The Canada Mortgage and Housing Corporation keeps accurate statistical records of the housing market activity across the country and here is a collection of that data for the Vancouver Census Metro Area up to November 2008 (pdf). The chart shows the number of housing units started in the past 12 months (red), completed in the past 12 months (yellow) and the number of housing units under construction (blue) at any point in time. Click the chart to make it bigger.
Several interesting things pop out to me as I observe this chart and the data underlying it:
1) We are currently in a very large building boom.
2) There have been several boom cycles in Vancouver's history
3) The current cycle has born witness to a statisical occurence that has not happened in any previous boom cycle - the number of units under construction has far exceeded the number of starts or completions.
This last observation could be for a variety of reasons:
1) More multi-unit projects which take longer to complete - has that really changed so much since the 90s?
2) A shortage of labour - why start so many projects if developers don't have the labour
3) The prevalence of the pre-sale contract which allows the developer to pass on a portion of the financial risk to the pre-sale buyer and thus no rush to complete when you already have buyers locked into a contract. Why not start more projects so you can lock in more pre-sale buyers and then take a long time to complete because you have too many projects on the go. Seems like a recipe for success from a developer standpoint. The issue then becomes what happens when all developers proceed down this path and a systemic problem creeps into the system with that systemic problem being gross oversupply. Add in the unprecedented level of speculators taking part in pre-sale contracts and we are now just seeing the tip of the iceberg of what happens to a local housing market when these things converge.
On another note - CMHC tracks the number of completed but unsold housing units and this number has risen from 892 units (11/07) to 1295 (11/08). Clearly the market is saturated and cannot absorb any more housing units at current price levels.