House building falls to seven-year low

Garry Marr
Province

The housing sector, reeling from declining existing home sales, was dealt another blow Monday with news that new home construction hit a seven-year low in November.

Canada Mortgage and Housing Corp. said there were 172,000 units built last month on a seasonally adjusted annualized basis, down from 211,800 in October. It was the lowest level for housing starts since November, 2001.

“The resale market is having an impact [on new home construction],” said Julie Taylor, a senior economist with CMHC. “People have a large supply of choice. Before they were not finding what they wanted in existing homes so they were moving into new homes.”

The Canadian Real Estate Association said 32,048 existing homes were sold in October on a seasonally adjusted basis, a 14% decline from a month earlier. The last time sales fell that sharply was June, 1994.

New home construction appears to be headed for the same decline. Last month’s numbers saw a 29% drop from October for urban multiples, which includes the volatile condominium sector.

There is a sense from builders that this month’s numbers are just the beginning. “Housing starts are a lagging indicator. It will get significantly worse,” said Brian Johnston, president of Monarch Corp.

Mr. Johnston predicts some projects in the condominium sector that were originally counted as starts when ground was broken will end up not counting when the projects are cancelled. “Everybody is waiting with bated breath for that,” he said.

The industry has been bracing for a decline in demand and cutting back construction, according to John Kenward, chief operating officer of the Canadian Home Builders’ Association.

“Builders have been making the necessary adjustments,” said Mr. Kenward. “It is coming down faster than we would have anticipated.”

Derek Holt, senior vice-president of economics at Scotia Capital, said while new home construction is beginning to fall he does not see it as an “implosion” and says it’s probably a healthy reaction to the slowing economy.

“We don’t want what U.S. homebuilders did,” said Mr. Holt, referring to a large buildup of inventory that has gone unsold in many American markets. “We remain of the view that while Canada’s housing market has been in a year-long correction, the magnifying effects of high economy-wide leverage are not as much of an issue in Canada as in the U.S.”

Paul Ferley, assistant chief economist with RBC Economics, also emphasized the decline in construction starts in Canada pales in comparison with the United States.

“Relative to an annual peak in starts of 229,000 in 2006, the level of activity in November is down 24%. In the U.S., the most current level of starts for October 2008 of 791,000 is down a phenomenal 62% from the annual peak of 2.073 million units reached in 2005,” he said.

CMHC is predicting there will be 212,000 new starts this year but by next year they will fall to 178,000, the first time in seven years the figure has dropped below 200,000. Most economists seem to agree with that assessment.

“After showing a great deal of resilience over the past year, the Canadian housing market is cooling. With our expectation that homeowners will be facing tight credit conditions and a softening market over the next two to three quarters, the rapid rate of growth in housing starts seen early in the decade — which was simply not sustainable — is likely to continue to unwind,” said Dina Cover, an economist with TD Bank Financial Group.

© Copyright (c) National Post

 

Sun

BCTV News Clip Dec. 8, 2008 re: Housing Bubble – People walking away from pre-sale deals

Ozzie Jurock F.R.I.
Sun

We say it every year … if you have to sell do not worry about the time of year. Properties do sell in December. Some Realtors (myself included — in an other lifetime) have their best month of sales in December. So, realtors and owners remember: Here is the seller … so … he has to sell now. He must move soon but alas, he is told, December is a bad month to sell. What with Christmas and all, no one comes out looking. And the wisdom is, that the average realtor has gone skiing anyway and the seller keeps hearing that no one buys zover the season anyhow. Well, if you want to/must sell, think again.

Realtors know that, while you do not want to have anyone tromping through your home on Christmas day, those that are out looking in December are serious buyer types. They are also definitely moving — and soon. Houses and property do sell in December. So, realtors and property owners remember: Since most sellers believe no one is looking, fewer homes are being put up for sale, therefore there is less competition. Major Points to consider before hiring a Realtor: Make sure to list your property with a Realtor who is around — but tell him/ her not to book appointments on the days when you want peace, Christmas/ Boxing day, etc., however you want Realtors to know that your

home is for sale. Make sure your Realtor and/ or his company does not stop advertising over the holidays because they are expecting less business.

