Vancouver Island housing construction has dropped to a level not seen since the summer of 2000 as the economic downturn continues to pummel real estate and construction sectors.
New home starts plunged to just 74 units in February -- a 73 per cent drop compared to the same month a year ago when 277 new housing units got underway. The last time starts were close to last month's level was August 2000 when work began on 73 homes, ÎÚÑ»´«Ã½ Mortgage and Housing Corp. said yesterday.
February was the first month since April 2000 when no townhouses or condominiums were started on Vancouver Island.
Overall, Vancouver Island starts dropped from 169 in January.
"Lower levels of new construction across Vancouver Island can be attributed to a well-supplied resale home market," Travis Archibald, CMHC senior market analyst said from Vancouver. "The slow start is consistent with CMHC forecasts, which call for a reduction in housing starts in 2009. The good news is that home buyers will benefit from a better and more affordable selection of homes."
After years of frenzied condominium building, the multi-family segment of the market has slowed drastically.
Last month, Victoria had 36 new homes underway. Of those, 24 were single-family, with 10 in Saanich and the Saanich Peninsula combined, and nine in the Western Communities. Nanaimo had the next highest number of starts, with 22.
The total number of starts for the first two months of this year came in at 243, down from 594 for the same months last year, CMHC said.
In Greater Vancouver, the picture is similar, with 701 starts last month, compared with 2,446 in the same month the year before. ÎÚÑ»´«Ã½'s urban housing starts slid by 13 per cent in February to 12,300 seasonally adjusted at an annual rate.
Across the country, starts dropped by a startling 12 per cent last month to 134,000 from January. Many analysts had anticipated starts to reach 145,000 last month.
ÎÚÑ»´«Ã½ Mortgage and Housing Corp. said yesterday there were 134,600 housing starts in February, down from 153,500 units in January, on a seasonally adjusted annual basis. Most economists had expected housing start to reach 145,000 in February.
Urban construction fell 14.9 per cent to 107,800 units in February, with multiple starts falling 17.5 per cent to 63,300 and single-unit activity dropping 11 per cent to 44,500.
The decline in urban construction was felt in all regions of ÎÚÑ»´«Ã½, except Atlantic ÎÚÑ»´«Ã½ where starts rose by 10.8 per cent, CMHC said. The biggest declines were in Quebec, down 19.6 per cent, Ontario, off 14.4 per cent, the Prairies, 19.4 per cent lower, and ÎÚÑ»´«Ã½ down the 13 per cent.
Rural starts in February were unchanged from the previous month at 26,800 units.
Home construction "is slowing to more sustainable levels," CMHC said. "These decreases, however, should be viewed in the context that housing starts have been exceptionally strong over the past seven years, exceeding 200,000 units per year."
BMO Capital Markets economist Robert Kavcic said the "Canadian housing correction is in full swing with starts now well below the rate of household formation, offsetting the overbuilding of the past five years."
Millan Mulraine, economics strategist at TD Securities, said the "recent slew of housing sector reports have all been pointing to a continued correction in the Canadian housing market, and this report suggests that the pace of adjustment is accelerating. It means that the housing sector may remain a key source of drag to Canadian economic activity."
The Canadian economy shrank at an annualized rate of 3.4 per cent in the fourth quarter of 2008 as the country fell into a deeper-than-expected recession.
