Andrew Murray considers his company fortunate to have work.
Murray owns Hemlock Homes, which builds custom single-family homes in the Nelson area. It's a small operation, Murray has only three or four employees, that intentionally only builds two homes per year.
But even that target can be difficult to meet.
“This coming year I'm fully booked, but it's the first time in like three years I've been fully booked...," said Murray. "I feel like I’ve been kind of lucky. Hearing from a lot of other builders, they still don’t have many projects lined up for the year.”
Construction of detached single family homes dropped significantly in Nelson in 2024. Annual data provided by the Canadian Mortgage and Housing Corporation (CMHC), which records construction starts for single, semi-detached, row houses and apartment units, shows the building of just three single homes began in the city last year.
That is the lowest amount of construction in more than a decade, during which time building peaked in 2018 with 26 projects but has since mostly declined annually.
Nelson is in line with a provincial trend that is moving away from single-family homes. CMHC found a three per cent increase of construction starts in Canada in cities with populations of 10,000 or more (that would include Nelson), but there was a 20 per cent decrease in B.C. that had the biggest drop among all provinces. All other types of builds, which include semi-detached, row housing and apartment units, were down eight per cent in B.C. from the previous year.
Natalie Andrijancic, the City of Nelson's director and approving officer at Development Services and Climate Leadership, said the city doesn't track construction starts but it does record building permits. The city had 183 permits totalling an estimated value of $39 million, which was up by two permits and $14 million over 2023. Those permits also included the addition of 28 secondary suites.
The city has encouraged affordable housing developments — there are currently three such projects in various planning stages and two under construction — and also had policies in place designed to promote housing increased density before the provincial government mandated similar rules last year.
There were only four semi-detached homes and seven row houses that began construction last year, although those numbers are typical.
Andrijancic speculated one reason for the decrease in single home construction was tied to interest and mortgage rates.
The Bank of Canada had not lowered its policy interest rate for four years until June 2024 when it was 4.75 per cent. At the time, the average prime mortgage rate among Canadian banks was 6.95 per cent according to Rate Hub.
Since then the bank has decreased the rate six times, most recently to 3.25 per cent on Jan. 29. The annual prime mortgage rate is now 5.45 per cent.
“Up until July of 2024 it was still very high compared to what it had been over the pandemic and previously," said Andrijancic. "The cost of land has also increased over the last five years, and then the cost to build can also be high."
Southern Interior Construction Association CEO Clifford Kshyk says the falling interest rate is still too high for families hoping to invest in a home of their own, and is undercut by rising supply costs and labour shortages that drive up construction expenses. A lack of available land, which is acute in Nelson, is also a factor.
If a trade war begins with the United States, Kshyk warned some material costs will only get more expensive.
Kshyk is based in Kelowna, where the average assessed residential property value is close to $1 million. That's far higher than in Nelson, where the typical single family residential property value as of July 1, 2024 was $681,000 according to BC Assessment.
But Nelson property values have also been trending up. Just five years ago the same type of property in the city was valued at only $471,000.
"It's dollars," says Kshyk. "People just haven't been able to save enough money to put a reasonable down payment on a million-dollar home to be able to qualify for a mortgage and maintain payments.”
Modular housing, which can be up to 20 per cent less expensive than traditional stick builds, offers one alternative for home owners. Kalesnikoff Timber has invested in a modular construction facility in Castlegar where half the production will be on large-scale multi-unit projects.
Yet Murray said some Nelson families still desire their own dream home built from the ground up, albeit with increased emphasis on affordability.
“If anything, people are dialling back what they want so they can afford to be in the house.”
