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