Housing starts in Metro Vancouver remain strong despite lower sales, according to CMHC
Metro Vancouver housing starts trend lower
Housing stats in Metro Vancouver were up in 2012 over 2011, but Canada Mortgage and Housing Corporation says starts are trending lower.
“For several months, the trend numbers have been coming down,” said Robyn Adamache, CMHC’s senior market analyst for Vancouver. “The pace is starting to slow a bit.”
The trend measure is a six-month average of seasonally adjusted annualized numbers. Adamache said it was fairly stable through 2012, with between 18,000 and 20,000 annualized starts each month.
“This trend is expected to continue into 2013, with 19,100 total housing starts forecast for the year,” Adamache said.
There were 19,027 housing starts in Metro Vancouver for the year 2012, up more than six per cent from the year and from the 10-year average, CMHC reported.
In December, there were 1,187 starts, including 251 single-detached houses and 936 multi-family units. The ten-year average for December is 1,275, Adamache said.
For the year, single-family starts were down 8.2 per cent, while multi-family starts were up 10.3 per cent, according to CMHC. 
“I think developers in Vancouver have shown themselves to be very quick at responding to consumer trends,” Adamache said. “I think you see that in the types of homes that are being built. There is more demand for more affordable, lower-priced homes.”
She said Vancouver’s rental vacancy rate is 0.9 per cent, which is very low — a boon to real estate investors.
“Because there is a good, strong rental market, people are buying multiple-unit homes as de facto rental properties that they will hold onto and rent out as investment properties,” Adamache said. “That’s part of the reason we’re seeing more multiple-units.”
Nationally, housing starts declined for the fourth consecutive month in December.
The pace of housing starts slowed by a modest 1.7 per cent last month to 197,976 on an annual basis, the fourth drop in as many months, CMHC said. The decline was less than analysts expected.
On Tuesday, Canada’s leading bankers judged the country’s real estate market as “relatively solid” despite the slowdown and concerns about overbuilding in the condominium segment, forecasting that 2013 would see a “soft landing” in the market.
But December’s relatively strong numbers also gave skeptics more reason to warn of a future reckoning.
David Madani of Capital Economics said Canada’s real estate market is exhibiting the same cracks as the United States before the 2007 crash.
While lower, December’s starts were still well above the 175,000 to 185,000 annual growth requirement needed to accommodate population growth. Meanwhile, sales are heading south. Vancouver sales are down 31.1 per cent from last year, while Toronto resales of existing properties have fallen 19.5 per cent from a year ago.
“The upshot is that too many housing units have and are still being built, excesses that will eventually upset the balance of demand and supply,” Madani warned. “We will stand by our long-held view that home prices are likely to fall by around 25 per cent over the next year or two.”
Bank of Montreal economist Robert Kavcic said he expects homebuilding activity to slow to about 180,000 this year, which “would meet underlying demographic demand, and be just the scenario that policy-makers ordered.”
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