Metro Vancouver single-family housing starts rise, but multi-family still down

Oct. 10, 2009 | Market Update | By Aaron Rossetti

VANCOUVER SUN - Derrick Penner - Metro Vancouver's ailing residential housing sector showed another sign of recovery in September with starts of single-family homes for the month outpacing the number started in the same month a year ago, Canada Mortgage and Housing Corp. reported Thursday.

Total September starts of all housing types for the region were still less than half of what they were a year ago, but the federal housing agency noted that the numbers have kept rising from extremely low levels earlier in the year, and the bump-up of single-family starts is a positive sign.

"I was a little bit surprised [at the jump]," CMHC analyst Robyn Adamache said in an interview. "It's the first month [this year] that we've seen a year-over-year increase in anything, so it's good news."

Adamache surmised that the reason single-family developments are seeing a bit of a jump is because they are projects where builders can be more flexible in how they phase them, building only the units they are able to pre-sell, meaning there is less risk associated with them.

Metro Vancouver saw 369 single-family homes started in September, up from 337 a year ago.

Within that number, Surrey accounted for the largest number - and the biggest jump - with 191 single-family starts, compared with 140 a year ago.

Peter Simpson, CEO of the Greater Vancouver Home Builders' Association, said his group's members have been able to presell homes over recent months and roll those sales over into new starts, which makes them a lot happier about conditions now than they were earlier in the year.

"I haven't had anybody complain to me for some time now," Simpson said. "The only thing they're complaining about now is the [harmonized sales tax]."

Builders have been able to make sales by slashing prices, but Simpson added that in some areas builders are seeing prices creep back up to levels they were able to sell at at this time a year ago.

In other data released Thursday, realty firm Royal LePage said prices in home resale markets across Canada have recovered much of what they lost in last year's financial meltdown, although homeowners should be careful not to misinterpret what is going on.

Royal LePage said the "increase in sales activity and firming of house prices are the product of a normal market correction and not the beginning of another aggressive expansionary cycle."

"There is the illusion of a boom in the market, but in fact what we are experiencing is the end of a normal, short-term correction," said Royal LePage CEO Phil Soper said.

In Vancouver, Royal LePage noted that average home prices had increased 14 per cent since January, although they still remain at levels below their peak in early 2008.

On Vancouver's west side, Royal LePage's survey found an average $1.05-million average price for detached bungalows in the third quarter of 2009, which is the same as it was in the same quarter a year ago. Standard condominium prices on Vancouver's east side, however, at $357,000, were almost nine per cent higher than a year ago.

For new-home construction, Adamache said the rise in starts is an extension of rising sales numbers and tighter supply conditions in the region's housing resale market, which is spilling demand into the new-home market.

While starts are generally low, about 41 per cent of the homes that builders have started were begun in the second quarter.

However, September's multi-family starts were still down more than 70 per cent bringing the total number of starts for the month, at 858, to not quite half the number started in the same month a year ago.

For the year to the end of September, Metro Vancouver had seen 5,644 housing starts, which was down 64 per cent from the 15,664 started in the same period a year ago.

Across B.C., builders started work on 1,467 new homes in September, down about 53 per cent from the same month a year ago.

For the year to the end of September, builders started work on 9,316 new homes, down almost 64 per cent from a year ago.

The pace of construction in September was slower than in August, but still represented an improvement over earlier in the year.

"The improving trend in single-detached home starts demonstrates there is underlying strength in new-home construction," said Carol Frketich, Canada Mortgage and Housing's regional economist.