Metro Vancouver housing starts strong despite slowing sales Number of units being built year-to-date more than 10 per cent higher than 2011
Metro Vancouver housing starts strong despite slowing sales
Number of units being built year-to-date more than 10 per cent higher than 2011
residential housing units are being built this year than last,
according to Canada Mortgage and Housing, despite sluggish home sales.
Photograph by: Ian Smith
, Vancouver Sun
is going strong in Metro Vancouver, even though home resale prices are
dropping slightly and sales activity is significantly below historical
Metro Vancouver housing starts in were on pace in
September to reach 20,000 units by year’s end, mostly driven by
multi-family developments, Canada Mortgage and Housing Corporation
There were 293 single-detached housing starts
and 1,423 multi-family housing starts in September 2012 — numbers
similar to last year’s. Year-to-date, total starts have reached 14,828
units, compared to 13,260 for the same time period last year, CMHC
“Full-time employment gains have supported housing
demand so far in 2012,” said Robyn Adamache, CMHC’s senior market
analyst for Vancouver. Continuing low mortgage rates and population
growth are also keeping the numbers high, although global economic
uncertainty is tempering the agency’s projections for 2013, when they
expect housing starts to remain flat.
September’s benchmark price
for residential properties in Metro Vancouver fell 0.8 per cent to
$606,000 compared to last year, according to the Real Estate Board of
Greater Vancouver. But Scott Brown, senior vice-president of residential
project marketing at Colliers International, said values for new home
sales are not dropping.
“No one is doing any severe discounting —
the developers are not in a position where they have to lower prices,
but the odd one that’s trying to just jump-start their fall campaign is
offering some incentives,” Brown said. “You’re seeing more deal-making
going on to try to speed the market up.”
Sales activity for new
homes is showing a similar pattern this year to last year, with strong
sales in the first half of the year, a slow summer and the expectation
that sales will pick up in the fourth quarter, Brown said.
we saw last year, was that right after Thanksgiving the market for
multi-family, new home sales really picked up and lasted right through
December,” Brown said. “Right now, we’re seeing sales activity at sales
centres starting to pick up again.”
The federal government’s
decision to eliminate 30-year amortizations on government-insured
mortgages is driving up monthly payments, making it tougher for some to
qualify for a mortgage, he added.
“We’re seeing more people being
rejected for mortgages than they were last year,” Brown said. “Last
year, people’s ability to finance was obviously far easier than it is
this year, so it’s affecting the market somewhat.”
The real estate
board also reported that there were only 1,516 properties sold in
September, which is a 32-per-cent decline from the 2,246 sales recorded
in September 2011 — and 41.6 per cent below the 10-year September sales
average of 2,597.
Brown said investors are becoming more selective
— choosing properties close to SkyTrain stations or in just the right
location — whereas in 2007, investors were not selective because all
properties were expected to increase in value. Brown has not heard of
any projects being cancelled, but he said some developers may delay
offering their projects for sale until January.
Fraser Valley real estate market has been more stable than the market
in the western part of the Lower Mainland, in communities like
Vancouver’s west side, Richmond or West Vancouver, where prices went up
dramatically in 2011 and for now, are still holding steady.
the west-side market, there’s very little price movement downward, but
there’s also very little transaction movement as people wait to see
who’s going to move first,” Brown said. “The Fraser Valley never ever
did recover to those peak values; instead, it’s been steady-eddy growth.
It keeps plodding along, being a generally healthy market without the
big news flashes and without the big crashes.”
Brown said sellers
on the west side do not seem to be in a big hurry to sell, which is why
the prices have not dropped significantly.
“The west side was
particularly hot last year, and was driven by media stories about
foreign buying,” Brown said. “The values that were set by that foreign
buying would be relatively high, compared to two years ago, but the
question is will that hold or will it soften? No one knows and it still
depends to a degree on whether the foreign buying continues.”
said foreign buyers are willing to pay more for premium properties,
partly because of their wealth and partly because of their perception of
what a property is worth.
“If you’re living in a market where a
starter home is a million and a half and you can never own
single-family, but you can walk in here and buy a home near downtown
with a yard for $3 million, that sounds cheap to them, whereas to a
local person that is a lot of money still,” Brown said.
The prices for new multi-family homes have been relatively stable for the past year, Brown said.
price for a downtown highrise on average is still about $700 per square
foot. They haven’t moved up aggressively in the last 18 months,” Brown
said. “It saw steady growth and a steady price since 2009, but it hasn’t
seen that one-quarter spike when it jumps up 20-25 per cent.”
biggest year-to-date increases in housing starts were in Port Moody,
Port Coquitlam and White Rock, Adamache said. Overall, Burnaby,
Coquitlam and Vancouver accounted for the highest number of starts.