With the HST still a mass of confusion, certain markets are still feeling the pinch.

Victoria housing starts also down due to lack of multi-family projects.

Travis Archibald, senior market analyst with CMHC says Everything has been pretty slow across the Island over the first few months, but he’s still optimistic about the summer and fall months having seen what’s on the books, has been approved and what’s in the planning stages

As seen in the Times Colonist

Homebuilding in Greater Victoria was down 24 per cent over the first four months of 2011 compared to the 10-year historical average, says Canada Mortgage and Housing Corporation.

A combination of fewer multi-family developments breaking ground and uncertainty over the fate of the harmonized sales tax appears to be behind the sluggish start to the year.

“Everything has been pretty slow across the Island over the first few months, but I’m still optimistic about the summer and fall months having seen what’s on the books, has been approved and what’s in the planning stages,” said Travis Archibald, senior market analyst with CMHC. “But again, the biggest factor is on the multi-family side – any one project can have a big impact on the numbers and right now we haven’t seen much in terms of apartment and townhome starts this year.”

There were 445 total housing starts over the first four months of the year in Greater Victoria, a 47 per cent drop from the same period in 2010. Of those, only 249 represented multi-family starts, a big drop from the 522 multifamily starts in 2010.

In April alone, there were 124 total starts, down 42 per cent from the 213 in April 2010, and there were just 59 multi-family units a 52 per cent drop from the 123 in April last year.

Archibald said CMHC still expects about 2,000 starts across Victoria in 2011 based on continued levels of in-migration and the number of projects in the pipeline.

“Like any business, homebuilding is cyclical but ultimately you will have to build to meet the long-term demographic demand,” he said noting net in-migration to Victoria last year was 6,000. “As long as people keep moving here we will need housing.”

But builders are unlikely to get to it quickly until the HST question is resolved, said Casey Edge, executive director of the Victoria branch of the Canadian Homebuilders Association.

“We’re waiting on the [June] referendum to see where that goes,” Edge said.

He noted the tax adds significantly to the cost of a new home priced in excess of $525,000. Previously exempt from provincial sales tax, those new homes are now subject to the combined HST. Builders expect that could put off buyers.

Purchasers of new homes costing up to that $525,000 threshold are eligible to receive a rebate of 71.43 per cent of the provincial portion of the HST, up to a maximum of $26,250.

But not all developers feel the need to wait.

Chris LeFevre, the man behind projects like the RailYards in Vic West and the Oriental condo development downtown Victoria, said he’s going “pedal to the metal” at the moment in a market he believes will reward the right product at the right price.

“I feel quite optimistic about the marketplace in terms of if you have the right product at the right price and an interesting product there are people out there who are real and tangible buyers,” he said.

LeFevre said the right product is affordable – between $200,000 and $300,000 – not mainstream or ho-hum, and have some edge in terms of location, character or finish. “If you have those ingredients you can do some good business, if you don’t it’s a bit of a slug-out,” he said.

So far Lefevre appears to be winning the fight as he has seven projects either approved or in the starting gate.

He has just sold out the first phase of Bond’s Landing at the RailYards and has started construction of 15 townhomes on the site. His Oriental development on Yates Street is 50 per cent sold, with expectations the residential units will be complete Aug. 1, and all of the ground-floor commercial space has been spoken for.

“This is a very reliable, stable real estate marketplace,” LeFevre said.

However, he admits the HST has had a dampening effect in some respects.

“It has created a psychological barrier,” he said. “The biggest effect is it can cause confusion to a new purchaser and that in itself can cause some trepidation, particularly if that purchaser thinks the HST might disappear (after a referendum).”

But Lefevre said it’s a false “mental block” as even if the HST goes, some form of taxes will remain on new homes.

“It’s not as though the whole tax subject will go away,” he said, noting his company like many others has gotten around the issue by listing units with a price that includes the net effect of the HST.

Edge said there is some good news in CMHC’s latest figures with Langford holding steady as a strong place to build – there were 35 new single-family homes built in the municipality last month compared with 36 at the same time last year.

Mark Fidgett
Your Vancouver Mortgage broker
604-273-2002
www.notapennydown.com
mark@notapennydown.com