Housing starts across British Columbia remained depressed in the first quarter of 2009, falling almost 70 per cent compared with 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.

“Developers and homebuilders in B.C. are starting fewer new homes in response to a well-supplied resale market and weaker housing demand,” Carol Frketich, Canada Mortgage and Housing’s regional economist for B.C., said in a news release.

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.

And the pace of 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.

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 ago.

“The slowing housing starts trend that began in the last part of 2008 will continue,” Robyn Adamache, Canada Mortgage and Housing’s senior analyst for Metro Vancouver, said in a news release, also citing well-supplied resale markets and a growing inventory of unsold new homes as the reasons builders are holding off on new development.

Across Canada, home construction rose unexpectedly in March, led by Ontario and Quebec, Canada Mortgage and Housing Corporation said Wednesday.

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.

“Higher multiple starts in Ontario and Quebec were the main contributors to the rise in new construction activity in March,” said Bob Dugan, CMHC’s chief economist. “While the multiples segment experienced the largest increase, the overall boost in starts was broad based, encompassing the singles segment as well.”

http://housing-analysis.blogspot.com/2009/04/from-vancouver-sun-housing-starts.html

reviewed by Moishe Alexander, CFC CEO

Moishe Alexander, CFC CEO, presents:

The Corvallis Gazette Times reports from Oregon “Morrie and Colleen Slay didn’t want to sell their house. But after they both got laid off, the Albany residents fell behind on their payments. Faced with foreclosure, they discussed their options with a counselor and decided to put their modest two-bedroom on the market, pay off their mortgage and walk away. With real estate values falling, they owed more than the house was currently worth, so they opted to pursue a short sale. The Slays had a willing buyer and an experienced real estate agent who helped them file all the required documents. But every time they thought the sale might close, the lender said there was a problem with the paperwork and closed their account.”

“Last week, after months of frustration, their buyer pulled out of the deal. ‘We’ve got to start all over,’ Morrie Slay said.”

“Anna Balkema, the Willamette Neighborhood Housing Services program’s lone full-time counselor, said she’s seen very few of the subprime or fraudulent loans that have hogged the headlines. Most of the homeowners she works with have conventional fixed mortgages with reasonable interest rates.”

“So what’s pushing them into foreclosure? In most cases, it’s a layoff or a major medical expense. ‘The most typical scenario we have is one or double job losses,’ Balkema said. ‘I’m not seeing any 10 or 11 percent (interest rates). We’ve had people in foreclosure with a 5.25 — they lost their job and couldn’t make the payment.’”

“Wells Fargo, one of the nation’s largest mortgage lenders, is an enthusiastic supporter of the Making Home Affordable initiative, according to Judith Olsen, a community development officer in the bank’s Portland office. ‘The foreclosure and resale process is expensive — it’s expensive for the bank, but it’s also expensive for communities. We really don’t want the houses back, trust me. We’re not in the real estate business, we’re in the lending business,’ Olsen said.”

“Morrie Slay wishes his lender had the same attitude. If the short sale had gone through, the mortgage company would have lost about $12,000. But compared to going through foreclosure, that could end up looking like a bargain. ‘They’re still going to end up losing. It’s going to take time, it’s going to take money — I just don’t understand,’ Slay said.”

“‘It’s just very frustrating for both of us,’ added his wife, Colleen. ‘If you know anybody that wants a house …’”

The Oregonian “Allan Smith doesn’t know the stories behind the foreclosed homes he sells each weekday morning on the Multnomah County Courthouse steps. His job is to sell houses, not ponder why. Besides, these days everyone he encounters has some sort of financial problem or complaint, even the banks doing the foreclosing and the speculators hoping to find a deal in someone else’s suffering.”

“‘You’d think, with the financial crisis, things would be hopping,’ he said. ‘But if I sell three or four, that’s a solid week. We’re frozen here’”

“In the last quarter of 2008, homeowners defaulted on 1,054 loans in the Portland region. That’s more than half the total for all of 2007 and almost as many as in all of 2006. Several hundred homes come up for sale each week in Multnomah County. Yet most of Smith’s auctions get postponed as antsy investors decline to bid on artificially overpriced houses or banks give borrowers more time to make payments on loans they never should have taken out.”

