Housing starts hit record high in 2019

Absorption rate falls nine percentage points meaning more supply in housing market which could lead to lower prices if trend continues

Vancouver housing starts hit a record of 28,141 in 2019 after two years of declines.

According to the Canadian Mortgage and Housing Corp., Vancouver housing starts grew 20% in 2019 from 23,404 in 2018.

The 2019 record was 0.8% higher than the previous record of 27,914 in 2016. 

Data from 2019 signals a sharp turnaround for the trend of falling housing starts Vancouver has experienced over the past two years.

After tallying records in 2016, 2017 had a 6.1% drop in housing starts to 26,204 followed by a 10.7% drop in 2018.

“This is certainly encouraging news for those aspiring towards housing affordability.

The pipeline of new supply, despite recent turbulence in the market, remains fully stocked,” wrote realtor Steve Saretsky on his blog.

The vast majority of the starts were apartment and condo units accounting for 75.8% of starts in 2019. Single-family homes made up the second largest share of starts at 12.1%.

The five most active municipalities for housing starts were Vancouver, Burnaby, Surrey, Richmond and Langley. Coquitlam and North Vancouver joined Vancouver, Surrey and Burnaby for most rental housing starts in 2019.

There is evidence that developers are getting stuck with new supply once it is built, according to data collected by Saretsky.

In December 2019, 25% of new homes remain on the market after construction.

This is up nine percentage points from its low of 16% in November 2017.

Saretsky says this number is not cause for concern, but if it continues to fall developers will have more unsold inventory and it would likely result in a forced price reduction.