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G O F I G U R E Construction Costs Too many new condos is just one sign that the province's real estate market remains off its game by Steve Saretsky P R OP E R T Y WAT C H NOVEMBER 2019 BCBUSINESS 19 ASSOC., STATISTICS CANADA, GOVT. OF CANADA, VAIL RESORTS, BLOOMBERG, COLORADO SUN, CBC NEWS, GARIBALDI AT SQUAMISH T o put it mildly, the B.C. real estate sector has had a difficult 2019. As of the end of August, home sales sat well below last year's levels, down 16 percent. While there have been encourag ing signs in recent months that activity is picking up, the market and those who make their living in it still face many headwinds. The most obvious one: demand for new housing has slipped, creating headaches for developers and a thinner pipeline of projects for con struction crews. To add insult to injury, still more supply, in the works for the past few years, is completing as 2019 draws to a close. These homes will add to a backlog of inven tory, making the market more competitive for developers launching new projects. If construction goes accord ing to plan, some 9,000 multi family units will be finished in Metro Vancouver and the Fraser Valley during the third and fourth quarters of 2019, according to a recent report by Vancouverbased real estate marketing firm MLA Canada. In a typical quarter, the region sees about 2,000 to 3,000 condo presale units completed. The upshot could be more activity on several fronts, the report suggests: "Detached home sales rising as new con dominium owners sell their single family homes and move into their new units; increased amount of condominium in ventory on the market as inves tors put their new apartments up for sale; or, an impact on vacancy rates as homes enter the rental market." For their part, developers and construction workers will have to get used to what looks like survival of the fit test. Provincial numbers aren't G O F I G U R E Western Canada's ski industry employs 28,600 people 5 37 $3.5 billion Direct capital spending expected to develop Garibaldi at Squamish, a proposed 2,508-hectare all-season mountain resort on the Sea to Sky Corridor that aims to open in 2025 LIFT/HILL CAPACITY: 17,538 skiers HOTEL/CONDO BEDS: 21,922 North American ski sites managed by Vail Resorts, current owner of Whistler Blackcomb, when it launched its all-resort unlimited Epic Pass in 2008 Number Vail owns after acquiring Peak Resorts in September Cost of an Epic Pass in 2008: US$549 Cost this year: US$969 Over 10 years, Grouse Mountain creates enough man-made snow to bury a highrise to the 48th floor 5-10% per-decade decrease in Canadian snowfall since 1981 Combined revenue for B.C. ski facilities in 2017: $542.8 million ! 51% from 2013 13.4% operating profit margin in 2017, versus 6.9% in 2013 Generates $2.1 billion in annual spending Invested >$100 million in lift equipment and other infrastructure last year available, but nationwide the number of construction com panies going insolvent is rising, albeit from a low base, the Office of the Superintendent of Bankruptcy Canada reports. Although we'd rather not speculate, it doesn't take a rocket scientist to determine that the broader outlook is souring in B.C. For example, September's edition of the Business Barometer Index pub lished by the Canadian Federa tion of Independent Business put the province at about 53 points—a big drop from 70 early last year. Another red flag is singlefamily housing starts. Builders of singlefamily homes are typically smaller and can pivot faster than apartment developers, making them a use ful leading indicator. In B.C., they're pulling back, data from Canadian Mortgage and Hous ing Corp. shows. As of August, the 12month average for single family housing starts was 671, down from a cycle high of 893 in February 2018. It's much too soon to de clare imminent doom and gloom, but one thing's for sure: conditions have shifted dramatically in the real estate space, creating opportunities for those who can adapt. • Home Loss While the condo units keep piling up, B.C. single-family housing starts have taken a dive 300 400 500 600 700 800 900 1000 1100 SEP- 05 FEB- 06 JUL- 06 DEC- 06 MAY- 07 OCT- 07 MAR- 08 AUG- 08 JAN- 09 JUN- 09 NOV- 09 A PR-10 SEP-10 FEB-11 JUL-11 DEC-11 MAY-12 OCT-12 MAR-13 AUG-13 JAN-14 JUN-14 NOV-14 A PR-15 SEP-15 FEB-16 JUL-16 DEC-16 MAY-17 OCT-17 MAR-18 AUG-18 JAN-19 JUN-19 BASED ON A 12-MONTH AVERAGE. SOURCES: CANADA MORTGAGE AND HOUSING CORP., STEVE SARETSKY