Housing starts and under construction

Just had a look at the CMHC Housing Now publication with the January starts/completions data. Completions exceeded starts by 2115 in January 2010--which is the most for a single month since 1981 (and the data in 1981 is really wonky so I don't know what to make of that). Correspondingly, under construction is 'cliff diving' as they say over at Calculated Risk. Straight downhill.


The 12 month total of starts tweeked up in January 2010, but it is still at a deep low. How deep? Check the data back to 1948 below.


The 12 month total of starts is in the neighbourhood of the lows hit in 1967, 1983, and 2000. That's right, lower than the depths of 1967--when Vancouver's population was much smaller. That is not a lot of starts.

What do I see happening over the rest of 2010?

1. It is unlikely that starts will stay so low. Look at the green line--it has never rested at the bottom before (but perhaps we've never had such a speculative glut before!).
2. Completions will continue to chug along at the current pace for the rest of the year, still exceeding starts.
3. Under Construction will drop below 10K and might touch historic lows close to 5K if starts don't pick up as much as I think they might.
   

One big implication of this is for the employment market. We know that a big part of the boom in the BC labour market was driven by construction employment. Construction employment depends on the 'under construction' total. As that number continues to drop over this year, we will see unemployment rise.

About a year ago, I predicted 10% unemployment by June 2010. We're at 8.1% now. I don't know if we'll make it to 10% in the next 4 months, but it's not a crazy prediction to hit 10% sometime in 2010 as the Olympic workforce gets laid off and the construction workers join them.

We see the next labour market data point this Friday. That data comes from the middle of the Olympics, so we won't start to get a real glimpse of the post-Olympic period until the March numbers come out in April.