Major Points for your property: Put up those Christmas lights — everywhere. For a $ 20 to $ 40 dollar investment, even the most tired looking home can look great at night. Put up that Christmas tree early. Remember buyers are looking for a home. Nothing like conveying that homey feeling with presents under the tree. Have that wonderful baked cookie smell. If you don’t bake cookies simmer a cinnamon stick in water before buyers come — great aroma. Put the Christmas wreath on the door early and poinsettias through the house. You need them anyway. Said Marty Douglas, illustrious branch Manager of Coast Realty Group in Comox “ Each year I send a memo to our sales staff urging them not to give into the Christmas spirit ( spirits?) too soon because there is always a strong and very qualified group of buyers during the holidays. Competition to buy is less, buyers are more serious, and sellers know that an offer in December may not come around again until March. And every year we do the most surprising deals in December”. Indeed. There is nothing like showing a home at its sparkling best with less competition. Go against the trend — consider December.

Where old and new intersect

Sun

Quebec Corner Project location:

Vancouver Project size: 9 townhouses Residence size: 854 sq. ft. – 1,269

sq. ft. Prices: $ 538,900 – $ 739,900 Sales centre: 3086 Quebec, Vancouver Hours: 2 – 5 p. m. Sat – Sun; weekdays by appointment Telephone: 604-805-1804 E-mail:

chris. lotoski@ macrealestate. ca Web: quebeccorner. com Developer: Summit Development Architect: b2architecture inc. Interior: Christina Oberti Interior

Design Occupancy:

Mount Pleasant,

Immediate h e Q u e b e c C o r n e r townhouse project is the latest marker of change in the Vancouver neighbourhood of Mount Pleasant.

The neighbourhood is primarily composed of single-family, Arts and Crafts or Craftsman homes.

But to view the nine Quebec Corner residences, located one block west of Main, on Quebec at 15th Avenue, you might conclude that the look of future for the neighbourhood might be modern contemporary.

“I think the demographic of Main Street is a young, hip, urban demographic. They are drawn to contemporary design,” says Ian Doddington, chief executive officer of Summit Development.

“I believe this is the first of many to come [ contemporary buildings] to this area. It’s a very young, eclectic experience along Main Street and these buyers aren’t interested in buying an Arts and Crafts home.”

The developer started Summit eight years ago and has been developing mostly three and four-plexes on the west side of Vancouver on infill lots. Quebec Corner is the largest multi-family infill project the company has built.

Doddington acquired the site and tore down an older fourplex to build the nine townhomes, three of which are sold.

Although this particular area in Mount Pleasant does have older, multi-family apartments nearby, Quebec Corner does stand out for its stylish design. The striking architecture, by b2architecture inc., is sleek and modern with large windows, metal balcony railings and an attractive wood soffit. The garden suite apartment on the south side has two generous size outdoor areas behind a contemporary wood slat gate.

“I think people welcome an option to living in a stereotypical condo tower where it’s very anonymous with no sense of community,” says Doddington, pointing out he lived for five years in a Yaletown condo tower without ever having met his neighbours.

Quebec Corner, with its selfmanaged strata, will likely result in homeowners getting to know one another and having more pride of ownership, he says, adding strata fees are low and range from $ 140 to $ 200 a month.

The homes themselves are selling from $ 538,900 to $ 739,900 and are located on a quiet residential street. So while there are literally hundreds of shops, restaurants and other services nearby there’s no serious traffic outside the homes, says Doddington.

“ It’s almost a Yaletown experience [ in the neighbourhood] here because of all the amenities on Main Street,” he says.

The interiors of the homes also mimic a high-end Yaletown condo, with wenge kitchen custom cabinetry, glass tile backsplash, double thick, quartz countertops with breakfast bar and stainless steel appliances.

Flooring on the main is real bamboo hardwood, while the rest of the homes are carpeted, except for the bathrooms, entryway and laundry area which have large format — 12 by 24 inches — porcelain tile.

The master bedroom has quartz countertops in the ensuite and radiant infloor heating. Most of the homes have nine-foot ceilings and in some cases vaulted ceilings and skylights.

When the Vancouver neighbourhood of Mount Pleasant was young, the trans-Atlantic predecessors of today’s townhouses were anything but the open-plan shafts of natural light and ventilation in which the Quebec Corner households will reside.

One other attribute of today’s townhouse is nicely demonstrated in the Quebec Corner show home: In putting nine homes where there were once four every cubic — not square — inch of the replacement space matters. From cook-top to table top, from drinks before dinner to dining table, from garage down to bedrooms up, economy of movement is paramount. An example of the economies of space that a household can undertake is found on the bedroom floor. The second bedroom is a guest bedroom and home office. The scene outside the master bedroom speaks of Mountain Pleasant’s detached-home past. 

