Friday, January 28, 2011

City of Vancouver Permit Update for 2010

I have been producing some graphs starting in early 2009 showing the trend of permits in the City of Vancouver (here and here). Here is an update to December, 2010.

Residential dwelling permits graphed since 2007:


Permits parsed for 1-2 dwelling units only (i.e. SFHs):Multi-unit building permits:

All permits' value, residential and commercial:


Analysis:

1. There was a significant, though not full, rebound in multi-unit permits in late 2009 and into 2010. This is commensurate with the rebound in construction employment coming out of the recession.
2. The detached market is extremely hot right now. This is evident through significant price appreciation of detached-zoned lots in the City, notably (but not exclusive to) the west side.
3. Detached permits have been falling significantly since mid-2010. Seasonality in permit applications cannot be discounted; I would not be surprised to see detached permit applications rebound going into the first half of 2011. A builder friend of mine claims the City's permit office has a backlog it's working through.
4. The building recession in late 2008 through mid-2009 is now bookended.
5. The data presented here show what a severe housing recession looks like and hint at how dependent the City is on sustained permit revenue to fund its operations.
6. The permit data are coincidental with faltering sales, however the permit data are released with about a month's delay; sales are available with virtually no delay thanks to paulb over at vancouvercondo.info. It's worth remembering that with housing markets, prices are a lagging indicator.
7. Laneway housing continued its upward trend. Builders and the permit department are likely becoming more familiar with the process and relevant codes (and likely fine-tuning it as they go). I would expect to see a continued increase in laneway housing permits, barring any major pullbacks in the availability of credit.

3 comments:

takloo said...

I only recently read the globeandmail article "Is Vancouver in a real estate bubble?"... foreigners from China gobbling up Vancouver real-estate...I was wondering how true that was and your thoughts
thanks.

jesse said...

Well, lone reader,

There are not much data to support or refute the "rich Chinese" investor causing price ripples throughout Vancouver.

I've seen it first hand. Scores of buses full of Asians were parading through the west side of Vancouver and these Asians were gobbling up all sorts of properties, often tearing them down to rebuild. Complaints from neighbours have erupted as newly-minted houses were left unoccupied and the yards started to go into disrepair. Bylaws needed to be enacted to force the owners to keep lawns and outer appearances aesthetically acceptable.

When did this occur? 2010? Nope, this was in the late '80s. The migration from Asia into Vancouver is hardly new. Now, perhaps, there is a renewal of significant war chests dumping money into property again. Who knows how long this spate of buying will last.

How much property do rich Chinese buy? Well there aren't much data on this because residents, whether they came to Canada 3 years ago or 30, are not parsed based on tenure on Canadian soil or whether they derive their incomes from out of country, though I'm sure banks have the data on this. We also know only about 30% of immigrants to Vancouver are from China. A significant % come from the Philippines, India, Iran, Korea, as well as Europe. These people have to live somewhere too and aren't necessarily all rich beyond locals' wildest dreams.

I did a bit of quick math on the impact. Assuming all immigrants buy property, they make only 25% of transactions in volume. That means 75% of transactions are by locals, predominately with local incomes. If you believe in the tail wagging the dog, believe the rich Asian myth. Occam's Razor tells me it's a simple case of too much debt.

Enjoy your blog BTW.

takloo said...

thanks for the reply Jesse...

i wonder if it was the Japanese in the 80s and the Chinese :)