Photo: Ian D. Keating/Flickr
BC housing starts saw a significant year-over-year increase in the first six months of 2016, but interestingly Vancouver — by far the province’s most-discussed housing market — was not the main driver of that rise.
According to the latest data from Canada Mortgage and Housing Corporation (CMHC), BC housing starts were 42 per cent higher from January to June 2016 than they were during the same period in 2015. And while Vancouver housing starts rose nearly 50 per cent, the other three BC cities covered by CMHC saw much bigger increases.
Coming in slightly above Vancouver, housing starts in Victoria rose 61 per cent in the first six months of 2016 compared to the first half of 2015. Meanwhile, Kelowna and Abbotsford saw much larger upticks — 80 per cent and 146 per cent, respectively.
CMHC defines a start as the beginning of construction, “usually when the concrete has been poured for the whole of the footing around the structure.”
While Vancouver tends to dominate housing discussions at the national level, it’s not hard to see why housing starts came in higher in other BC cities. As RE/MAX points out in a report published earlier this year, high housing prices in Vancouver have prompted many prospective homebuyers to look in nearby cities.
The housing markets in such cities have gotten hotter as a result. In fact, per that report, the average sale price of a home in the Fraser Valley, a region that includes Abbotsford, surged 31 per cent in the first quarter of 2016. By comparison, average sale prices rose 24 per cent in Vancouver, 8 per cent in Kelowna and 10 per cent in Victoria.
“Outside of Vancouver and Toronto, surrounding regions continue to experience a spillover effect as buyers move farther out in search of affordable single-family homes,” RE/MAX says in the report.
That increased demand has been a boon for BC’s construction workers, particularly in Victoria. As Greg Baynton, president of the Vancouver Island Construction Association, recently told the Times Colonist, “[o]ur members are going flat out. It is all coming together in a beautiful storm.”
However, one economist believes the recent increases in housing starts could go too far. In a note published earlier this week, BMO Senior Economist Robert Kavcic points out that from 2010 through most of 2015, housing starts in Vancouver ranged between 22,000 and 23,000 compared to 44,200 in the first six months of 2016. “Since then, condo prices have accelerated to an unsustainable rate, and the concern is that builders are now getting into the action too with too many units,” he comments.
In other words, supply may be on track to ultimately outpace — not just meet — demand, at least in Vancouver. Kavcic recommends keeping a close eye on the situation.