Housing Starts Rise

Condo Construction Boosts Kelowna Area Housing Starts

The Kelowna area new home market maintained a blistering pace in July, according to Canada Mortgage and Housing Corporation (CMHC). Housing starts, lead by the condominium sector, broke the 300 unit mark for the second straight month. July housing starts increased to 332 units from 281 units in July 2005.

Apartment condominium starts have surged ahead this year, builders responding to strong growth in demand. Construction began on seven projects totaling 452 units in June and July. “Price and lifestyle are the key drivers,” explained CMHC Market Analyst Paul Fabri. “Kelowna’s condominium market has moved in new directions, attracting not only retirees, but first-time buyers and especially buyers seeking resort style housing,” noted Fabri. Multi-family housing has become more widespread. Also, many new, larger neighbourhood developments are now designed to include higher density housing – semi-detached, townhouse and condominium units. Mixed residential/commercial developments and towers, rare just a few years ago, have become more common. Singles starts remained at high levels in July.

Though skyrocketing new home prices and slightly higher interest rates have begun to temper growth in demand for detached units, market fundamentals remain solid. Strong employment growth has spurred in-migration, boosting demand for housing. Also, regional amenities remain a big draw, fueling population growth. An aging population in combination with hot BC and Alberta economies has led to sharply increased demand for resort and other types of lifestyle-oriented housing. Interest rates, though edging up, remain low by historical standards.

Elsewhere, the Kamloops and Vernon new home markets also recorded another strong performance. Penticton starts were down 23% from last July.

Nationally, housing starts were almost unchanged, edging up to 236,500 units seasonally adjusted at annual rates (SAAR), from 236,400 (SAAR) units in June. Gains in BC and Ontario were offset by declines in Quebec and the Prairie and Atlantic regions.