Number of starts higher for single-family homes; multi-family figure drops
The value of approved building permits for both Vancouver and B.C. was up significantly in April both from April 2012 and March 2013.
Photograph by: Don Healy , Regina Leader-Post
As housing starts continue their ho-hum-but-steady pace through 2013, a surge in the number of building permits shows stronger numbers might be around the corner.
The six-month trend for housing starts in Metro was nearly identical in May, at 16,324 units started, compared with April, at 16,370 units started, Canada Mortgage and Housing Corporation reported Monday.
The seasonally adjusted annual rates are down significantly from April to May, however, reflecting a swing from 17,986 in April to 14,690 in May.
“Because May 2013 was down in terms of construction from May 2012, that will show in the (seasonally adjusted annual rate) numbers,” said Lance Jakubec, CMHC’s senior market analyst for Vancouver. “Let’s say there were similar declines going ahead for the next five months; that would start to be a trend.”
The trend is used to balance monthly fluctuations, and reflects a stable, moderate market that is in line with CMHC’s forecasts, Jakubec said.
The number of starts was up for single family homes, while the number of multi-family home starts dropped, CMHC reported.
Jakubec said there are some communities, such as Burnaby, the University Endowment Lands and North Vancouver City, where the multi-family starts were higher year-over-year, but that the market is generally stable across Metro.
“There are multiple sub-markets and stories happening across the Lower Mainland that just get rolled into that single number,” Jakubec said. “When you see that single number for Metro Vancouver, it’s really important to think what is the story of Vancouver versus Surrey versus Coquitlam, all of which are in the Lower Mainland, but all of which really function as their own markets.”
Meanwhile, the value of approved building permits for both Vancouver and B.C. was up significantly in April both from April 2012 and March 2013, Statistics Canada reported last week.
Bob de Wit, CEO of the Greater Vancouver Home Builders’ Association, said his members are optimistic about the housing market in Metro.
“The election was a bit of a surprise to everybody … but I think that post-HST and post-election, there is a lot of optimism out there on the builders’ side and that is going to lead to projects moving ahead quicker than they might have otherwise,” de Wit said. “There is optimism that the economy will continue to be strong and that people will be buying homes.”
He also said that the resale market numbers are improving.
“On the resale side, you’re seeing more uptake from buyers — partly seasonal — and when you see more balance in the market it also encourages new construction.”
There is normally a lag of about three months between the time a building permit is approved and the actual housing start for a multi-family development, said Bryan Yu, an economist for Central 1 Credit Union.
“We won’t be seeing that for at least a few months going forward,” Yu said.
But Yu doesn’t think the positive building-permit numbers represent a return to a red-hot real estate market.
“On the multi-family side, these projects have been planned quite some time ago. It’s not as though these are projects that are just planned in the past year, it’s probably at least a few years now,” Yu said. “I think it’s an anomaly. I do think the housing starts will probably tail back in the next few months.
“The overall environment for the housing market isn’t that strong right now. There’s not as much demand for new home construction going forward given the levels of inventory in the market.”
Yu said B.C. is losing people to other provinces and that not as many international immigrants are coming to the province as they did five years ago. On top of that, employment growth has been “treading water,” retail sales are slow, and the mortgage-rule tightening has dampened demand, Yu said.
“I think given where the economy is … you’re not seeing the environment that’s conducive to a lot of housing demand growth,” Yu said. “If there is demand, there is also quite a bit of inventory in the market still.”
But Yu doesn’t see a sharp drop-off in the housing market either. He said that while not many jobs have been added, not many have been lost either, and mortgages in arrears are quite low.
“People are not really financially in trouble. You’d have to have a significant economic shock, whether it be a big, sharp increase in interest rates or recession-induced job losses that would cause individuals to divest of their homes, or to take any amount they can get for their homes,” Yu said. “We just don’t see that happening.”