Alberta home builders cut jobs and projects as industry faces tough times

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Alberta home builders forced to cut jobs and projects
WATCH: Many home builders in Alberta say they're being forced to cut their workforce and some projects. Tomasia DaSilva reports on what they say is driving them to these drastic measures – Dec 3, 2018

Many Alberta home builders are being forced to restructure and for some, that means cutting their workforce and cutting projects.

Ryan Scott is the president and CEO of Avalon Master Builder. He’s also with the industry group Bild Alberta, which is a unified voice for the land development, home building and renovation industry in the province.

He said a lot of Alberta’s builders are struggling.

“You see a lot of projects coming in at one sale a month, which really isn’t sustainable,” Scott said.

Avalon has faced its own challenges and Scott said it’s had to make some tough choices, including cutting staff.

“In the last three years, probably 20 per cent of our company, so that’s a pretty significant amount. We’re a small family business.”

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Late last week, Jayman Built, one of Alberta’s largest home builders, had to go a similar route. It cut more than 15 per cent of its workforce.

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In a statement to Global News, CEO Jay Westman said the company is in a cycle of over-supply and under-demand which is “being driven by the current political landscape and the policies that have affected the primary driver of western economy, which is energy.

“These dire conditions are reminiscent of the 1980’s energy crisis, and are not due to an economic or commodity driven downturn this time.”

Westman said while Jayman is well positioned to weather these conditions, others in the industry are not.

“As we move into 2019, our industry has the opportunity to support change in government, change in policy and ultimately to our economy.”

Scott agreed the industry is facing quite a few challenges and not just from Alberta’s economic slowdown.

READ MORE: Here are the winners and losers of the new mortgage rules so far

He pointed to regulations from the federal government which include tougher new mortgage rules compounded by higher interest rates.

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He also said new building costs being proposed by the province will not help.

“When we add $10,000 to the cost of housing, that takes 20,000 Albertans out of being able to afford to buy a house.”

A growing number of Albertans have already found it tough to buy in this market.

Housing starts slumped 22 per cent from this past September to October, and they dropped 49 per cent year over year.

While CMHC, Canada’s national housing agency, agreed those other factors played a part, officials said supply and demand are really hitting the market.

“It’s not necessarily that they’re building too much but in 2014 or just prior, there was a lot of construction activity coming onto the market,” senior analyst James Cuddy said.

“When the recession hit, a lot of demand was pulled out of the market and as a result, there was a lot of inventory.”

Getting rid of that inventory won’t be easy.

CMHC is forecasting Alberta’s housing market will be flat in 2019.


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