steel cables draped over the top of the concrete core. This design provided greater earthquake resistance and column-free floor space.

Anthem’s decision to maintain the building’s exterior was applauded by Vancouver architect Robert Lemon, who is among the founders of a local group dedicated to preserving what it considers B.C.’s modern architectural treasures.

“The hanging pedestal design made it a modern classic from the day construction began,” Lemon said. “There are less than half-a-dozen like it around the world. Now the classic is being rejuvenated; the investment in this conversion will keep it modern and keep it vital.”

Anthem, which controls more than $600 million worth of residential, commercial or industrial real estate assets around North America, is owned by senior management and its parent, Anthem Works Ltd., a publicly traded investment company.

Its share price closed Wednesday on the Toronto Stock Exchange unchanged at $11.70.

© The Vancouver Sun 2004

Condominium and townhouse sales rose in January over the previous year, but a decline in transactions involving detached houses pushed Greater Vancouver’s residential property market slightly below levels of a year ago.

However, average prices continued climbing unabatedly, as the number of available homes remain at annoying low points for would-be purchasers.

The latest Multiple Listing Service figures, released Tuesday, show a total of 1,954 units in the three main housing categories changed hands in the Vancouver region last month, compared to 1,966 sales in January 2003, a difference of less than one per cent.

The inauspicious start to the year follows a record-setting 2003, when 37,901 homes were sold, four per cent more than the previous all-time high of 36,415 units sold in 1989.

Continuing its trend as the hottest ticket in 2003, condo sales in January increased 12.9 per cent over the same period a year ago, with 834 units snapped up, up from 739 units.

The average condo price in Greater Vancouver hit $230,500 last month, up 6.3 per cent from the $216,200 at 2003’s year end, and up 11 per cent from $206,200 in January 2003.

Townhouse sales in January rose 15.3 per cent to 332 units sold, compared to 288 units the previous year. Last month’s average price of $304,800 was 12.2 per cent higher than the 2003 year-end average of $292,600, and 21.4 per cent more than $251,100 the previous January.

Among detached houses, January MLS sales in Greater Vancouver dropped 16 per cent to 788 units sold, compared to 939 units the previous year. However, the average price kept rising, reaching $495,900 last month, up 4.4 per cent from $475,100 at 2003 year end, and up 17.3 per cent from $422,700 in January 2003.

Realtors largely blame escalating prices on a chronic lack of inventory, resulting in bidding wars breaking out over desirable properties.

“We can’t get enough new listings to keep up with demand,” said Robin Vrba, of Re/Max Real Estate Services. “We have problems finding purchasers anything to buy.”

MLS data show a total of 3,420 active listings of detached homes in January in Greater Vancouver, down 20 per cent from 4,316 units a year ago.

While townhouse listings remained stable at 1,001, compared to 1,017 units the previous January, condo listings plummeted 23 per cent to 2,447 units, down from 3,196 units.

In the six Fraser Valley communities, a total of 1,025 housing units were sold on the MLS last month, a marginal decrease from 1,034 units the previous year.

Active listings fell 5.3 per cent to 5,354 units, compared to 5,656 in January 2003.

Year-over-year, the valley’s average detached price hit $328,100 last month, up 13.6 per cent from $288,800. January’s townhome average of $204,600 represented a nine-per-cent increase over $187,800, while the condo average of $122,000 was a slight improvement over $121,200 a year ago.

“Prices are continuing to increase throughout the valley,” said Reg Davies, president of the Fraser Valley Real Estate Board. “Despite that, the Fraser Valley still offers very attractive properties at a reasonable cost, and relative to other areas, you get a lot of value for what you pay here.

“Needless to say, we’re very optimistic about the upcoming market this year.”

© The Vancouver Sun 2004