Fewer building starts take a bite out of construction employment

Figures released Friday showing lower housing starts, fewer building permit applications and job losses in construction indicate that British Columbia's building boom is ending in the climate of recession and tougher economic times.

Canada Mortgage and Housing Corp. reported Friday that housing starts across the Lower Mainland fell six per cent in December, following a declining trend from a high start in 2008 to end the year also down six per cent.

Metro Vancouver starts fell to 1,108 starts during a December that featured dismal weather, down from 1,181 in the same month a year ago.

For the year, Metro Vancouver builders started work on 19,591 new homes compared with 20,736 in 2007.

And building-permit applications across B.C. in November dropped 29 per cent from October to hit a value of $607 million, the biggest decline among all provinces.

Within that figure, Metro Vancouver builders took out $350 million worth of permits, a 22-per-cent decrease from October.

Keith Sashaw, president of the Vancouver Regional Construction Association (VRCA), said the decline in permit applications is a reflection of difficult economic conditions overall, something the construction sector expects to continue until consumer and investor confidence recovers.

"We are definitely in the downside of the cycle," Sashaw said. "However, the industry has come off a very robust and sustained period, and the current levels of [non-residential] construction are above where the industry was in mid-2006."

In the meantime, B.C.'s construction sector is shedding jobs -- some 6,200 in December -- helping to edge the province's overall unemployment rate up to 5.3 per cent, according to the Statistics Canada Labour Force Survey released Friday.

The VRCA analysis of unemployment figures shows that 4,100 of those construction job losses occurred in the Lower Mainland and southwest B.C. region.

Sashaw said the industry expects employment in the sector to continue decreasing over the coming months as building activity catches up with changes in the economy.

Robyn Adamache, a senior analyst with Canada Mortgage and Housing, said Metro Vancouver finished with a high number of housing starts despite the slowdown, but that was "just a matter of momentum."

"Especially multiple-unit starts are not easy to turn on a dime," Adamache said, "but I think builders are certainly cognizant that the market is slowing," and are reducing their activity.

December, with its wild weather, was a dismal month to make a housing start and the numbers were particularly low in Vancouver. Vancouver saw 54 starts in December compared with 214 in the same month a year ago.

Given lower sales in Metro Vancouver resale markets, and the slowing in new-home construction that is catching up with resale markets, Adamache is forecasting a 19-per-cent decline in housing starts for 2009.

Peter Simpson, CEO of the Greater Vancouver Home Builders' Association, said the slowdown of building permit applications and starts is not unexpected given the number of proposed housing projects that have been put on hold before reaching the permit phase.

His organization's member companies have been laying people off -- from designers to builders -- and the concern is that declining starts will translate into more job losses."To say things are going swimmingly would be misleading," Simpson said, "There are challenges out there, but with challenges are opportunities."

Some construction workers, Simpson said, are shifting their sights from new construction to home renovation, which hasn't shown signs of a similar slowdown.

And the builders that are willing to slash prices are selling homes, Simpson said.

However, Sashaw said the industry is also awaiting the promised boost in government infrastructure spending, both at the provincial and federal levels, designed to offset offset faltering private-sector investment.

(prepared by Derrick Penner/Vancouver Sun)

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BUILDING SLOWS

Home construction, building permit and employment figures released Friday indicate that B.C.'s construction sector is slowing down.

Some selected figures:

- 2008 housing starts, compared with 2007
B.C. 30,857 -10%
Metro Vancouver 19,591 - 6%
Abbotsford* 1,285 +18%

- Building permits in Nov. 2008, compared with Oct. 2008.
B.C. $607 million - 29%
Metro Vancouver: $350 million - 22%
Abbotsford* $8.2 million - 49%

- Construction employment in December, compared with November
B.C. 213,500 jobs - 6.8%
Metro Vancouver 109,900 - 1.3%
Abbotsford* 9,500 - 6%

* Census metropolitan area.

Source: Canada Mortgage and Housing Corp., Statistics Canada