Analyst says no danger of market saturation on the horizon
Home construction is feeding a stable Metro Vancouver housing market with an increase in multiple-family starts offsetting fewer single-detached starts last month, according to Canada Mortgage and Housing Corp.
"It's steady as she goes," noted CMHC senior market analyst Robyn Adamache of their latest report on residential construction intentions, which concluded there were 1,332 starts in April, about the same as April 2011.
However, starts were up 16 per cent to 5,963 for the first four months of 2012 compared to the first four months of 2011. Multi-family starts are up 20 per cent in that period to 4,987, while single-detached home starts are up one per cent to 976.
Adamache said that although the local market is doing well, she sees no danger of a potential glut of new condos saturating the market.
"I don't see it," she said. "The numbers are rising, but they're nowhere near the numbers in 2007-08, when there were 20,000 units under construction. Now, we're just over 11,000."
Cameron Muir, chief economist for the B.C. Real Estate Association, agreed.
"The numbers can be volatile on a month-to-month basis, [but] overall consumer demand is trending on a 10-to-15 year average. We're looking at the total housing starts for B.C. up 1.5 per cent over last year and up 3.3 per cent in Metro Vancouver. There have been moderate gains in construction activity. But, at this point, we don't see that [a condo oversupply]."
Adamache noted that if the rest of 2012 plays out like it has so far, there would be 18,400 starts for the year in Metro Vancouver, just under CMHC's forecast of 18,500 and above the 17,867 starts in 2011.
There are about 1,700 new condos unsold in the region, she added, far less than the mid-'90s peak when there were twice that many.
"All in all, the condo market is stable. Prices have been flat for some time and sales have been steady."
Adamache said that the cities of Vancouver and Surrey continue to record strong new home construction activity, with condominium apartments accounting for most of the starts in Vancouver and townhouses the main type of new homes in Surrey.
Other hot spots, according to Canada's national housing agency, include White Rock, New Westminster and Maple Ridge. For urban B.C., the seasonally adjusted annual rate rose 6.3 per cent to 22,100 in April, up from 20,800 in March. Actual numbers for urban B.C. in April were 1,867, slightly lower than 1,898 in April 2011.
Nationally, housing construction starts blew past expectations in April, with CMHC saying there was a season-ally adjusted annual rate of 244,900 housing starts last month. That was up 14 per cent from the previous month.
"While unseasonably warm weather has been helping starts in recent months, April's return to more normal seasonal temperatures still saw home building soar," CIBC World Markets economist Emanuella Enenajor said in a research note.
Construction on multiple-housing units in urban areas drove the overall gains. They were up 27.4 per cent to a rate of 158,500. Urban singles saw a gain of 0.6 per cent to 67,700.
Regionally, there was a surge of 56.5 per cent in urban housing starts in Quebec, and increases of 12.2 per cent in Ontario, 6.3 per cent in the Prairies, and 2.6 per cent in Atlantic Canada.