Developers optimistic despite drop in May housing from last year

CMHC survey notes that starts are doing better on a year-to-date basis over 2011 

 
The CMHC survey released Friday showed the total number of Metro Vancouver starts in May stood at 1,692, down 15 per cent from the 1,991 starts in May 2011.
 

The CMHC survey released Friday showed the total number of Metro Vancouver starts in May stood at 1,692, down 15 per cent from the 1,991 starts in May 2011.

Photograph by: Vancouver Sun , files

Housing starts in Metro Vancouver were down sharply in May from the same month last year, but have been on the rise since Jan. 1, according to Canada Mortgage and Housing Corp.

Despite the May numbers, developers remain optimistic and believe 2012 is shaping up as a good year.

“Based on the developers I’ve talked to, no one has delayed or deferred projects scheduled to come in Q3 [the third quarter] or Q4,” said Scott Brown, senior vice-president, residential markets, Colliers International. “Not only that, but we’re preparing for a strong fall season of launches.”

The CMHC survey released Friday showed the total number of Metro Vancouver starts in May stood at 1,692, down 15 per cent from the 1,991 starts in May 2011.

On the multi-family side, it was even steeper: an 18-per-cent drop from 1,660 in May 2011 to 1,365 in May 2012.

However, for the first five months of the year there were 7,655 starts, up seven per cent from 7,128 in the same period in 2011. Multi-family starts rose nine per cent in the first five months over the same period last year to 6,352 from 5,833.

For the city of Vancouver, things looked better with starts rising from 439 in May 2011 to 541 this May. Housing starts in the city for the first five months of the year reached 2,276, compared to 1,547 for the first five months in 2011.

Brown suggested the numbers in the latest CMHC survey didn’t reflect the strong pre-sales at projects like Telus Garden in downtown Vancouver – where 428 condos sold out in a week in late March – and other projects in which construction hasn’t started, but will shortly.

Brown, whose company is doing the marketing for Century Group’s planned 50-storey mixed-use hotel and residential project in Surrey called 3 Civic Plaza, said if Colliers felt the market wasn’t strong it wouldn’t have recommended the project’s launch this week.

“We are very optimistic about the project. If you have a good asset, the market is strong, especially if it’s on transit.”

Brown also believes newer product is doing well despite slowing sales in the resale market.

“Resales are still cheaper, but there’s a lot of really well-priced new product for people who would typically go to resale.”

CMHC senior market analyst Robyn Adamache said May’s drop in starts is not particularly noteworthy, because multi-family starts can be quite volatile on a month-to-month basis. Adamache prefers to see longer-term results before calling it a trend.

“It’s just one month of data. I think we’re on track for a year that’s fairly similar to last year, about 18,500 starts.”

Adamache noted that housing starts are not considered starts until the foundation of the building is poured, “so pre-sales are not counted.”

Adamache also said that nearly three-quarters of all multiple-family starts during the first five months of the year were in Burnaby, Coquitlam, Richmond, Surrey and Vancouver

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