Rate increase may hinder strong building pace

After a busy August, Greater Victoria homebuilders are on pace to start as many homes this year as they did in 2016, according to numbers released Monday by Canada Mortgage and Housing Corporation.

There were 183 housing units started last month, up from the 150 started in August of last year. Year-to-date, there have been 2,096 homes started in 2017. At this time last year, builders had started work on 2,042.

“We are approaching last year’s numbers, but my guess is we won’t surpass last year,” said Casey Edge, executive director of the Victoria Residential Builders Association.

Edge estimates the region will see about 2,700 homes started this year. Last year, Greater Victoria recorded 2,933 new starts.

“It’s a strong market, but it’s also a challenging market,” said Edge, noting there are several factors rearing their heads that could have an impact on homebuilding.

“It’s mostly because of rising material costs and the shortage of trades,” he said. “But then we have some things coming up in the next few months that could [have an impact].”

Edge said rising interest rates and mortgage rules that have established a higher threshold to qualify are going to make a difference in terms of market demand and therefore the number of news homes that are required.

“Then we have the [B.C. Energy Step Code]. B.C.’s municipalities are scrambling trying to figure out how to implement that and determine what support may be needed to implement the change,” he said.

The B.C. Energy Step Code is an amendment to the B.C. Building Code that will be implemented in stages starting later this year. Builders suggest it could add as much as $80,000 to the price of a new home, in the name of energy efficiency.

“It could be a perfect storm,” said Edge. “Those three things could affect the market going forward.”

Right now the market is busy, with most builders saying they are booked for at least the next 18 months.

So far this year, they have started 619 new single-family homes, up from the 608 through eight months last year; 86 semi-detached homes, a slight increase over last year; 211 townhomes, which is more than double the 91 started in 2016; and 1,174 apartments, a drop from the 1,257 last year.

Canada Mortgage and Housing Corp. said there are 3,298 homes of all kinds under construction in the region.