B.C. Market Report: Builders enjoy robust start

By Peter Mitham

Strong housing starts in the first quarter of 2006 aren't entirely cancelling prospects for a slower year for B.C. homebuilders in the months ahead.
Canada Mortgage and Housing Corporation forecasts 32,600 housing starts for the province, a decrease from the 34,667 starts reported last year.
That's in spite of 7,934 housing starts in urban B.C. in the first three months of this year, a 27 per cent increase over the same period last year. Were the pace of starts to continue through this year, CMHC believes urban centres in B.C. could see just over 38,000 housing starts this year.
But such a dramatic increase isn't likely to happen, said Cameron Muir, senior market analyst in CMHC's Vancouver office.
"We don't anticipate we'll see the same increase at the end of 2006," he said, acknowledging that strong activity especially in February and March may require CMHC to recast its 2006 forecast.
Though developers and contractors are learning to deal with a tight labour supply through better scheduling, Muir said a shortage of skilled workers and available development sites continues to put a damper on activity.
In Vancouver, where a 41 percent increase in single-detached starts to 1,424 helped drive total housing starts to 5,093 units in the first quarter, the skepticism is equally strong.
"If you project these numbers for the first quarter out to the end of the year, it looks as though we might meet or exceed the 2004 total, which was the highest for a decade. But we still have nine months to go," said Peter Simpson, CEO of the Greater Vancouver Home Builders' Association.
He noted last year initially saw sluggish starts in Vancouver, disappointing expectations, but eventually caught up later to end the year at 18,840. He believes a similar reversal is possible this year.
In the meantime, contractors continue to find it very difficult to secure trades.
While big builders with multiple projects enjoy some flexibility in terms of scheduling workers, Simpson said smaller builders face significant pressure in keeping trades. Though many are learning to deal with the straitened market, which has been grappling with the lack of skilled trades for the past two years, Simpson said poaching is not unheard of.
'Trades wanted' signs are not uncommon on hoarding at Vancouver-area building sites, but some workers are also receiving offers of above-market wages and significant cash bonuses if they switch jobs.
"That's an unfortunate condition of the market," Simpson said, but one that underlines the competition for skilled workers.
A lack of workers, as well as escalating construction expenses - the Independent Contractors' and Businesses' Association expects costs to rise by half over current levels by 2010 and construction times will see significant lengthening. A 12-month multifamily project, for instance, could now bank on a timeframe of approximately 16 months or more.
In the growing seaside community of Ucluelet on the west coast of Vancouver Island, developer Wayne Wenstob of Whiskey Dock Developments Ltd. said a mixed-use project he's undertaking with 14 residential units has taken twice as long to build as he expected.
"That's simply because of the fact of not having workmen. I'm not even being fussy in seeing skilled workmen. I can't even get labourers," he said. HB