Saanich Real Estate Market - New Houses, Homes

Surge in building of new houses
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Darron Kloster, Times Colonist
Published: Tuesday, October 10, 2006
There was more residential construction activity in the Greater Victoria region during September than any other month in the past 16 years, according to new data from the Canada Mortgage and Housing Corp.

Last month’s 387 housing starts — which included 139 apartment units in Victoria — was the busiest month since April 1990 but still well below that boom period when 615 units were rising.

Peggy Prill, senior analyst for the federal housing agency, called September “an unusually strong month” as Victoria and parts of Vancouver Island continued to buck the national trend toward a softening construction market.

Builders, however, were cautioning about reading too much into the latest numbers, saying September may have been a perfect storm where zoning issues, construction timetables and pre-sell conditions on several projects may have come through at the same time. The CMHC takes its monthly inventory based on the start of building off a foundation.

Still, the numbers for building on Vancouver Island continue to be impressive. New hosing starts from Campbell River to the capital hit 671 units in September, well ahead of the 549 units started in August and the 540 underway in September 2005. Overall, the Island has had 3,625 housing starts this year — 288 more than a year ago.

In Greater Victoria for the first nine months of the year there have been 1,980 residential construction starts, an increase of 421 from the same period a year ago. Of last month’s 387 starts, 270 were apartment units in Victoria, Saanich and Langford. The total also included 71 single detached homes, including 25 in Langford and 18 in Saanich.

In Campbell River the number of new homes is up to 268 for the first nine months, an increase of 53 per cent. Parksville-Qualicum area has 263 new residential units so far this year, up from the 200 started over the first nine months of 2005.

Duncan, Nanaimo and Courtenay all showed decreases year to date. Nanaimo slowed the most, showing just 55 starts last month compared to 233 in September 2005. Overall this year, the harbour city has 600 new starts, 126 fewer than the first nine months of 2005.

Prill said the positive influences of Victoria’s economy — a national low unemployment rate, unprecedented job growth and increasing migration levels from other provinces — have fuelled the surge in new housing.

Across Canada, housing starts edged down 2.5 per cent from August levels to 211,300 starts in September. B.C. homebuilding held steady to 29,800 in September compared with 29,400 the previous month. The figures are seasonally adjusted at an annual rate.

Casey Edge, executive director of Victoria’s Canadian Homebuilders Association, said the increasing numbers of condominiums under construction points to an “affordability issue” that is only getting worse in Victoria. He said land costs are escalating and the costs of materials and labour are inching higher at a rate “where it’s going to outstrip people’s ability to pay.”

He said three levels of government have to work together to ease some of the costs of building new homes, such as taking the initiatives to increase zoning for townhouses and other forms of housing, reducing development cost charges, re-tooling the GST rebate on new homes and easing other costly building regulations.

The cost of existing homes is also squeezing consumers, despite increasing inventory on local real estate markets. Darrell Paysen, president of the Vancouver Island Real Estate Association, which covers properties from the Malahat to Port Hardy, said the average prices of a single family home last month was $306,000, a 15 per cent increase from September 2005. In Greater Victoria, the average was $545,172 and the median $471,000. More than a third of homes sold in Victoria were under $400,000 and 43 per cent of condos sold for less than $240,000.