Hi all, M- speaking.
I've just posted this as a comment on the Vancouvercondoinfo blog, but I figured I'd post it here as well, to ensure there's some rational discussion, and that it doesn't get lost among the flames. Looking at the stats below, what do you think? How does it play into prices, population, etc? Where's population going from here? Where are housing starts going from here?
BC Population Data from BCStats:
YEAR: Population: Households: Housing Starts:
1991:.... 3,373K ............ 1,280K ........... n/a
2001:... 4,076K ............ 1,593K ........... 275K (since 1991)
2006:... 4,243K ............ 1,677K ........... 152K (since 2001)
2009:... 4,455K ............ 1,778K ............ 90K (since 2006).
What are some numbers that we can extract from this bare data?
Population rose by 70K per year, and 27K units were built per year, which implies 2.6 people per housing unit. A little more than Vancouver, but that's about the norm for the province. So we can conclude that population growth roughly matched the amount of construction. Household growth was a little higher than construction, but within a reasonable range.
Population rose by 33K per year, and 30K of housing units were started each year. Huh, that implies 1.1 people per housing unit, which implies that there was lots of surplus housing constructed. Household formation suggests only 17K of households were "formed this year, which implies that *half* of the housing units built weren't occupied.
Population rose by 70K per year (1990s growth levels!), and 30K of housing units were started each year. That's about 2.3 people per dwelling, which is about normal, if a touch on the low side. Household formation was 30K per year, which matches the level of construction, so that's about right.
Can we conclude anything from the above data? To me, it looks like construction matched population growth and household formation in the 1990s, suggesting that construction and growth were balanced. From 2001 to 2006, there was massive overconstruction going on (mainly due to low population growth). Since 2006, construction and population growth have been balanced.
Since 1991, unit construction has been fairly flat-- sure there have been some strong years and some weak years, but overall the rate of construction has been constant for each of the multi-year chunks that I've picked. The biggest aberration was in the 2001-2006 period, where population growth was abysmal, and so there was a lot more construction going on than we actually needed.
Have the imbalances been wrung out of the system?
How will prices (rising/stable/falling) play into this?