Housing starts up, but sales have softened

B.C. has recorded Canada's biggest increases in residential construction investment this year despite indications that home sales are levelling off.

However, Greater Vancouver Home Builders' Association chief executive officer Peter Simpson said he's not surprised.

"Right now, we're actually ahead of last year's pace," Simpson said in an interview about housing starts, which are up 16 per cent for the first four months of 2008 to 6,691, from 5,757 starts for the same period in 2007. "But sales have definitely softened over the last few months. So we might see some easing of housing starts as we move through the year."

Simpson also said another reason for the increased investment is that construction costs continue to rise for builders.

According to a Statistics Canada survey released Monday, B.C. saw a 21.2-per-cent increase in the first quarter of 2008 over the first quarter of 2007 to $4.0 billion in residential construction investment. That represented an increase of approximately $700 million from $3.3 billion in 2006.

That compares to a national increase of 7.5 per cent to a total value of $19.8 billion. Outside of B.C., the biggest increases were in Alberta (a 9.1-per-cent increase to $3.5 billion, up by $292 million over the same period in 2006) and Ontario (a 4.0-per-cent to $6.9 billion, up by $264 million). Quebec, Prince Edward Island and the three territories reported decreases.

Statistics Canada attributed the increase in Western Canada, which included money spent on renovations, to a favourable job market, growth in disposable income, flexible financing options and the strength of the economy. As well, the increase coincided with a rise in the price of houses, up six per cent in the first quarter of 2008 compared to the same quarter in 2007.

Despite the construction investment increases,the Fraser Valley hit a near-record high for total inventory of homes for sale in April and Greater Vancouver listings also took a substantial jump as markets continued to slow.

The Fraser Valley Real Estate Board reported 4,458 new listings added to the Multiple Listing Service in April, a 53-per-cent increase from the same month a year ago. Total listings of 11,111 is up 43 per cent from a year ago.

In Greater Vancouver, new listings added to inventory were up almost 26 per cent to 7,010 units. Total inventory stood at 13,575 at the end of April, up 18 per cent from last year.

Greater Vancouver's MLS sales of 3,218 were down five per cent from the same month a year ago.

As well, Greater Vancouver closed March with its slowest first-quarter for sales since 2001.

According to the StatsCan survey, new housing investment increased by 8.8 per cent compared with the first quarter of 2007 to $9.7 billion. Investment in apartment and condominium construction contributed the most to the increase in this component, with spending on apartments increasing by 17.5 per cent to $2.6 billion. Construction spending on single-family housing rose by 3.7 per cent to $5.6 billion.

In constant dollars, investment in new apartments and condominiums increased 6.4 per cent, while spending on the construction of new single-family homes dropped 1.1 per cent.

Renovation spending came to $8.4 billion, a 7.2-per-cent increase compared with the first quarter of 2007. Renovation spending represented 42.4 per cent of total residential construction investments.

(prepared by Brian Morton/Vancouver Sun)