Vancouver‘s housing boom is fuelling the country’s record-breaking increase in building permits, according to a Statistics Canada report released yesterday.

Across the country, the value of building permits issued by municipalities jumped 27.1 per cent in June over the previous month to $5.3 billion, setting a new monthly record as well as exceeding the $5-billion mark for the first time.

In B.C., the value of housing permits issued in June increased nearly 80 per cent, to $796 million, setting a new monthly record for the province.

But the real force behind the explosive growth are multi-family developments across the Lower Mainland where the number of building permits for housing increased by 58 per cent in the first six months of 2004 compared to the same period last year.

At Vancouver City Hall, staff are busy processing the steady stream of permits.

“It is hectic here,” said Rick Scobie, director of development services for the city. “We’re offering overtime to staff just to keep up with the processing, but our timelines have been going up because of the increasing volume.”

Scobie said in June alone, his staff issued building permits worth half a billion dollars — the amount usually processed in six months. “We did half a year’s work in one month and we were already tracking month to month ahead of last year,” he said. “We’re coping, but we’re busy.”

Cameron Muir, senior market analyst for the Canada Mortgage and Housing Corp. (CMHC), said the demand for new housing is expected to remain strong for at least the next few years, and the building-permit numbers indicate construction activity will continue at a good pace this year.

“Building permits are a kind of forward indicator about what will be happening in the new few months,” Muir said.

“They give an indication there’s going to be a significant number of housing starts during the balance of the year.” Muir’s prediction will be confirmed this morning with CMHC’s release of the July housing start numbers.

So far this year, housing starts in the Lower Mainland are up 40 per cent over the first seven months of 2003 and most of the growth is in multi-unit construction.

Starts are down for the month of July, however, mainly due to a big jump in multiple starts during the previous few months.

“Condominium developers are working flat out to satisfy demand,” Muir said.

“The Greater Vancouver market is the hottest in the country.”

Despite the number of new condos under construction, the inventory of completed new units is at a historic low in the Lower Mainland. Last month, there were no new apartments available in downtown Vancouver and only 68 in the entire Lower Mainland.

Five years ago, there were 2,600 new condos available for sale during the same period.

“I don’t remember the last time it was like that,” Muir said yesterday. “Even if demand dropped, all those new units are sold and the ones under construction are mostly pre-sold. If you want a new unit, you’re going to have to wait.”

Last week, CMHC predicted that home-building starts this year will reach their highest level since the late 1980s housing boom, due to the lowest mortgage rates in several decades and continued employment growth.

In B.C., the construction industry is the most powerful element in the province’s economy and has created 10,000 new jobs so far this year.

© The Vancouver Province 2004

STUART DAVIS/VANCOUVER SUN Joelle Ciona, Dina Gonzalez Mascaro and their dog Burana are all in love with Uno.

Floorplan of the one bedroom and den suite (711 sq. ft.) that Ciona and Mascaro will share.

   PHOTOS BY STUART DAVIS/VANCOUVER SUN
Two views of the living room in the Uno display suite show the seamless blending of living space, while the bedroom (above) is stylishly functional.

Homeowners south of the Fraser River should no longer feel like the Lower Mainland’s poor cousins. The price of houses and townhouses is rising faster in the Fraser Valley than in Greater Vancouver, July sales statistics show.

The average price of a detached home in the valley rose 20.9 per cent since July 2003, to $360,488, the Fraser Valley Real Estate Board reported Wednesday. Townhouses averaged $235,963, up a whopping 27.6 per cent in just a year.

Apartment prices in the valley rose a more modest 14.8 per cent to $137,835 on average.

As in the city, sales activity cooled in July, with 1,553 transactions compared to 1,915 in the same month last year.

Fraser Valley Real Estate Board president Moss Maloney put the decline down to the fact July 2003 was extraordinary, breaking the previous record for sales in the month.

“Sales continue to be very strong, higher than what we predicted. Overall, we’re still on track to beat last year,” he said.

Prices were highest in White Rock, where a detached house averages $553,263, up a hefty $120,377 from a year earlier.

“It’s still a seller’s market. Inventory is up only slightly, yet prices are firming up and remaining consistently high,” Moloney said.

