New detached houses become scarcer
Derrick Penner, Vancouver Sun
Published: Thursday, January 10, 2008
The new detached house became a rarer commodity in 2007 than ever in Metro Vancouver.
Multi-family units accounted for 80 per cent of all new homes started during the year, according to Canada Mortgage and Housing Corp.
New-home starts in Metro Vancouver increased by 11 per cent -- to 20,736 units in 2007, the highest since 1993.
However, detached houses accounted for only 4,211 of those, the lowest proportion since 1961, according to available Canada Mortgage and Housing records.
The last time houses made up 50 per cent or more of new housing starts was 1988, when 9,287 detached homes accounted for 52 per cent of new homes.
In 2007, apartment condominiums made up more than half the 16,525 multi-family homes started, according to Canada Mortgage and Housing analyst Richard Sam.
"The No. 1 reason we're seeing a lot of apartments is price," Sam said in an interview.
Sam added that with the average price for a Metro Vancouver detached house topping $800,000, "buyers have shifted their expectations towards more affordable, higher density style housing."
Helmut Pastrick, chief economist for Credit Union Central B.C., said in an interview that residential construction defied almost all forecasts in 2007, which called for an easing of new-home building.
Pastrick was not surprised by the continuing trend away from detached homes, which are becoming "more of the exclusive domain of only the wealthy."
"When it comes to the middle-income buyer, they're more likely to be purchasing a new townhouse or other form of multi-family," Pastrick added. "They won't be able to afford single-family [houses]."
Peter Simpson, CEO of the Greater Vancouver Home Builders' Association, added that the pressure on builders' costs alone will ensure that prices continue rising in 2008.
"We've got land, labour and municipal [development] cost charges, all three of which are rising," he added.
Simpson noted that multi-family housing dominated starts even in the more spacious suburbs such as the District of Langley, where the total was 626 multi-family starts versus 583 detached homes, and Maple Ridge, where 400 multi-family homes were started against 345 detached homes.
Surrey had the most housing starts in all of the Lower Mainland with 4,862. Multi-family units were 2,349 of those compared with 1,560 single-family homes.
"Among this generation of first-time home buyers," Simpson said, "there are those who will live their entire lives in some form of multi-family housing."
The trend away from single-family housing was a province-wide phenomenon. In 2007, CMHC counted 33,364 new starts across B.C.'s urban centres, a 5.5-per-cent increase. Of those starts, however, only 10,536 were detached houses, a 13.7-per-cent decrease from 2006.
Pastrick said he expects housing construction to decline in 2008 as rising prices and mortgage rates, which eased during the latter half of 2007, squeeze more buyers out of the market.
"At the margins, I see demand growing at a slower pace and supply growing at a faster pace," Pastrick said.
However, with most development now contingent on the pre-sales of significant numbers of units, Pastrick added that "the kind of oversupply one would expect in this process would not be considerable."
Pastrick expects "a fairly normal to mild adjustment" in Metro Vancouver real estate markets over the next two to four years.