Starts for multiple units offset a decline for single detached homes

Michael Kane
Sun

January’s growth is attributed to a 51-per-cent increase in multiple unit construction which offset a 36-per-cent decline in single detached starts. Photograph by : Vancouver Sun file

Housing starts in Greater Vancouver were up a whopping 22 per cent in January compared with the same month last year, confounding experts anticipating a modest slowdown as more buyers are priced out of the market.

However, January last year was a relatively slow month and multiple starts tend to be highly volatile from month to month, cautioned Robyn Adamache, senior market analyst with Canada Mortgage and Housing Corp. in Vancouver.

January’s growth is attributed to a 51-per-cent increase in multiple unit construction which offset a 36-per-cent decline in single detached starts. A total of 1,093 multiple units and 234 single detached units were started in the month.

Although demand for new homes is expected to remain strong in the year ahead, Adamache doesn’t expect January’s rate of growth to be sustained.

She said CMHC is calling for about 4.0 per-cent growth in starts in the Vancouver metropolitan area this year, pushing the total above 19,000 compared with 18,705 in 2006 and 18,914 in 2005.

Helmut Pastrick, chief economist with the Credit Union Central, suggested January’s numbers were a “temporary pop upwards.” He expects starts to moderate this year as high costs price out more buyers.

“We have seen sales decline fairly steadily for the past 12 to 18 months which I think is mainly due to the affordability squeeze affecting low-equity buyers, first timers and the like,” Pastrick said.

“It could also be that we are seeing less investor activity but that’s harder to get a handle on. It wouldn’t surprise me if we did see fewer smaller investors buying condos.”

The Greater Vancouver Home Builders’ Association is also expecting a moderate decline in starts this year compared to last year, with prices climbing seven to nine per cent, said chief executive Peter Simpson.

“It will still be a very healthy year in historical terms. You only have to go back to the year 2000 to see when we only did 8,000 housing starts.”

Simpson said three months of poor weather probably accounted for January’s decline in single detached starts. That would jibe with CMHC’s national numbers which show B.C. and Alberta lagged the pace of starts in the Atlantic and Central regions which were buoyed by unseasonably warm weather.

National numbers “blew the roof off expectations” with starts surging to 249,300 units, their highest level since March 2004, Pascal Gauthier of TD Economics said in a release.

Gauthier also expects starts to ease in line with economic fundamentals which, although positive, “don’t support such lofty levels of homebuilding activity.”

Across British Columbia, urban housing starts increased 21 per cent to 2,611 units in January, compared to the same month last year.

© The Vancouver Sun 2007

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