The Fraser Valley sales figures echo numbers released this week by the Real Estate Board of Greater Vancouver, where July sales slipped by a quarter year over year, to 3,017 units from 4,023 in July 2003 amid rising prices.

The benchmark price of a single-family house — representing a typical home on the market — rose 15.4 per cent to $493,010, the Vancouver board said. The benchmark townhouse rose 19.3 per cent to $324,530, while condos rose 19.6 per cent to $242,470.

The Fraser Valley board covers communities south of the Fraser River from Delta to Abbotsford. The Greater Vancouver numbers reflect sales from Maple Ridge in the east to Richmond in the south and the Sunshine Coast in the west.

So far this year 12,006 homes have changed hands in the Fraser Valley, compared to 10,879 at this time last year. Sales in 2003 set a new volume record for both Lower Mainland real estate boards.

Realtors and homeowners will be watching whether or not sales activity picks up again in the fall. A prolonged slowdown in sales, accompanied by a rise in the number of homes on the market, typically precedes a levelling-off in prices.

“My prediction is that we’re going to have a very strong fall,” Maloney said. He noted that interest rates are rising, but “not running away.”

Given the price increases seen over the past three years, buyers are becoming more selective, however.

“A home that’s priced five, six, seven per cent over market will sit,” Maloney said.

© The Vancouver Sun 2004

CREDIT: Vancouver Sun Graphic New Homes By Province

British Columbia will lead the country in the growth of new home construction this year and next, Canada Mortgage and Housing Corporation predicts.

Housing starts will grow 21.1 per cent to 31,700 in 2004 and a further 2.2 per cent to 32,400 in 2005, the federal agency said in its third-quarter Housing Outlook, released Wednesday. That compares with a projected Canada-wide increase of just 3.3 per cent this year and a decline next year. It also represents the highest new home numbers seen on the West Coast in a decade.

B.C. housing starts peaked at 42,807 in 1993, when new arrivals were flocking to the province from Alberta, Ontario and Hong Kong. Since the late 1990s more new homes have been built in Alberta than B.C., but CMHC is predicting that B.C. will once again overtake its neighbour beginning in 2005.

The province is also expected to set a new record of 100,000 sales of existing homes this year — more than one in every five homes sold in Canada — and to lead all provinces in the growth of renovation spending. B.C. residents will spend $4.6 billion on home improvement this year, a 10.3-per-cent increase over 2003.

CMHC’s regional economist, Carol Frketich, attributed B.C.’s leading position to strong employment growth and rising consumer confidence, in addition to the historically low interest rates that are sustaining construction and real estate sales across the country. She also noted that B.C. is playing catch-up.

“We’re still coming off those very low numbers in 2000 and 2001,” she said. B.C. had been underperforming the rest of Canada since the “Asian flu” — the economic downturn in Asia — struck in 1997. As a result, the housing market here had more room to grow than elsewhere in Canada.

“This will be the third straight year of more than 20-per-cent growth” in new home construction, she said.

Though the 2005 projections are still dependent on a number of factors, Frketich said the 2004 forecast is pretty solid.

“For 2004 we’ve got a lot under our belt already,” she said. “It would take a lot to throw that forecast off.”

Greater Vancouver accounts for more than 60 per cent of the new apartments, townhouses and houses being built, but the positive direction is spread around B.C., Frketich said. Victoria is seeing a substantial increase in condominium construction, as is Kelowna. The fastest percentage increase in all housing categories is coming in Kamloops, she added.

Higher interest rates will likely push resale activity down to a still-robust 95,000 transactions next year, CMHC predicts. But prices will keep climbing, faster than the Canadian average. The average price of a home in B.C. will grow 12 per cent to $292,000 this year and another 5.5 per cent to $308,000 in 2005.

Canada-wide, the average price should rise 9.2 per cent to $226,200 this year and 4.6 per cent to $236,500 in 2005.

B.C. will see higher renovation spending again in 2005, growing another 8.9 per cent to $5 billion, CMHC said. That contrasts with six-per-cent growth nationwide, to $38.5 billion.

Across Canada, CMHC expects 225,700 housing starts this year, the most since 1987.

