With less than a month left before the end of the year, Greater Victoria’s homebuilders have already broken a 10-year record for housing starts and are closing in on a mark set in 1989.
Figures released by Canada Mortgage and Housing Corporation show the area’s homebuilders have started 2,787 homes through to the end of November, eclipsing the 2,739 started during 2015.
“We have passed our peak year in over a decade and we will be going to be seeing stronger starts than we’ve had in several decades,” said Casey Edge, executive director of the Victoria Residential Builders Association.
The record set in 1989 was 3,247 housing starts. “We probably won’t get there, but when you consider that the cost of housing is significantly higher than what it was in 2006 that’s a significant achievement,” he said.
CMHC said there were 268 new homes started last month, 69 of which were single-family homes and 199 were apartment and condominium units.
Edge said several factors are at play in the robust homebuilding market, including low interest rates, consumer confidence in a buoyant economy, strong employment and in-migration numbers and people looking at real estate as an investment.
He doesn’t see it slowing down in the near term. “Victoria has been climbing out of a significant downturn since 2009, and it’s only in the last year and a half that we have been able to see reasonable numbers,” Edge said. “Victoria was one of the last (regions) to recover from the 2009 crash, we are making up for a lot of lost housing starts over the last six to seven years.”
Next year, he said, Victoria won’t hit the 3,000-mark, but it will likely see as many as 2,400 new homes started.
Edge did note there is some concern that 80 per cent of all new homes are being built in just three municipalities — Langford, Victoria and Saanich.
“The remaining 10 municipalities represent only 20 per cent. For example, year to date there have been only three housing starts in Metchosin,” he said. “Land use regulations in some municipalities present a challenge to affordable housing and drive up costs.”
Tied as it is to solid employment numbers and consumer confidence, the strength of the housing market and anticipation of a strong 2017 paints a rosy picture of the local economy.
Real estate is expected to remain a driving force in 2017.
Remax’s 2017 housing market outlook says Victoria will see another two per cent increase in sale prices after a 12 per cent increase in the average residential sale price this year.
The strength of homebuilding and real estate in Victoria and the Lower Mainland in particular has pushed B.C.’s economy to a forecast 3.4 per cent growth this year according to the Conference Board of Canada.
“Next year, the slowing housing market will weigh on the province’s economy and a more moderate increase of 2.4 per cent in real GDP is anticipated,” said the board’s provincial outlook released this week.
“As a result of the implementation of a tax on foreign home buyers and affordability issues, housing starts will slow down in 2017 and the province’s economic growth will fall closer to the national average,” said the board’s Marie-Christine Bernard.
The board believes starts will decline by 13.3 per cent provincewide next year.
Edge doesn’t necessarily buy that. “Over the last several years, quite frankly, a lot of people have predicted downturns in the housing market and a lot of people have been wrong,” he said.
