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Housing starts on the upswing; Richmond one of a few construction hotspots

Metro Vancouver's housing starts are on the upswing, rising to 1,783 in September over 1,644 in the same month last year, with most activity in the multi-family category, according to Canada Mortgage and Housing Corp.

Metro Vancouver's housing starts are on the upswing, rising to 1,783 in September over 1,644 in the same month last year, with most activity in the multi-family category, according to Canada Mortgage and Housing Corp.

Year-to-date, the numbers were even stronger, with the multi-family sector seeing a 39-per-cent increase in starts from January to September compared to the same period in 2010.

The reason for the multifamily strength, according to CMHC's senior market analyst for Metro Vancouver, Robyn Adamache, is two-fold: builders are increasingly confident taking on larger multi-family projects, and buyers are skeptical of higher-priced detached homes because they want to avoid the HST threshold of $525,000.

"On the single-family side, we're seeing a decline this year," Adamache said in an interview after the report was released Tuesday. "We think people interested in a single detached home are putting off the decision until the HST tax ramifications are sorted out.

"When the economic recovery was fragile, builders were more comfortable doing single-family starts rather than a large project. It was a more incremental way of getting out of the recession. Since the recovery has taken a better foothold, we're seeing the multi-family side pick up again."

Construction hot spots year-todate compared to 2010 included North Vancouver, Richmond and the Tri-Cities area.

According to CMHC, while the total number of starts in Metro Vancouver rose eight per cent from August to September to 1,783, they were up 19 per cent year-to-date from 11,137 to 13,260.

Year-to-date, multiples were in a much stronger category, rising 39 per cent from January to September to 10,516, from 7,541 in the same period in 2010.

Single-detached starts fell 24 per cent over the same period, from 3,596 to 2,744.

Adamache - who noted that apartment starts were concentrated in the cities of Vancouver and Richmond, while Surrey led the way in less dense housing types including singledetached and townhouse starts - said multi-unit construction has been trending higher since 2010 after declining sharply from 2008 to 2009.

She also said, "The City of Vancouver had the secondhighest number of single-family home starts in the region, most of which were replacement housing."

Greater Vancouver Home Builders' Association president and CEO Peter Simpson agreed in an interview that housing starts - particularly on the multi-family side - are looking up.

"In 2009, we ended the year with 8,339 [total] housing starts. Last year, it was improved to 15,217 for the entire year. This year, so far, we're at 13,260. That's not bad. The forecast for the year is about 16,300."

However, Simpson said, the "fly in the ointment" is buyers avoiding higher-priced homes - particularly more expensive single-detached homes - until they get more clarity on the HST.

Simpson said builders would like the government to remove the provincial portion of the HST to a level that neutralizes the tax's effect, or reduce the property-transfer tax on new homes to soften the HST's effect.

Meanwhile, the Abbotsford census metropolitan area recorded 29 housing starts in September, down from the 43 starts recorded in the same month last year, the national housing agency said. So far this year, there were 362 housing starts compared with 351 in the same period last year.

In B.C., September's seasonally adjusted annual rate of urbanhousing starts moved higher to 27,400 units from 23,100 units in the previous month.

The number of starts in B.C. urban areas increased to 2,399 in September from 2,305 in September 2010.