Construction on the rise but builders can’t keep up with demand
Wyng Chow
Sun
Spurred by rising demand and dwindling inventory, new house construction in Greater Vancouver jumped 46 per cent in July compared with the same month a year ago, while property sales soared 50 per cent, driving up house prices.
“This is an exciting time for both builders and consumers,” said Charles King, chief market analyst for Canada Mortgage and Housing Corp. in Vancouver.
“Consumer confidence in residential real estate has been ignited by low interest rates. Today, home ownership continues to be within the reach of most pocketbooks.
“With this surge in new construction, consumers will have the opportunity to purchase a range of single-detached and multiple-family housing in many communities.”
Figures released Monday by CMHC show construction started on 1,691 new homes last month in Greater Vancouver, compared with 1,161 units in July 2002.
Through the first seven months of 2003, a total of 8,019 new starts was recorded in the region, up 15 per cent from 6,994 units the previous year.
Despite the construction boom, developers still can’t keep up with demand, as the number of active listings in July fell 20 per cent year-over-year to 9,325 units, down from 11,769 units.
Realtor Bob Rennie said that pre-sales have been so hot, there are fewer than 200 condominiums left for sale in the some 19 projects that are still under construction in downtown Vancouver.
“The market is being fuelled by the lowest interest rates in 45 years, along with the lowest number of listings in 18 years. When you reinforce that with the upcoming Winter Olympics and the future jobs and investment coming into the Lower Mainland, you’ve got an active market.”
(Five-year, fixed-term mortgages are currently available at rates below five per cent).
Between May and July, it took Rennie less than eight weeks to sell out all 456 units at the Electric Avenue condo project, being developed by Wall Financial Corp., in the 900-block Hornby.
At an upcoming Wall project, called the Hudson at Granville and Dunsmuir, Rennie already has more than 140 prospective purchasers on the priority waiting list for the 427 suites, a month before the sales launch.
Over on the North Vancouver waterfront, Rennie recently sold 93 of 117 units at Millennium Group’s One Park Lane, at West First and Chesterfield, in less than three weeks.
“The dynamic spot isn’t just downtown, it’s everywhere,” said Rennie, who sold $127 million worth of properties in 2002 and expects to far exceed that dollar volume this year.
In July, Multiple Listing Service data showed a total of 4,023 detached houses, townhomes and condos changed hands in Greater Vancouver, the first time that more than 4,000 units sold in a single month since March 1992, at the height of the sizzling market largely fuelled at the time by Asian immigration.
By comparison, in July 2002, a total of 2,670 units changed hands.
Condos and townhomes were the hot tickets last month, with sales climbing 62.6 per cent and 61.3 per cent respectively over the same month last year.
The average MLS price of a detached house in Greater Vancouver rose 9.8 per cent in July to $428,600, up from $390,500 the previous year.
Condos sold at an average price of $214,900, an 8.7-per-cent increase over $197,700 in July 2002, while townhomes fetched an average of $271,200, an appreciation of four per cent over $260,800.
On Vancouver‘s west side — which includes the downtown area — condo sales nearly doubled last month with 692 units sold, compared to 357 units the previous year. The January-to-July average price of $273,500 was 7.3-per-cent higher than $255,000 in 2002.
In addition to first-time purchasers finding home ownership attractive because of record-low mortgage rates, King noted that residential property is now preferred by investors as a safe alternative to volatile stock markets.
A recent CMHC study indicates about 50 per cent of all condos built in downtown Vancouver during the 1990s were bought by investors.
“It appears that this trend is still evident,” King said.
Across B.C., 2,715 new housing starts were recorded in urban areas for July, up 41 per cent over the same month last year.
From January to July, province-wide housing starts rose 20 per cent to 13,018 units, with multiple (condos and townhomes) starts climbing 27 per cent to 6,691 units, and single-detached starts increasing 13 per cent to 6,327 units.
Along with the Lower Mainland, the leading B.C. markets in terms of growth this year are in Greater Victoria, Kelowna and Abbotsford.
© Copyright 2003 Vancouver Sun
