Housing starts across British Columbia remained depressed in the first quarter of 2009, falling almost 70 per cent from the same quarter of 2008, Canada Mortgage and Housing Corp. reported Wednesday.

While housing starts ticked up slightly in March on a national basis, builders in B.C. started work on 2,517 new homes in the first three months compared with 8,532 in 2008.

Locally, the declines in starts ranged from almost 93 per cent in Kelowna, where builders started on 72 new homes compared with 985 in the first quarter last year; to 31 per cent in Nanaimo, where builders started on 170 new homes vs. 247 in the same months a year ago.

New-housing construction slipped in March to a pace that would see builders across urban B.C. start work on 10,000 units in 2009, compared with a pace of 12,000 units seen in February.

In the Lower Mainland, Metro Vancouver saw starts fall by two-thirds, 1,829 units compared with 5,131 in the first quarter of 2008.

Robyn Adamache, senior analyst for Canada Mortgage and Housing in Vancouver, said the drop in starts now is a lagging response to the dramatic fall-off in sales that the Lower Mainland and other regions experienced through last summer and fall.

Comparing the current real-estate market correction to the past couple of market cycles, Adamache added that “it seems like builders have responded a little bit more quickly to the downturn in the resale market.”

Across Metro Vancouver, West Vancouver saw the steepest drop in the first quarter at 92 per cent, with the Tri-Cities and Surrey not far behind at 91 per cent.

Delta was the only municipality to see an increase in housing starts. Builders there started work on 81 new housing units, an increase of 55 per cent in the first quarter from a year earlier.

B.C., and Metro Vancouver in particular, did see a significant rise in the value of building-permit applications in February, which signals higher levels of building in future months.

Adamache added that current housing starts are well below her forecast for Metro Vancouver, so the permit numbers are evidence backing her expectation for “things to start improving a bit by the end of the year.”

Peter Simpson, CEO of the Greater Vancouver Home Builders’ Association, said record attendance of almost 900 participants at his organization’s seminar for first-time homebuyers indicates to him that there is demand in the market that will support more housing starts later on.

“That [seminar], for me, was the litmus test of where we are,” Simpson said in an interview.

If the seminar had low attendance, coupled with low housing starts, “I’d say that’s going to be a long-term [situation],” Simpson added.

In the meantime, however, Simpson said the low level of starts does not bode well for employment in the construction sector.

Adamache said rising unemployment in B.C. is one factor that will weigh on housing in the months to come.

Douglas Porter, an economist with BMO Capital Markets said, “You are starting to see very real job losses in B.C. B.C. is, unfortunately starting to catch up with Ontario on that front.”

On the bright side, Porter said falling prices and lower interest rates have made homes more affordable, which will help mitigate the effects of higher unemployment.

Across Canada, home construction rose unexpectedly in March, led by Ontario and Quebec, CMHC said.

There were 154,700 housing starts on an annualized basis during the month, up from a revised 136,100 units in February, the government agency said. Many economists had expected housing starts to dip to 130,000 units in March.

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