Alberta
Market Report
By Ann-Margret Hovsepian
Scott Boyd, executive
officer of the Canadian Home Builders' Association - Central Alberta, laughs
when asked to describe the current housing situation in Alberta and exclaims:
"We can't keep up!"
Though builders in most parts of the province are scrambling to meet demand,
and many are showing signs of fatigue as they delay holidays and work longer
hours, Boyd admits it's a good problem. "At the end of July, more permits
were taken out in Red Deer than in all of 2006… and that was a record
year," he says, adding that most of the outlying communities have also
reported record permit numbers and starts.
"The market is strong," says Grant Ainsley, executive officer of
the CHBA - Alberta, "but not as strong as last year." He notes that
the housing market has softened in Calgary, the city that has led the province
- and in some cases the country - in growth for a number of years. "It's
funny how you get used to something, you say it's too busy, you wish it would
slow down a little and then when it does you're taken aback," Ainsley
says. "When you go through boom and bust cycles like the last cycle in
the late 70s and 80s, builders wonder whether this is the end of the road.
Is this 1982 all over again? But the signs are all positive: the price of
oil is high, showroom traffic is still high, and the market is still strong."
According to the Spring/Summer 2007 CHBA Pulse Survey, Alberta home builders
expect total housing starts to be about 47,000 this year, close to the 48,962
starts of 2006. This represents a huge chunk of the national starts forecast
of 219,500.
Though it's harder to track statistically, the renovation market has seen
strong growth, with two-thirds of renovators in the province reporting higher
activity in the past 12 months, and the average project costing $100,000.
Boyd notes that because new housing can be very expensive even for people
who are well-established, and with the increase of high-density development,
those in their 40s and 50s who still want a large lot are often opting to
renovate rather than buy new.
Though Boyd and Ainsley both express concern about the continuing shortage
of tradespeople and staff, "the main concern is both price and availability
of serviced lots," says Ainsley. "The average price of lots has
gone up about $200,000 - roughly 400 per cent - in last 12 years."
Boyd says that the staff shortage "slows down getting a mortgage, nailing
down the design of home, and even getting permits and so forth. It's about
a 12-month-long process from getting the lot to getting the keys to move in."
"There is optimism," says Ainsley. "We've hit a price point
for a lot of the homes being sold and we understand it's becoming a challenge
for people to qualify for mortgages, but overall, all things considered, there's
a pretty good level of confidence in the economy for rest of the year."
He adds that there may be a bit of a slow-down next year as Canada Mortgage
and Housing Corporation is predicting 44,000 starts for 2008. "We call
that a much more normalized market," Ainsley says. "It's a matter
of relativity if you go back about five years."HB