© Copyright (c) The Vancouver Sun

The local slowdown should not be confused with the collapse in the U. S.

Dave Watt
Sun

In recent months, economists have had the unenviable task of trying to calculate the direction the housing market is likely to take, factoring in things like unemployment rates, population and immigration figures, economic growth, mortgage rates, and that most nebulous of criteria, consumer confidence.

They agree that the decrease in housing sales and prices bears little relation to the economic indicators in British Columbia. What has changed is public perception of our financial security, triggered by the troubled global financial markets.

As realtors, people are asking us to help make sense of the housing market.

Sellers are asking if the market value of their home is decreasing. Buyers want to know if they should wait for further price reductions. Homeowners not in the market to buy or sell want to understand the impact on their equity, which may affect decisions like plans for renovations.

Investors are asking about shortterm impact — is it a good time to buy, renovate, and re-sell for a profit? And long-term impact — is quality real estate now available at lower prices? First-time buyers want to know how much they need for a down payment, whether they can afford the monthly mortgage payment, and if they can get financing in these uncertain times. There are no easy answers. Around the Lower Mainland’s kitchen tables, realtors are helping people assess their individual situations.

Circumstances cause each of us to make decisions despite uncertainties related to global economies and politics. Someone gets a job in another city. A family must consider estate planning for a parent. A young couple wants to start investing in their own home, rather than renting.

Our MLS statistics and housing price index ( HPI) tell us that, since May, residential home sales and prices have been decreasing. After five years of unprecedented growth in home values in the Lower Mainland, that’s not particularly surprising or necessarily unwelcome.

Between 2003 and 2008, the HPI benchmark price of a detached home in Greater Vancouver increased nearly 70 per cent to $ 761,000 from $ 449,000. Condominiums over the same period increased 82 per cent to $ 387,000 from $ 213,000.

Left unchecked at this rate, by 2013 the benchmark price of a detached home would top $ 1.2 million and condos more than $ 700,000.

Current trends offer moderation to a market where affordability, for much of this decade, was eroding, making home ownership unattainable to an expanding segment of our community.

Since May, residential home prices have declined 12.8 per cent, resulting in an 8.3-per-cent year-todate price reduction for detached, attached and apartment properties across Greater Vancouver.

These moderating home prices should not be confused with the U. S. housing downturn. Since 2005, prices in the U. S. have been edging downward owing in large part to imprudent subprime lending practices.

Mortgages in Canada are tightly regulated and underpinned by a solid banking structure. The World Economic Forum recently identified Canada as having the world’s “ soundest” banking system.

The local real estate market is not immune to global economic challenges; however, Canada’s disciplined lending structure has kept the mortgage landscape steady in these uncertain times.

While the current rate of foreclosures in the U. S. is nearly five per cent, only 0.28 per cent of mortgages in Canada are in arrears, a proportion that is not only low but steady, according to the Canadian Association of Accredited Mortgage Professionals ( CAAMP).

Low prices are not the concern as much as the view that prices are falling. Buyers are waiting to see of the real estate market has hit bottom.

Identifying the “ bottom” of a market is difficult, given that certain variables must remain constant to attain real savings.

For example, interest rates must remain low and that perfect house must remain available at an acceptable price.

Most of us sell a home and buy a home within the same market; while we may be selling at a lower price, we’re also buying within that lowerpriced market.

Deciding to buy or sell a home should be a milestone moment based on your financial and personal circumstances, and the market conditions within your neighbourhood of choice. For those whose finances allow it, there are excellent opportunities in today’s housing market. This is a good market for long-term investors.

The Real Estate Board of Greater Vancouver has existed for nearly 90 years and witnessed numerous market cycles. Sales increase and decrease. Prices go up and down. Historically, the values at the peak of the next cycle inevitably surpass the ones before.

Dave Watt is president of the Real Estate Board of Greater Vancouver.

StatsCan report finds this province has recorded steepest decline

Derrick Penner
Sun

Home builder Norm Couttie is busy putting up 200 condo and townhouse units in four projects around the Lower Mainland right now, but isn’t so sure what 2009 will be like.

That is indicative of the residential housing sector, which saw the value of residential building permits drop substantially in October from September, according to a report from Statistics Canada.

