British Columbia housing starts remained elevated in August despite pulling back from stellar June and July performances.
B.C. urban-area housing starts in August reached a seasonally adjusted annualized pace of 42,875 units, according to the latest Canada Mortgage Housing and Corp. data.
While down 9.1 per cent from July’s pace of 47,170 units, levels were slightly higher than in August 2020. Unsurprisingly, August’s pullback reflected declines in the highly volatile multi-family sector as detached housing starts were unchanged. Housing starts typically fluctuate due to the impacts of large apartment and townhome projects.
August’s decline owed largely to a 9 per cent decline in the Vancouver Census Metropolitan Area (CMA), which is unsurprising given the dominance of multi-family construction in the region. Impacts from other metros on headline numbers were nominal given relative sizes of markets, but Abbotsford-Mission starts rebounded.
(Editor’s note: In August, 1,903 housing units started construction in Vancouver CMA (which includes Surrey and Langley), comprised of 1,203 apartments, 320 townhouses and 253 single- detached houses. There were also 38 starts of semi-detached homes, usually duplex units. Of the total multi-family starts, 23 per cent were rental units.)
Starts in smaller urban areas fell dramatically by 20 per cent, which may have been due to wildfires throughout the province.
Despite the decline, 2021 housing starts have been stellar. Year-to-date growth reached 36 per cent through the first eight months of the year. While partly reflective of a soft 2020 performance, this was the strongest start to the year on record and was further amplified by rural area gains. Detached starts in urban areas rose 25 per cent, with multi-family starts up nearly 40 per cent.
Growth was broad among metro areas, with Vancouver CMA starts up 34 per cent, Victoria up 43 per cent and Kelowna up 33 per cent through August. Abbotsford-Mission starts fell 22 per cent. Smaller urban markets on net contributed to higher starts with growth of more than 40 per cent. Broad growth reflects a combination of factors, including low interest rates and pandemic drivers such as remote work and early retirements.
Demand for recreational properties likely fuelled a movement of individuals away from the large and expensive urban cores into already under-supplied suburban and smaller urban areas.
These factors have led to a boom in construction across the province as builders struggle to meet the sharp upturn in demand. •
- Bryan Yu is chief economist at Central 1 Credit Union.