“‘The banks and the investors are both in the business of making money,’ Smith says. ‘Buying a house you’re not going to be able to sell for a year or two isn’t a great way to do that.’”

“Affordable-housing advocates have protested a few auctions this year, arguing that banks and lax regulators are responsible for the rash of people losing their homes. Smith’s work is fairly grisly when you ponder it. Each week, he provides play by play for dozens of financial apocalypses.”

“That doesn’t depress him: ‘This is the system,’ he says. ‘You buy a house, you promise to pay it off.’”

“Tom Moyer dug a hole deep under downtown Portland last year, betting that buyers, lenders and renters wanted 32 stories of luxury real estate. He found renters to fill the offices and shops. But Moyer — a 90-year-old self-made millionaire, owner of 9 million square feet of real estate and builder of the Fox Tower — couldn’t get a loan to get out of the ground.”

“Moyer’s four decades of empire building smacked into a wreck of a recession April 10, when he halted construction on his $170 million Park Avenue West tower. That morning, Moyer paid 100 workers in the pit spiked with rebar. On Wednesday, the final three workers climbed out of the hole for the last time.”

“Park Avenue West was supposed to show off the city’s rising wealth. It was to be Portland’s fourth-tallest building at the city’s center, passed every seven minutes by a MAX train. The condos, offices and retail shops were designed to set new standards of opulence for a town wrapped in fleece. ‘This will be a sentinel to downtown,’ Lloyd Lindley, former chairman of the city’s design commission, declared in 2007.”

“Instead, the pit shows off the depths of Oregon’s economic troubles, No. 2 in the country for unemployment. For now, the economy makes the pit a civic eyesore. Plywood, barbed wire and Jersey barriers provide their own kind of sentinel. The top concrete parking floor — 40 feet below ground — stops in midspan. One column pokes up wearing a coat of concrete, then the next is naked rebar.”

“The site is framed as a snapshot of the era when easy credit and booming real estate busted. Even for Tom Moyer.”

“The crews working for Mark Sorensen’s company, R2M2 Rebar & Stressing, made their money threading rebar and wires together for the concrete column that would run up the center of the building. The company helped build Intel plants in Hillsboro, most of the Pearl District’s condos, the aerial tram and all seven buildings in the South Waterfront District. But the housing market collapse and credit crisis hit R2M2 as well.”

“Work on the core was picking up April 10 when the call went out. ‘It was just becoming a full-time deal,’ said Stan Campbell, Sorensen’s general superintendent. ‘Then it ended.’”

“Rob Frederiksen was deep in the pit when he got the call over his radio about 2 p.m.: ‘Tell everyone to grab their tools and come up out of the hole.’ I got on the job and I thought, ‘I’m pretty lucky to be here,’ he said. ‘I thought, ‘I’m here for another 18 months.’ Then ka-pow.’”

“Oregon lost 20 percent of its construction jobs between April 2008 and April 2009, far more than the national average of 13 percent. The state’s construction industry has shed 35,000 jobs since the August 2007 peak. The job cuts frustrate workers, but Frederiksen wondered: ‘Who do you blame? You think Tom Moyer, he owns half of Portland, it seems like. It just goes to show you it doesn’t matter how much pull you got or how much money you got. Everyone’s susceptible.’”

The Idaho Statesman. “The declining Treasure Valley housing market is either nearing bottom or nearing a cliff, depending on which statistic you look at. Pending sales – contracts that have been signed but not closed – are way up: 27 percent in Ada County and 39 percent in Canyon County, according to Jere Webb, an agent with Coldwell Banker who publishes…monthly statistics for real estate professionals.”

“Pending sales usually close within 45 days, so Webb expects the number of homes sold to rise significantly in the next couple months. Of course, there’s a catch. ‘A number of these could be short sales and bank-owned properties which take longer to close, and are less definite than sales of homes that aren’t distressed,’ Webb said.”

“If a significant number of these pending contracts are for distressed homes, sales prices will likely continue to fall, since such homes tend to sell below market prices. According to Webb, 37 percent of sales in Ada County and 64 percent in Canyon County in May were distressed.”

“Loan originator Doug Adams with Idaho Street Mortgage said he expects rates to stabilize. Adams said he was inundated with refinancing applications in March and April, but the pace will slow if rates keep rising. Another factor slowing closings is a raft of new government regulations and lender requirements.”

