Trades are working at full capacity
Bruce Constantineau
Sun
A strong increase in multiple-family housing starts throughout Greater Vancouver last month offset a decline in single-family home construction so the total number of starts increased by more than 12 per cent over July 2004, Canada Mortgage and Housing Corp. reported Tuesday.
But total housing starts during the first seven months of 2005 remain nine per cent below last year’s total as builders work at full capacity to keep up with demand.
“Demand remains very robust,” CMHC senior market analyst Cameron Muir said in an interview. “The decline in starts is more a sign that the capacity of the industry has been reached. There are about 18,500 housing units under construction throughout Greater Vancouver now and builders are extremely busy completing those projects.”
CMHC said single-family starts in Greater Vancouver fell by 14.2 per cent in July to 458 but the number of multi-family starts rose by 27.2 per cent to 1,187.
So far this year, Greater Vancouver housing starts have fallen by nine per cent to 10,219 units but the total number of B.C. starts has dipped by just 1.6 per cent to 17,287 units as building activity in communities like Kelowna and Victoria runs ahead of last year’s pace.
Muir expects the number of Greater Vancouver starts this year will come close to the 19,400 units that were built in 2004 while B.C. starts are forecast to be slightly higher than the 33,000 units that were constructed last year.
He said the housing market is currently experiencing a “second wave” of consumer demand, supported by strong economic fundamentals like job growth, population growth and low mortgage rates. The first wave of consumer demand was a release of pent-up demand that accumulated during the late 1990s, Muir said.
He said builders are constrained by a decline in the supply of good development sites and in Vancouver, they’re now considering properties in Gastown, Chinatown and southeast False Creek.
“Those projects won’t be as large as other developments and many of them will be mixed use, with some form of social housing component, so they’ll take longer to finish than more conventional projects,” Muir said.
Greater Vancouver Home Builders chief executive officer Peter Simpson said the number of new single-family starts has fallen by about 20 per cent this year because single-family homes are so expensive, starting at around $350,000 and up.
He said home builders face stiff competition for skilled trades people now from commercial and industrial projects and from a very active home renovation market, where spending is expected to top the $6-billion mark next year. Simpson noted total housing starts this year should still come close to last year’s total, which was the best year in a decade.
“I have not heard one complaint from anybody [about a slowdown in home construction],” he said. “Complete projects in Arizona and California have been delayed indefinitely until they sort out the trades shortage but we’re not at that point.”
© The Vancouver Sun 2005