“We’re just like everybody else,” Couttie, president of the development firm Adera, said in an interview. “Our main job is to finish what we’ve got on the go, and when we get closer to finishing we’ll be able to look ahead and see more clearly what’s going on and make our decisions.”

Couttie said Adera “will obviously give serious consideration” to what projects will start in 2009.

Pre-sales of new homes are sluggish, said Peter Simpson, CEO of the Greater Vancouver Home Builders’ Association, and sales are what will dictate future starts.

In October, the value of residential building permits issued to contractors in B.C. fell almost 27 per cent to $428 million from September, Statistics Canada reported, the steepest decline among provinces.

In its first measure of construction intentions since the beginning of the economic turmoil, the federal data-gathering agency said the value of residential construction dropped by 7.8 per cent nationwide from September to October.

B.C. did see an almost 38-per-cent jump in non-residential permits issued in October compared with September — $435 million vs. almost $328 million — which helps absorb some of the loss, but doesn’t offset all of it.

The value of all permits issued in B.C. totalled $863 million in October, a 5.2-per-cent decline from September.

Simpson said the home-renovation sector of construction, which is expected to grow in 2009, will also absorb some tradesmen.

However, with Canada Mortgage and Housing Corp. forecasting 16,500 new housing starts for 2009, compared with an average of 19,000 starts per year over the past five years, Simpson said there is a growing concern that construction workers will see longer lags between jobs.

“As these projects are shelved, so are the jobs that normally go with them,” Simpson said.

The construction sector is already seeing rising unemployment, said Philip Hochstein, president of the Independent Contractors and Business Association of B.C.

Hochstein said the unemployment situation will become more acute by the end of 2009 as more projects that are underway now come to completion without a growing number of projects to follow them in the pipeline.

“You’re forever working yourself out of a job in construction,” Hochstein said. “That’s okay when there’s another job down the road. There just doesn’t seem to be those jobs [coming] on the residential side.”

The bump in non-residential construction will help offset some of the downturn in residential construction, Hochstein said, but not all of it.

He said pending announcements from promised provincial infrastructure spending will help the industry, which will be able to respond with competitive prices.

“In the past, [government projects] might have seen two or three bidders,” Hochstein said. “Now, there will be six, eight, nine.”

Keith Sashaw, president of the Vancouver Regional Construction Association, said moderating commodity prices are bringing the cost of building materials down, and the growing availability of labour “should make projects that were marginal before more viable.

“The industry is coming off one of the strongest and most prolonged periods of expansion that we have ever experienced,” Sashaw said, “and the underlying fundamentals of B.C. are among the strongest in North America.”

© Copyright (c) The Vancouver Sun

 

Value falls everywhere except Quebec, Nfld.

Province

OTTAWA — The value of Canadian building permits dropped 15.7 per cent to $5.4 billion in October, Statistics Canada said yesterday.

“Construction intentions fell in both the residential and non-residential sectors, and in all provinces except Quebec and Newfoundland and Labrador,” the federal agency said.

Building permit values fell in eight provinces in October, the agency said.

The biggest declines were in Ontario, which saw a 24.8-percent drop to $1.8 billion, Saskatchewan, which plunged 58.7 per cent to $138 million, and Alberta, which posted a 17.5-per-cent drop to $844 million.

Those declines were mainly in the non-residential sector, Statistics Canada said.

“In contrast, all three provinces recorded increases of at least 10 per cent in September,” it said.

Meanwhile, Quebec saw values rise 8.5 per cent to $1.3 billion, led by construction permits in industrial and institutional buildings, the agency said. “Newfoundland and Labrador also reported an increase as a result of gains in commercial intentions.”

Overall, non-residential permits fell 23.9 per cent to $2.4 billion in October — reversing a 41-per-cent rise in the previous month.

“October’s decrease occurred mainly as a result of a decline in non-residential components in Ontario, Saskatchewan and Alberta,” the agency said.

Single-family permits declined six per cent to $2.0 billion, the fourth straight monthly drop.

“It is clear that the pace of both housing activity and commercial building activity is quickly throttling back as the economy cools. Though the magnitude of the declines in October are unlikely to continue . . . the trend is certainly well entrenched,” said Charmaine Buskas, economics strategist at TD Securities.

“This suggests that building activity will not contribute to growth as the correction continues to unfold.”