Housing starts solid as mortgage rates watched

Island residential construction jumps 37%, signalling stronger economic conditions
By Darrell Bellaart, The Daily News June 9, 2010

The house-building industry is back producing homes at a rate comparable pre-recession rates in 2008.

The Canadian Mortgage and Housing Corporation, the federal agency that monitors the housing industry, is reporting solid year-over-year numbers in residential construction during the past year in its May industry report.

House construction is generally a good indicator of any economy and after a drop in activity on the Island, markets are now continuing a turnaround evident since the spring. A surge in apartment construction put Nanaimo ahead of the rest of the Island last year, but this year the emphasis is back on traditional, single detached homes.

Nanaimo’s housing industry started work on 390 units January through May, a 37% increase from the same period last year. May’s figures are similar, with 87 units started, a 25% increase over the same month last year.

Island-wide the industry was up 164% year-over-year, with 1,665 units compared to 624 in the first five months of 2010. Despite having the Island’s highest house prices, Victoria got the biggest chunk of that increase, with 979 new houses started, more than four times the 222 units started up until May 2009.

The market is still shy of its banner years — 2005 and 2008 — but builders are glad to see the industry turned around.

“It may be getting back to normal,” said Doug Bromage of InSight Developments, Nanaimo’s largest developer. “There may be a push to beat any impending interest rate hikes.”

CMHC reports 200 are in single-family housing, more than half of Nanaimo’s new growth.

“Your average house in Nanaimo is still under $400,000 and there is that big a wage gap between Nanaimo and Victoria,” said Travis Archibald, CMHC analyst.

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