Home building on the Island remains a booming business and those wielding hammers don’t expect it to change anytime soon.
That’s the consensus from developers who, despite a recent increase in interest rates and another expected this fall, are bullish on their prospects over the next two years.
“I think it’s going to be good for at least another couple of years,” said Steve Copp, owner of Steve Copp Construction. “Interest rates might make a small mark in it, but there are still buyers coming into town and the absorption rate is very quick on a lot of the bigger projects and new homes.”
That demand, which home builders say comes from locals moving up to new homes and out-of-province buyers discovering the Island, buoyed home construction in June with 467 new homes started, down slightly from the 533 started in June of 2006 but still a big jump from the 279 started in May 2007.
Figures from Canada Mortgage and Housing Corporation released yesterday also showed Victoria builders had a busy month in June, with 309 new homes started, up from 300 in the same period last year.
Copp, who has built a mix of single-family homes and multiple-family projects, said last year a 31-unit development in Langford priced between $200,000 and $250,000 a unit sold out in 10 days, and a 49-unit project he hopes to get zoned in Colwood already has a 38-person waiting list.
“As long as you have the right price point, there are people to buy it,” he said. “People are definitely coming here and buying anything from the mid-range to the top-dollar stuff, too.”
According to Peggy Prill, senior market analyst for CMHC, there’s nothing to suggest that will change this year.
“The real-estate market is cyclical, there’s no getting around that, and we do expect we are in the upper part of the cycle and eventually things will tend to trend down,” she said. “But in terms of what we’re seeing in the economic indicators, it’s still going very strong.”
The key indicator according to homebuilders is the unemployment rate — with that at an all-time low in Victoria, the housing market remains buoyant.
“I just don’t see it slowing down,” said Bob Gill, owner of the 114-unit Reflections development in Langford, due to be completed next June.
“We’ve had 10 sales in the last two weeks, and this is supposed to be the slow time of year.”
Reflections has sold more than half its units — some units will be held back for what is expected to be a strong fall push that could net a higher return — and have leased or sold 90 per cent of the available 15,000 square feet of commercial space.
The demand has some builders looking at hitting historical targets in terms of the number of homes started this year.
“A couple of years ago, there was a lot of predictions of softening in the market and it just didn’t happen,” said Casey Edge, executive director of the Canadian Home Builders Association Victoria, noting higher prices, increased interest rates and slipping demand were all cited as reasons for a slowdown.
“But demand is clearly continuing to increase, and we’re starting to push toward that magic 3,000 number [of annual starts], which we’ve seen a couple of times in the past — 1981 and 1989,” he said.
“The market continues to be strong and surprise people.”
In the first six months of 2007, Victoria saw 1,214 new homes started, up from 1,110 last year, with the Island boasting 2,201 starts, up from 2,146.
Nationally, it’s another story. CMHC reported that in Ontario and the Prairies, housing starts dropped last month by 4.1 per cent to 225,000 units, seasonally adjusted at an annual rate compared with May of 2007.
B.C., on the other hand, had a good month, with a slight increase to 34,500 units SAAR from 33,500. End of Article.
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