The sky is NOT falling: Alberta home builders
March 19, 2015
Alberta home builders have a message for those who have recently bought – or are about to buy – a home: relax. The sky is not falling on the housing market in the province.Sure, the recent slide in oil prices has caused a stir: listings are up and sales down, but so far there's been little impact on home prices. In Calgary, for example, the detached benchmark price in January was $518,600, an eight-per-cent increase over January 2014’s $480,300, and up slightly from December’s $510,900.So, Chicken Little, what exactly is the problem?
CHBA – Alberta Economic Analyst Richard Goatcher, summed up the industry’s mood following a recent meeting with builders in Red Deer – the “Heartland” of the province.“A general mood of caution for 2015,” he told New Home & Condo Guide. “Most expect to stay busy, but slower than last year.”
CHBA – Alberta represents more than 1,500 builders, renovators, developers, trade and supply companies in the province – so, a sector that is a key employer and economic driver.Builders expect 2015 starts will drop 15.5 per cent from 2014 levels, but the province-wide total of 34,300 units should still exceed the 2010-14 five-year average of 32,500 units.
Most of the slowdown this year is expected to come in the multi-family segment, where starts are expected to decline by 20 per cent to 16,840 units. Single-detached starts are expected to reach 17,460 units, down 11 per cent from 2014.
To be sure, these declines are notable, but they follow a very busy 2014 for Alberta’s new home building industry – the best since 2007 – with total housing starts (urban and rural) reaching 40,590 units.
CMHC weighs in
Last week, Canada Mortgage and Housing Corp. updated its forecast, in its first quarter 2015 Housing Market Outlook, saying housing starts in Alberta would decrease to 36,000 in 2015 and 34,500 in 2016.
As for price growth, CMHC says that after leading the Prairie region with a 5.2-per-cent gain in 2014, Alberta will record more modest price growth moving forward. With rising listings and lower demand in 2015, price growth in the province will ease to below two per cent to an average of $407,100 in 2015 and $415,000 in 2016.“
Lower oil prices will have a dampening effect on investment and economic growth, particularly in Alberta and to a lesser extent Saskatchewan,” says Lai Sing Louie, CMHC’s regional economist. “This will contribute to slower employment growth and net migration, in turn slowing housing demand.
The Canadian Association of Petroleum Producers – representing another huge employment sector in the province – says capital investment in western Canada will still total $46 billion this year – including $25 billion in the oil sands.“Certainly a drop from the high-water mark, but not chump change, either,” CHBA – Alberta spokesman Paul Cashman told New Home & Condo Guide. “Alberta’s other big primary industries – forestry and tourism – will get a boost from the low Canadian dollar.“So, there are still some big positives in Alberta.”
Related reading:
Calgary to be among leaders in home price growth in 2015
Edmonton housing outlook: let the good times roll
Calgary housing outlook: record years give way to still solid growth
Calgary is hot, but still one of the most affordable housing markets in Canada
About Wayne Karl
Wayne Karl is an award-winning writer and editor with experience in real estate and business. Wayne explores the basics – such as economic fundamentals – you need to examine when buying property. wayne.karl@nexthome.ca