Housing outlook positive around B.C.; rental starts on the rise in Vancouver
We’re well into the season of forecasts, and the numbers can all start flowing together after a few presentations, leaving only a trend as a final impression. And the trend, if nothing else, indicates that housing markets around the province have every reason to stay strong this year despite some weakness relative to the past two years.
The impression was reinforced last week at the Canada Mortgage and Housing Corp.’s (CMHC) annual housing outlook conference. While often more bullish than other outlooks, CMHC presenters frequently used terms like “modest” and variations on “stable” to indicate the direction of the market. Recent peaks wouldn’t be met, but the outlook for the province’s housing markets is positive, and more so than other forecasts predict.
BC Real Estate Association stats, for example, peg resale pricing for Greater Vancouver at $734,000 in 2012, dropping to $720,000 in 2013 – a decline of 1.9%.
CMHC senior market analyst Robyn Lake told her listeners last week that she expects average resale house pricing to stay relatively even between 2012 and 2013, dropping just 0.3% from $730,000 to $728,000.
Similarly, despite expectations by many of a cooling trend in residential construction in 2013, CMHC expects a slight increase in housing starts from 19,000 units this year to 19,100 units in 2013 for the Vancouver metropolitan area.
This puts housing starts for 2012 above the forecast of 18,000 units made a year ago. It also anticipates a 0.5% increase in starts for 2013 over this year’s tally.
Vancouver Mayor Gregor Robertson boasted during his recent talk to the Urban Land Institute of the upswing in rental construction since he became mayor with a slate of supportive Vision Vancouver councillors in 2008.
“We had many years of being 100, 150 units a year, which is incredibly low,” Robertson said. “We’re now averaging over 500 units of rental being built a year for several years now.”
But figures presented at the CMHC conference indicate the onus is still on condo investors to supply Vancouver with rental units.
“The number of rental starts is still looking very, very low, so we really do rely on condominiums to fill that gap,” Lake told the conference.
CMHC figures indicate that purpose-built rental starts – both market and non-market units – in the city of Vancouver totalled 743 units last year and 594 units in 2010. This year to date, there have been 581 starts.
These numbers are consistent with 1990s construction levels and well above the low of 126 units set in 2005 during the mid-decade condo boom. (However, purpose-built rental starts – notwithstanding Robertson’s claim – averaged 491 a year between 2001 and 2010.)
Regionally, rental starts have also increased.
Purpose-built rental starts totalled 1,755 in metropolitan Vancouver last year, up from a low of 447 units in 2009.
Avison Young principal Darrell Hurst rightly took issue with last week’s mention of Uptown Property Group in connection with the Merchant Square office tower in New Westminster.
Hurst, listing broker for the development, pointed out that New Westminster is now the project’s developer.
Merchant Square was in a period of flux when a previous reference to the project appeared here in February 2012 following an inquiry to Avison Young and conversations with New Westminster chief administrative officer Paul Daminato and others. Those notes were tapped for last week’s column.
Merchant Square will have 137,000 square feet of office space and 7,000 square feet of retail space when it completes in 2014. Despite good interest from potential tenants, none have signed leases.