“‘What used to take four to five days to underwrite is now taking three to four weeks,’ Adams said.”

The Columbian in Washington. “A formal plan to build a Vancouver waterfront community with almost 5,000 residents and 3,500 workers was submitted to city planners. Gramor Development of Tualatin, Ore., and its local investors filed a master plan for redeveloping the former Boise Cascade paper mill site along the Columbia River. Gramor President Barry Cain called the project ‘a once-in-a-lifetime opportunity to connect the community with the river.’”

“City officials have long coveted the waterfront project, not only for its potential to create jobs and generate taxes, but also for the prestige of having a prominent project on the West’s mightiest river. The overall project would include 3,000 to 3,300 residential units.”

“Residential units would be a mix of condominiums, apartments, senior housing and so-called ‘affordable’ work force housing for people earning modest wages. Cain said the first phase of construction likely would include five or six buildings offering 1 million square feet focusing on affordable and senior housing, a reflection of a sour market for luxury condominiums.”

“‘No one is going to plan on … regular condos right now,’ he said. ‘We are probably a few years away.’”

The Edmonton Journal in Canada “Economic woes, rising unemployment and a glut of condos caused the Edmonton region’s apartment vacancy rate to inch up by 1.3 per cent in April. The vacancy rate for rental apartments in the Edmonton census metropolitan area rose to 4.7 per cent in April from 3.4 per cent in April 2008, says the national housing agency’s spring rental-market survey.”

“Wood Buffalo, which includes Fort McMurray, had Alberta’s biggest vacancy increase, rocketing to 6.9 per cent from 0.1 per cent in a year. Rent for an average two-bedroom suite fell to $2,165 from$2,350. In the Calgary area, the apartment-vacancy rate more than doubled to 4.3 per cent from two per cent in the same period last year.”

“‘A lower level of employment is affecting the demand for units the rental market,’ said analyst Lai Sing Louie. ‘Landlords are responding to rising vacancies by providing incentives.’”

“‘With elevated levels of supply and inventory on the existing and new condominium markets, some investors have decided to rent out their units rather than sell them at reduced profits,’ said Richard Goatcher, senior market analyst for Edmonton.”

http://thehousingbubbleblog.com/?p=5481

KENORA, ON, June 8, 2009

Canadian Funding Corporation – CFC – posts CMHC update. Mr. Greg Rickford, Member of Parliament for Kenora, joined with Naotkamegwanning First Nation and Chief Warren White to celebrate the grand opening of a new 10-unit seniors residence today, which was officially opened by Chief Warren White and will be home to more than 30 elders.

“The Government of Canada is committed to creating safe and affordable housing for Aboriginal people in Ontario and across the country.” said MP Rickford, on behalf of the Honourable Diane Finley, Minister of Human Resources and Skills Development Canada and Minister Responsible for Canada Mortgage and Housing Corporation (CMHC). “This project provides area elders with access to safe, quality housing at an affordable cost.”

CMHC provided a housing loan of $1,064,000 to facilitate the construction of this seniors residence. CMHC will also provide housing subsidies for this project, which are estimated at $2.1 million over the term of the 25-year loan agreement.

“It’s been a long, prosperous journey and now we can express the wishes that our elders voiced years ago to develop a seniors residence in Naotkamegwanning First Nation,” said Chief White. “Through hard work, determination and negotiations with CMHC, it has become the greatest accomplishment for our community. We’re a community that believes dreams can become reality when we work very hard to achieve them.”

CMHC’s On-Reserve Non-Profit Housing Program assists First Nations in the purchase, construction, rehabilitation and administration of affordable on-reserve rental housing, and provides subsidies for First Nations people living on-reserve. The Government of Canada provides approximately $270 million in on-reserve funding each year to address housing need.

In April, the Government of Canada announced as part of Canada’s Economic Action Plan that it is providing $400 million in additional funding over the next two years to support on-reserve housing. These funds are dedicated to new social housing projects, the remediation of existing social housing and complementary housing activities through programming from CMHC and Indian and Northern Affairs Canada (INAC). This funding will also provide an economic stimulus for many First Nations and rural areas by creating jobs, developing skilled trades and supporting small businesses.