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[amor de cosmos]

New Construction Activity Down but Far From Out

New construction in Metro Victoria is down from the hectic pace of 2006, but remains very strong when put in a historical perspective. Solid demand continues as a result of strength in economic fundamentals, but is now beginning to be tempered by rising housing costs.

In October, Metro Victoria homebuilders broke ground on 282 new dwelling units, bringing total housing starts to 2,160 on the year. New construction was down considerably from last year: October starts were 11 per cent below their level a year previous, and total 2007 starts were down six per cent from the first ten months of 2006. Despite the one year decline, residential construction continued at a historically high level. Setting aside the lofty 2006 numbers, last month was the strongest October for housing starts since 1988, and this year’s total to date represents the strongest January to October performance since 1990.

Homebuilders maintained high production levels in response to continued strength in the demand for housing. As has been the case now for several years, Metro Victoria’s economic fundamentals strongly support demand. For the past three years, employment has increased by an average of 714 jobs per month. In October, 1,800 positions were created. At the same time, the unemployment rate dropped to 3.7 per cent, very low by historical standards. The tight labour market drew migrants into the region, spurring demand for homes. Migrant-led demand has been supplemented by move-up buyers, downsizing emptynesters taking equity out of their previous homes, and investors looking to capitalize on future growth in Victoria home prices.

The reduction in starts this year was reflective of a factor that moderated the demand implied by the strong fundamentals discussed above: the slow but steady rise in mortgage carrying costs. Average carrying costs are estimated to have increased by nearly a fifth between 2005 and 2006, with another similar increase likely this year. Increased carrying costs have driven demand away from large dwelling types and towards smaller ones. Supporting this shift is an increased appreciation amongst home buyers for the security, low maintenance and lifestyle factors inherent in condominium living.

etc etc

much more (27 pages) here:
http://www.cmhc-schl...79_2007_M11.pdf

On p.4 it shows a map where most of the housing starts are. Looks like Langford, Victoria city, Colwood & Saanich are carrying the Victoria CMA.

related news:

Dec 10, 2007 08:15 ET
Canada Mortgage and Housing Corporation: Busiest Month of Vancouver Homebuilding in Thirty Years

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Dec. 10, 2007) - According to Canada Mortgage and Housing Corporation (CMHC) preliminary figures, November home starts in the Vancouver Census Metropolitan Area (CMA) hit the second highest monthly level ever recorded. While some of November's strength can be explained by projects delayed in previous months due to the civic strike in the City of Vancouver that are now breaking ground, other municipalities such as Surrey and the Tri-Cities also recorded monthly increases. The surge in condominium construction since the beginning of the year has pushed the January to November tally up 12 per cent over the same period last year.
etc

http://www.marketwir...se.do?id=801075
graphs, etc here:
http://www.ccnmatthe.../docs/CMHCe.pdf