“As mortgage rates continue to rise next year, demand for new homes will cool and starts will slow to 204,200 units,” CHMC chief economist Bob Dugan said in a news release. Ontario and Alberta starts have already begun to decline.

Though B.C.’s housing market indicators appear to be trailing the market trend in the rest of the country, the province won’t necessarily follow other provinces into a downturn in 2006 and beyond, Frketich said.

“B.C.’s in a different cycle,” she said, noting that the approach of the 2010 Olympics and trends in the energy sector bode well for long-term growth in real estate.

Even today’s frenetic pace of new home construction is not keeping pace with the demand, said Michael Ferreira, president of the research and consulting firm Urban Analytics Inc. Just 76 of the 7,420 new multi-family homes put on the market in Greater Vancouver between January and July remained on the market at the end of the period, he noted.

“Most of the stuff that’s being started is already sold,” he said. He added that municipal halls are swamped with development proposals, so many projects are taking longer than expected to go through the approval process.

Like CMHC, Ferreira does not foresee any softening in the market any time soon. Construction activity will increase and prices will rise — both because labour and material costs are rising and because of underlying land values are, too.

“I don’t really see much of a change over the next 18 to 24 months,” he said. “There’s always a fear of the bubble bursting, but I don’t see any letdown in the near future.”

In the Vancouver area, sales volume dropped by a quarter to 3,017 units, the Real Estate Board of Greater Vancouver reported Wednesday. Single-family houses saw the biggest decline, to 1,211 from 1,819 in July 2003.

Still, year-to-date sales are running nine per cent ahead of 2003 and average home prices continued to increase at a torrid pace, with townhouses at a new all-time high of $324,193 and detached houses and condominiums slightly off their spring peaks at $521,782 and $246,765, respectively.

The average price of 60 houses sold in toney West Vancouver in July reached a stratospheric $978,700. The benchmark price, representing a typical home in the Greater Vancouver marketplace, rose 15.4 for houses, 19.3 per cent for townhouses and 19.6 per cent for apartment properties, year over year, the board said.

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NEW HOMES BY PROVINCE:

B.C. is expected to be the only province in Canada to record increases in housing starts both this year and in 2005.

Estimated change in number of new housing starts in (brackets).

Source: CMHC

2003 2004 2005

Actual Forecast Forecast

31,700 32,400

B.C. 26,174 (+5,526) (+700)

33,900 30,000

Alberta 36,171 (-2,271) (-3,900)

84,500 76,500

Ontario 85,180 (-680) (-8,000)

56,000 47,000

Quebec 50,289 (+5,711) (-9,000)

4,100 3,875

Nova Scotia 5,096 (-996) (-225)

© The Vancouver Sun 2004

Where: 1077 Cordova.

What: Shaw Tower, a 40-storey office/live work tower on the Vancouver waterfront.

When: Opens 2004.

Who: Consortium led by Westbank Project Inc. of Vancouver.

How much: $150 million.

Designer: James K.M. Cheng Architects Inc.

For a brief period the 146-metre-high Shaw Tower, now nearing completion on Vancouver‘s inner waterfront, will hold the distinction of being the highest building in the city.

It will soon lose its crown to a new 60-storey tower at the corner of Georgia and Thurlow, also being developed by Ian Gillespie of Westbank.

The 40-storey residential-commercial tower is unique in the sense that the first 18 storeys –298,000 square feet — will be taken up 80 per cent by Shaw Cablesystems, which gets its name attached to the distinctive, triangular building that will dominate the waterfront and is perfectly situated next to the new Vancouver Convention Centre.

Construction giant Ledcor will take up another 13 per cent and Westbank seven per cent. The upper floors, designed for those who wish to live where they work, will have views of the waterfront and the city.

The live/work units vary from 780 square feet to 6,000 square feet and cost between $350,000 and $5.5 million

The suites include commercial curtain wall construction — rarely used in residential construction — overheight ceilings, air conditioning and 24-hour concierge service.

Architect James Cheng says the design will be a shimmering tower on the water that will be visible from every direction. The building will also contain a 4,300-foot daycare centre, fitness centre and meeting and community rooms.

The tower holds one other distinction has well. Its foundation slab gobbled up 3,000 cubic metres of concrete, the largest single continuous pour in the city’s construction history.

© The Vancouver Province 2004