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CMHC predicts only 16,250 new homes in B.C. this year, but forecast is better for 2010

Blog by The Schacter Team | September 9th, 2009


British Columbia's residential construction sector will end 2009 at a near-dismal low, but 2010 should be a little bit better, according to the latest forecast from Canada Mortgage and Housing Corp.

The national housing agency expects builders to break ground on 22,000 new homes in the province next year, according to its forecast released Thursday, which is a 35-per-cent increase from the 16,250 units it is forecasting will be started by the end of 2009.

That 2009 figure, however, is less than half the number of starts the province counted in 2008, and is only about two-thirds of the five-year average of starts from 2004 through 2008.

Canada Mortgage and Housing Co. (CMHC) analyst Robyn Adamache said construction is down considerably more, some 70 per cent in Metro Vancouver alone, but believes those numbers will improve as builders respond to the more active housing resale market that has developed over the last few months.

"I think most developers are keeping an eye pretty closely on resales," Adamache said. "They're seeing sales heating up again with fewer active listings. And prices are starting to move higher again, so [developers] may be thinking about their next projects."

Peter Simpson, CEO of the Greater Vancouver Home Builders' Association, said CMHC might see some of that improvement in starts in its August figures as some of his organization's members have managed to retool, reduce prices and continue to sell homes.

"It's a mixed bag," Simpson said. "Some members are being risk averse, others are stepping in front of the rest and showing some confidence, and others have just got their doors closed right now."

He added that CMHC's forecast numbers are no surprise to builders as they watched resales spiral downward last year and adjusted accordingly.

"In 2010, they're expecting some improvement, and that's a result of what they are seeing in increased sales levels," Simpson said.

Adamache said a general improvement in the economy and consumer confidence and continued population in-migration (35,000 new residents expected for the Lower Mainland alone) should support higher levels of starts in 2010.

In Metro Vancouver, CMHC is forecasting 11,000 new-home starts for 2010, a 16-per-cent bounce back from the 9,500 new-home starts it expects to see by the end of this year.

That 2009 figure is also slightly less than half the number recorded by the region in 2008.

In Abbotsford, CMHC is forecasting 450 starts in 2010, up from expected 350 starts by the end of this year, but still only a fraction of the 1,285 starts recorded in 2008.

For Victoria, CMHC is forecasting 1,320 starts in 2010, which is an increase from the 930 it expects to have been started by the end of 2009, but is still less than the 1,905 recorded in 2008.

Nationally, CMHC forecast housing starts will reach 141,900 this year and increase to 150,300 for 2010. This is a significant improvement from the earlier part of this year, when the annualized pace fell to less than 118,000 in April.

Still, these expected numbers fall well short of the pace of more than 200,000 housing starts that held steady between 2002 and 2008.


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