B.C. building boom nears pre-recession levels
VANCOUVER — Special to The Globe and Mail
Last updated Monday, Sep. 03 2012, 9:22 PM EDT
While the news is full of warnings about a national housing slowdown and shaky global economic future, the Vancouver region has had a building boom almost equal to pre-recession years.
From downtown office towers to condo projects in Burnaby, Coquitlam and Surrey, construction crews are busier than they’ve been since the worldwide economic downturn washed ashore here in 2008.
Some cities are crowing about their success, as Vancouver did last week, noting that it has processed building permits worth $1.1-billion in construction value for the first six months of the year.
If that pattern continues, new building values this year will be the second highest the city has ever seen in its 126-year history. (The year before the recession, 2007, had the highest.)
That prompted Mayor Gregor Robertson’s office to issue a statement about the encouraging numbers and the reasons.
“After keeping taxes low, and maintaining permit processing times despite higher volumes, this is further evidence that Vancouver’s economic action strategy is working to create highly skilled and high-paying new jobs,” he said.
But other cities are quietly noting similar trends that indicate 2012 will be even stronger than 2011.
Last year was already a strong recovery year for the region, which saw almost $6-billion worth of development (it was $7-billion in 2007) and a return to 100,000-plus people working in construction – almost one out of every 10 jobs.
Surrey’s latest quarterly financial statement showed the value of building permits for the first six months of 2012 at around $850-million. That’s a third higher than the previous year and double 2009 – the year the recession hit the region’s construction industry the hardest.
Richmond’s department records show it has issued permits for $273-million worth of construction in the first six months of 2012, compared to only $59-million in 2009.
“Vancouver has every right to wave the flag, because it did go through a pretty slow period,” says development consultant Bob Ransford, who works throughout the region. “But I would say Surrey and Richmond are doing better than Vancouver. Richmond has seen more of a steady churn of projects in spite of the recession.”
Regional numbers show that several municipalities surged more quickly than Vancouver did after the worst recession year, 2009, a fact that Mr. Ransford attributes to having plans in place that encouraged developers to move ahead while Vancouver was bogged down in lengthy rezoning and planning processes.
Richmond, which did extensive planning to create new zones around the Canada Line for high-density development, saw the amount of construction within its borders dip from around $400-million in 2008 to only $160-million in 2009. But then it surged to unprecedented heights in 2010, up to $865-million.
Coquitlam, whose construction activity dropped to $200-million in 2009, saw almost $400-million worth of permits taken out for 2011.
“Some major builders have eight or more separate projects in different parts of the region,” said Peter Simpson, president of the Greater Vancouver Home Builders’ Association.
What is slowing some builders down now is the slow processing times in some municipalities, he said.
“Vancouver has really improved,” Mr. Simpson said. “But there are concerns about some other municipalities not processing them very fast. They’re afraid to ramp up in case there’s another slowdown.”
Municipalities had laid off dozens of planners or not filled vacant positions in the past few years as the level of building activity fell.
Now, the question is whether another trough is coming.
Mr. Simpson and Mr. Ransford said indications are that the market is holding steady and there’s still a lot of optimism.
But that could change this fall, Mr. Ransford said, depending on how well some new projects coming on the market do in pre-sales. Signs of a softening would prompt both builders and lenders to start slowing down.
I have a couple of follow up articles right after this post..
The numbers /statistics quoted above are interesting,…but that’s about it.
The numbers I look at are the increasing number of For Sale signs, especially around multi- family units.
A neighbour of mine sold their 6000 sq.ft. house approx. 3 months ago…..no one moved in ..now its up for sale again.
If supply is growing, why has construction increased ? Lots of reasons…but not an indication of a healthy and viable market. Regardless I would not even consider purchasing in the pre-sale or construction stages. It IS time for a time out, and let the dust settle.
There are already enough people sucked in that are going to pay dearly for being a “greater fool”.