Home builders get a breather

Penticton Herald: Tuesday, January 13, 2009
The red-hot Okanagan new housing market cooled off a bit in 2008, but Penticton area home builders aren‘t complaining. They‘re simply catching their breath. Year-end housing statistics released by Canada Mortgage and Housing Corp., reveal a slight increase for the Penticton area. Housing starts rose by six per cent to 313 compared to 295 starts in 2007. Paul Fabri, a CMHC market analyst, said the Penticton figures were bolstered by the start of construction of Phase 2 of the Alysen Place highrise development near Skaha Lake Road and Guelph Avenue. However, that project is currently on hold and the development firm, Pilot Pacific Inc., has applied for a refund of building permit and other fees from the City of Penticton. Fabri said if they do not to proceed with Alysen-2, it would bring the Penticton statistics in line with the rest of the Okanagan where housing starts dropped by 20 to 24 per cent last year. “The increase is a little misleading. The same factors that are affecting the other markets are affecting Penticton as well,” he said. “We have seen demand for both new and existing housing moderate over the past six or seven months.”

Ted Ritchie, a past-president of the Canadian Home Builders‘ Association–South Okanagan, said the local industry is still going strong with most established builders and sub-trades are already contracted for most of 2009. “The growth of the last few years has been unsustainable. It has been very difficult for us to build when the labour pools were stressed,” he said. “There was so much work, it was difficult to meet the demand.” Ritchie added the market demand is also changing, focusing more on smaller houses and sustainable building practices. His own firm, Ritchie Contracting and Design Ltd., is building its first off-grid house in Rock Creek for some clients from Vancouver. John Kelsey, owner of Upright Exteriors in Penticton, said although he‘s been told the construction industry is tapering off, his company has yet to experience a slowdown. Looking ahead to 2009, CMHC predicts the housing market will remain flat for at least the next six months. Fabri said housing starts are now settling back into more traditional levels of market demand as the economies settle back to a more modest pace over the next year or so. “It‘s a province-wide trend,” he said. “We‘re coming off, in many centres in the Southern Interior, record or near-record highs in both housing starts and/or sales of existing homes.” Penticton‘s 313 housing starts last year compare to 418 in Vernon and 2,257 in Kelowna. Single family housing starts were down slightly last year to 75 homes, compared to 83 in 2007. Fabri pointed to the ongoing shortage of single family building lots as the main reason. The number of new single family homes in Penticton has remained relatively flat over the past several years.

“If you look at single starts over the last seven or eight years, they‘ve been remarkably consistent,” he said. “You just don‘t have the building lots to see a significant change there, regardless of market conditions.” City of Penticton statistics indicate the value of residential construction rose to $55.4 million last year from $47.4 million in 2007. However, overall construction activity was down by about 20 per cent from a year earlier, when Penticton‘s construction tally was bolstered by the South Okanagan Events Centre project.