Construction activity is picking up on single-family homes and other residential projects on Vancouver Island as contractors rush to complete inventory before the harmonized sales tax comes into effect on July 1.
Island builders have broken ground on 1,008 housing units over the first three months of the year, according to data yesterday from the sa国际传媒 Mortgage and Housing Corp. -- exactly triple the 336 starts over the first quarter of 2009.
"The race is on," said Mike Baier of Limona Construction, who has 85 workers on three crews building both townhouses and single-family homes in View Royal, Cobble Hill and Duncan.
"The idea is to get as many finished as we can and get them on the market. Obviously we won't get everything done [by July 1], but we'll have some built and ready."
The new math for Limona and many other builders is attracting buyers in the $525,000 range or lower.
It's been the magic number for sales of both new and existing homes as it falls within the HST rebate threshold and is the most popular price point for the current real estate market -- in some cases causing bidding wars. It is, however, below the $570,000 median price of singe-family homes currently on Victoria's Multiple Listing Service and well below the average last month of $635,000.
Buyers of new homes costing up to $525,000 will be eligible to receive a rebate of 71.43 per cent of the provincial portion of the HST, up to a maximum of $26,250.
Homes over $525,000 would receive a flat rebate of $26,250, but the buyer would pay the higher rate on the balance.
"The HST is a major concern and the numbers this spring are a reflection of builders trying to beat [the tax]," said Casey Edge, executive director of Victoria's Canadian Homebuilders Association group.
The problem for a lot of builders in the single-family housing market is trying to build a home under the threshold cost. With land being the single-most expensive item on the bill, it's no surprise most of the building is taking place on the West Shore, where lots are varied and plentiful and prices are still well below those in Victoria or Saanich.
Small lots are currently popular in the Westhills development and at Kettle Creek, both in Langford.
Homebuilders are also facing potential increases of up to 100 per cent on development fees from the City of Victoria and up to eight-week turnovers on various applications in Saanich.
"Langford can turn around a blueprint in a few days ... time is money in this business," said Edge.
Although the cost of labour and materials has eased over the last several months, homebuilding remains a risky market, said Victoria contractor Ron Egli. He's built and sold about a dozen high-end homes in the Royal Bay subdivision over the last three years, but hasn't anything on the go at the moment.
Instead, Egli is doing custom work and sub-contracting, saying it's a safer bet than laying money out on building a house and then hoping it sells.
sa国际传媒 Mortgage and Housing Corp. said housing starts increased in all five of the urban centres it tracks on Vancouver Island during the first quarter of the year. Analyst Travis Archibald said the rebound is expected to continue through the year and exceed 2009 levels, but remain below the five-year average.
There have been 634 new housing starts in Greater Victoria since January, up from the 117 during the same period a year ago.
In March, 152 of the 258 starts were apartment units in Victoria. Langford led the way in single-family housing last month with 33, followed by 15 in Saanich and eight in Sooke.
Nanaimo, meanwhile, broke ground on 215 housing units so far this year, up from 170 in the first quarter of 2009.
Duncan started 47 homes, compared with 14 over the same period a year ago, while Courtenay increased from 27 to 82 and Parksville-Qualicum from eight to 30.
Canadian housing starts dipped slightly in March but are clipping along at levels not seen since 2008, a level unlikely to be sustained into the second half, economists said.
On a monthly basis, national housing starts slipped to 197,300 units in March from an upwardly revised annual rate of 200,400 units in February, CMHC said.
Seasonally adjusted starts for January were also revised up, to 189,000 units.
The March decline was blamed on a sudden drop in the always-volatile multiple-units segment.
Not since October 2008 has the number of annualized starts surpassed 200,000, added BMO Capital Markets economist Robert Kavcic. February starts were previously reported at 196,700 units.
Taken together, he noted, the recent three months' data represent an increase in the first quarter of 8.2 per cent, following gains of 15.2 per cent and 22.1 per cent in the previous two quarters.
