City struggles to keep up with permits as construction rises

The City of Nanaimo warns of wait times to process building permits as it sees higher-than-normal activity.

Residential construction is on the rebound in the Harbour City.

Nanaimo is experiencing an upswing in building permits and construction values, with more than double the planned investment for single-family homes than in the first five months of 2013. The increased activity has city officials scrambling to catch up on permit applications and warning of longer wait times.

It was a different story last year, when a slowdown in the residential construction market heralded one of the worst building permit slumps in more than a decade. Twelve months ago, construction value in Nanaimo was down 26 per cent, leading to thousands less in revenue for city coffers.

This year, Tom Weinreich, the city’s manager of building inspections, said he believes the municipality could exceed revenue budgeted for 2014. In May alone permits were up 60 per cent over the same time last year and since January the city has reported $52 million in construction values for single-family homes compared to $25 million over the same period in 2013. Across the board for commercial and residential construction, the city has seen $97 million in permit values and anticipates to soon add another $30 million for the downtown hotel, exceeding last year’s 12-month total of $120 million.

Experts including those at the Canadian Mortgage and Housing Corporation say the shift began in 2013 when sales started to increase in the resale market. By last fall, Nanaimo became one of the few communities in central Vancouver Island to move into balanced territory with stable home prices. Low mortgage rates, economic growth in B.C. and new residents to Nanaimo have also helped the residential construction market make a comeback, they say.

“What we have been seeing is certainly a turnaround here and I think confidence in the market is what it is,” said Byron Gallant, past-president of the Canadian Home Builders’ Association and owner of B. Gallant Homes Ltd.

He said builders are confident in the speculation market, residential sales are up and the mortgage rates are “holding at unbelievably low rates,” leading some people to decide that now’s the time to build. His company is experiencing one of its best years yet and he anticipates the market will hold strong.

“I don’t know if I would say it’s going to increase, what more could we ask for?” he asked. “We are in a steady growth pattern that hopefully we can sustain.”

Weinreich said recent activity is testing the city’s resources. Wait times have grown from three weeks to five, prompting his department to offer employees temporary overtime to address the issue.

“I know it’s not going to get any easier … because we do have more subdivisions coming online as well, but we are basically trying to keep up with the demand and of course, trying to do so in a responsible manner,” he said.

CMHC forecasts Nanaimo will see 500 housing starts in 2014.