Monday, March 09, 2009

Vancouver Housing Starts Falling into the Abyss

The highlight: Vancouver CMA housing starts off 71% from last February, Abbotsford CMA housing starts off 84%, Chilliwack CMA housing starts off 80%. Sheesh!

Canada Mortgage and Housing Corporation
Mar 09, 2009 08:15 ET

Canada Mortgage and Housing Corporation: Metro Vancouver Housing Starts Low in February

VANCOUVER, BRITISH COLUMBIA--(Marketwire - March 9, 2009) - Preliminary figures from the Canada Mortgage and Housing Corporation (CMHC) indicate housing starts in February were close to three quarters lower than the level recorded in February last year. There were 701 homes started this month in the Vancouver Census Metropolitan Area (CMA) compared to 2,446 home starts in February 2008."

February 2008 was an unusually strong month for housing starts, which makes the year over year decline more noticeable," said Richard Sam, Market Analyst with CMHC. "

However, low starts data for the first two months of 2009 are an indication that developers are pulling back until some of the supply of new and resale homes on the market are absorbed. In turn, home buyers will benefit from current buyer's conditions that exist in the resale market. CMHC is forecasting that housing starts will decline by more than one-third in 2009," added Sam.

Moving further into the Fraser Valley, housing starts remain low for the fifth consecutive month in the Abbotsford CMA. Very similar to the housing market in the Vancouver CMA, many projects are on hold.Provincial home starts declined to 12,300 units, seasonally adjusted at annual rates (SAAR) from 14,100 units in January 2009. At the national level, housing starts moved lower in February to 134,600 units (SAAR) from 153,500 units (SAAR) in January.

To view the map and tables accompanying this press release please click on the following link: http://media3.marketwire.com/docs/cmhcBC309.pdf

10 comments:

JimTan said...

Mohican,

Please add the date axis on the chart. Thanks.

Montery said...

Alternatively, just add key points like "89 crash" "mid-80's recession", "90's recession", etc.

Commentary/context is usually more valuable than just dates (especially for those younger whipper-snappers who don't know history!) :)

VanTOVan said...

It would be interesting to see how this compares to the situation in Ireland. I recall reading somewhere that more than 10% of their economy was based on the construction industry and, like BC, that construction activity was responsible for a significant amount of the economic in recent years.
We all know what's been happening there since construction fell off a cliff. (yeah, I know other factors like the loss of IT jobs, such as with Dell, are also contributing).

patriotz said...

If anyone is wondering why Vancouver has such crap housing stock, just look at the graph. Such wild swings in starts are not conducive to having a permanent, skilled construction work force. Instead the bulk of the housing stock gets built during boom times by dope-smoking hammer-swingers.

And as to who's fault that is - it's the buyers. It's the buyers' willingness to pay inflated prices for crap that is the root cause of Vancouver's boom-bust RE cycles since 1980.

mohican said...

Yes, Vancouver real estate is manic-depressive.

RentingSucks said...

I was talking to a young guy fresh out of college looking to buy in Yaletown. Interesting points I gleaned from the conversation:

- Low interest rates and the recent drop has made the numbers not as bad as I thought. His number were ~300k and $1400 rent which covers the mortgage. Of course there are maintenance fees, property taxes and insurance on top.
- When quizzed about funding the shortfall he said "300 bucks is nothing I'll just drink less."
- Figured he could get $6000 for 2 weeks during the olympics to cushion his downside.
- Absolutely believed that in 10 years his condo would be worth more than it is now because "Everyone wants to live in Yaletown."

It's this kind of risk taking attitude that increases our swings for sure. Does it make 40-50 percent down less likely?

jesse said...

"It's this kind of risk taking attitude that increases our swings for sure. Does it make 40-50 percent down less likely?"

Quite the opposite.

patriotz said...

- Figured he could get $6000 for 2 weeks during the olympics to cushion his downside.

Uh huh, and what happens to that rationalization after the Olympics?

Also, he'll be able to renew the mortgage for the same low rates only if the economy is still in the tank. Where would prices be after a five year recession?

van_coffee said...

Absolutely everyone I know thinks they are going to get $6,000 for their place during the olympics. Seems like a competitive market to me.

I suspect the numbers are not going to be nearly that good, and people are going to end up renting condos in vancouver for $2,000 for 2 weeks.

patriotz said...

Apartment owners, too, had hoped to cash in on the bonanza, with some jacking rents up to five times normal levels, according to the official New China News Agency. But of more than 20,000 apartments posted for short-term rent, only 8,000 were leased during the Games, it said...

Many will suffer, few will benefit. Vancouver in particular is unlikely to be prepared for such an outcome. All that glitters is not gold. (Mish)


China's Olympic Sized Bust