Because of all the baby boomers, renovations are coming up the middle
Jim Jamieson
Province
Townhome construction continued yesterday on Yukon Street at 11th Avenue near Vancouver City Hall. Photograph by : Arlen Redekop, The Province
New-home construction in B.C. is headed for a soft landing, says a forecast released yesterday by Canada Mortgage and Housing Corp.
But you’d never know it from the current building climate, said Surrey-based contractor Gary Friend.
“The stats are saying that the market will return to balance, but my sales are still strong and I don’t see any sign the market is dramatically changing,” said Friend, whose South Ridge Developments builds primarily in the Port Coquitlam-Maple Ridge-Pitt Meadows area.
“I’m very confident in the market. We had to level off at some point, but with the shortage of trades people and the shortage of land we don’t see a change in the market.”
CMHC is predicting that Canadian housing starts will moderate in 2007 to 209,500 from 227,395 units in 2006. In B.C., housing starts are forecast to drop to 34,700 this year from 36,443 in 2006, while softening further to 32,300 in 2008.
Peter Simpson of the Greater Vancouver Home Builders Association said the the residential construction industry will also continue to be busy due to an ever-increasing demand by homeowners for renovations. Simpson said the renovation market in B.C is expected to be worth $6 billion this year.
“Coming up the middle with all the baby boomers are renovations,” he said. “When we start talking about the competition for trades, don’t forget renovators need plumbers, electricians and carpenters, too.”
Bob Dugan, chief economist at CMHC, said most of the demand that built up during the 1990s has been absorbed, and higher mortgage-carrying costs due to continued strong price growth, and modest increases in mortgage rates, will contribute to the slower pace of new-home construction.
“During most of the 1990s across Canada there were about 150,000 housing starts. At the same time, there were about 185,000 new households springing up in Canada,” he said. “As economic conditions aligned to favour housing demand, these conditions really set the stage for a strong housing market.
“Because of the erosion of pent-up demand, low mortgage rates aren’t going to be able to generate as much new demand as in the past.” Dugan said higher home prices haven’t discouraged buyers as much as they have changed purchasing habits.
“The high prices we’ve seen in recent years is changing the composition of housing demand,” he said. “A couple of years ago, most of the strength was on the single [family detached] side, whereas now more and more we see multiple-family homes gaining market share in total starts.”
Existing home sales were near record levels in 2006 but will ease to 464,550 units in 2007 and to 449,200 units in 2008, CMHC said.
Growth in house prices is also likely to fall in B.C., the report said. It forecasts a 6.8-per-cent increase in average house price in 2007, down from 15.5 per cent last year, and predicts a quarter-point increase in mortgage rates between now and the second quarter of 2008.
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HOUSING STARTS OUTLOOK
National B.C.
2006 227,395 36,443
2007* 209,500 34,700
2008* 195,500 32,300
* Forecast
© The Vancouver Province 2007
