Lower costs fuel small housing boom

Lower construction costs are contributing to an increase in new home construction over the first five months of 2010.

According to figures released earlier this month by the Canada Mortgage and Housing Corporation, construction began on 82 single-detached and multiple family homes in Kelowna in May, an increase of 116% over May of 2009.

Over the first five months of 2010, housing starts have totaled 408, up from just 139 over the first five months a year ago.

"Lower construction costs have allowed builders to target value conscious buyers, boosting demand for new homes," says CMHC market analyst, Paul Fabri.

"Favourable interest rates have also been a key factor contributing to increased demand."

Fabri says consumers looking for a new home will find a good choice of new, completed and unoccupied units and strong price competition from the existing home market this year.

He adds that Kelowna's multi-family construction sector has moved away from large scale apartment condominiums toward smaller, phased attached housing projects and rental apartment construction.

In Vernon, construction began on 24 single-detached and multiple housing units in May, compared to 21 the year before while in Penticton, construction started on eight new single-detached homes in May, down one from the year previous.

Overall, construction in Vernon is off 2% over the first five months of 2009 while in Penticton, 2010 housing starts are up 272% over a year ago.