Construction industry reeling as buyers and money supply dry up
Jon Ferry
Province
Andrew Blais outside one of six homes he built in Surrey. Interest in the $999,999 house has vanished.
We live in hard times. Exactly how hard, I’ll leave it for the economists to decide. But, as former U.S. president Harry Truman noted: “It’s a recession when your neighbour loses his job; it’s a depression when you lose yours.”
Just how bad is it in Metro Vancouver? Well, if you have a government job, you’re probably sitting pretty. But if you’re in, say, the home-building business, you’re anywhere from becoming antsy to being in a cold sweat.
Just ask 36-year-old Surrey builder Andrew Blais. He’ll tell you it’s the worst he’s encountered since he got into the business in 1991.
The housing market was roaring along last year and earlier this year while Blais, the father of two children, was building six high-end houses in Fraser Heights and south Surrey. Interest was high. Potential customers were ooh-ing and aah-ing about the prospect of trading up to their spacious new dream home. And he was hoping to cash in.
Then, three or four months ago, whammo. The sudden downturn hit Blais, well, like a ton of bricks.
“I’m sitting on six houses that are three months on the market with zero offers, which is just astonishing for me, because I’ve never encountered such a thing, ever,” he told me.
Blais estimates prices for new homes have come down 15 to 20 per cent, if they are selling at all. Which has meant sleepless nights when he wonders not just how he missed the boat, but if he’ll stay afloat. It’s the same for other builders he talks to.
And it’s getting to be the same for tradespeople, too. It’s gone from Blais having to contact excavators, framers and roofers to ask them to do a job to them phoning him, looking for work.
Money for project financing is tight: “Banks want your first child, almost, now to secure stuff, where before they were just giving it away.”
Greater Vancouver Home Builders Association CEO Peter Simpson agrees fear has now seized the Metro Vancouver housing market. People are not buying, despite bargain-basement mortgage-interest rates — and the fact that there are some screaming buys out there.
“Homes are on sale right now, and yet people are still fearful,” he says.
What can be done about it? Well, Simpson believes federal, provincial and municipal governments can all do their bit. Ottawa can adjust the GST-rebate threshold, Victoria can cut the property-transfer tax, and municipal governments can lower their development fees.
All told, these can add 10 to 15 per cent — and perhaps more — to the cost of a new home, scaring off would-be buyers. “Now is the time when they [governments] need to be looking at these things,” Simpson says.
I agree. Politicians need to appreciate that housing is one of the key drivers of our economy. It’s not just big labour groups such as the auto and forestry workers who need a leg up.
How hard is it out there in Metro Vancouver? Only as hard as our governments want to make it.
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