The Canada Mortgage and Housing Corp. released its December and 2016 year-end numbers for housing starts this week, noting a downward trend last month using its “six-month moving average of the monthly seasonally adjusted annual rates of housing starts.” The CMHC uses the moving average to remove some of the significant ups and down in monthly building starts, particularly related to multiple-unit projects, to better see the trend in construction activity.
But Peter Simpson, the former long-serving CEO of the Greater Vancouver Home Builders’ Association, who retired in 2012, prefers to look at the raw numbers. And what he saw in Tuesday’s CMHC report had him excitedly cheering on his former industry and province. (The one-time journalist, now 72, retired to Nova Scotia where to the surprise of many, mostly himself, he now works as a volunteer firefighter and medical first responder.)
The total actual housing starts for B.C. last year hit 39,489, compared to 29,914 in 2015. For the 23 communities in the Vancouver Census Metropolitan Area, the total was 27,914 housing starts in 2016 compared to 20,863 in 2015 — a whopping 34-per-cent increase in construction activity in a single year.
“This is amazing,” said Simpson, who was visiting relatives in Mission when he called me. “I remember dancing in the streets when we hit 20,000 starts.”
“That’s the most by far since 1989, when there were 21,834,” added Simpson, noting that there were fewer than 10,000 starts in the years after the Great Recession.
Those numbers compare to B.C.’s manufacturing industry ($15 billion in GDP), mining ($8.3 billion), agriculture ($3.8 billion) and forestry and logging ($1.6 billion).
“I am very happy for the industry,” said Simpson of the high pace of construction. “It is not just good for the builders and developers. Every trade involved, suppliers, the ripple effect (in the economy) is far-reaching and it’s enormous. It goes right down to the guy making sandwiches in the trucks that come to the building sites and then back to the bakers who make the bread.”
Simpson said there is a lot of talk of trying to cool the Vancouver real-estate market, but that “detractors who say we’ve got to slow this market, they may as well say, ‘We’ve got to cut jobs.’”
He’s right. With the construction industry being such a huge part of the B.C. economy, its health is critical to the province’s overall prosperity.
Digging a bit further into the housing-starts data reveals some interesting stories, most significantly in the City of Vancouver.
Vancouver, which gets accused of being a difficult bureaucracy for developers to deal with, had 9,759 housing starts last year, including 8,479 multi-family starts and 1,280 houses. That’s up an astonishing 111 per cent from the 4,616 starts in 2015. If that’s the pace of construction with a slow bureaucracy, I can’t imagine the pace if building permits were issued quicker.
Simpson noted that Burnaby starts (4,172 in 2016 compared to 1,918 in 2015) surpassed Surrey’s (3,471, down from 4,561 in 2015) for the first time that he could recall. Richmond was fourth, with 2,215 starts last year, down from 2,657 in 2015.
Other parts of B.C. also saw large jumps in housing starts. Greater Victoria starts rose to 2,933 in 2016 from 2,008 the year earlier, Kelowna starts rose to 2,196 from 1,280, Abbotsford-Mission climbed to 1,136 from 806 in 2015, while Kamloops start rose to 697 from 631, to name a few.
Simpson said the booming construction business generated 78,159 person-years of employment — good-paying jobs that mean workers can raise families, buy products, take on mortgages and pay taxes.
“When you consider all the measures that have been made to slow down construction and cool the market, well, the market speaks for itself. People want to buy houses, people want to buy condos,” he said. “I think it is very positive to the areas. The question is when does it stop, or will it?”
Predicting the end of a construction boom is difficult, but it’s sure good economic news for British Columbians while it lasts.
Credit: theprovince.com/
