Photo: Tracy O/Flickr
Downsizing Baby Boomers and local job growth were among the major factors that spurred the highest level of housing construction in Victoria, BC, since 1976.
In December alone, contractors broke ground for 775 homes, up from 204 housing starts observed during the same month in 2017, according to the Canada Mortgage and Housing Corporation (CMHC), which tracks homebuilding activity each month through surveys and site visits.
Total 2018 starts in Metro Victoria numbered 4,273 units, up from 3,862 units in 2017.
“Rental units were half of all housing starts in 2018 in response to heightened rental demand and low vacancy rates,” writes CMHC in its December 2018 housing starts report.
Part of that demand stems from demographic trends, suggests Peter Gabey, a partner at DFH Real Estate, a Greater Victoria-based real estate firm. “Now we’re seeing the effect of Baby Boomers retiring,” he tells Livabl.
Not only are downsizing Boomers creating demand for condos in Victoria, they are also behind some of the increased interest in rental accomodations. “Our vacancy rate is super low, like we’re around 1 percent,” Gabey adds.
At the same time, low interest rates have favoured developers as they financed construction over the past year, Gabey notes.
There are other factors that have supported Victoria’s homebuilding boom. One of them has to do with a burgeoning local tech industry, says Bryan Yu, deputy chief economist for Central 1, a BC-based credit union.
“The region itself has benefitted from a very low unemployment rate [and] a strong labour market in recent years,” Yu tells Livabl.
“We’re actually hearing a lot of noise about more technology workers and technology companies setting up shop in Victoria because it’s cheaper,” he continues.
The same is true for the cost of owning a home. The average price of a single-family home in Victoria last month was $850,562, while the benchmark price of a detached home in Greater Vancouver was $1,479,000.
It should be no surprise then that Victoria’s relative affordability compared to Vancouver has been attracting homebuyers from the Lower Mainland.
“Some individuals who are looking for affordability can’t afford that [cost of housing] in the Lower Mainland, so they’re spreading their wings a little bit and going into other smaller cities,” Yu explains.
As demand has increased for ownership housing, prices have increased, pushing some local would-be buyers to the rental market, which has fed into that segment’s exuberant rate of construction for new apartments.
So will the homebuilding boom continue in 2019? Yu sees a calmer year ahead.
Province-wide Central 1 anticipates housing starts will drop by about 20 percent this year, due largely to mortgage stress testing and the weakened resale market, and Yu doesn’t expect Victoria will be spared from the effects of this either.
“I think it’s going to peter off. We don’t anticipate that this December bounce [in starts] is going to continue,” says Yu.