Calgary’s red hot resale housing market has pushed a lot of prospective home buyers looking at new homes as an alternative.
Local homebuilders such as Jayman BUILT were expecting a pause once the pandemic hit, but instead they’ve faced the opposite.
“(The demand) was shocking,” Jayman VP Stephanie Myers told Global News. “There’s very little available home inventory on the market with any builder right now. We’re seeing record numbers of traffic through our show homes: over 200 groups, week over week.
“Sales velocity is at record levels,” she added.
Numbers from Canada Mortgage and Housing Corp. (CMHC) show buoyant residential starts in Calgary compared to the rest of the province.
A total of 2,249 homes were started in Alberta in February, an increase from 1,854 in the same month last year. About half — 1,159 — were in Calgary. CMHC reported 642 were started in the city during same time period in 2021.
The City of Calgary is also reporting a rise in the number of residential building permits. From January to the end of March, it received 1,441 permit applications vs. the 1,230 the same time period last year — for a hike of 17.2 per cent.
Calgary couple Florin and Karen Marinescu bought their dream home in the fall of 2021 and take possession this August. They signed on the dotted line after looking around at older, already-built homes.
“It was pretty clear to me that I didn’t want an old house,” Karen said. “I wanted to build a new house.”
When Global News asked the couple “Why buy new?” they responded saying liked to be able to choose what features will be included in the home, including upgrades and energy efficient features offered with Jayman.
“I bought the house of the future — today,” Florin said.
The Marinescus also liked the “cost savings” of buying new and are happy they didn’t wait for Calgary’s red hot resale housing market to heat up anymore than it already has.
“We did the right thing. We made the right decision and at the right time.”
Myers agreed that with so many bidding wars for resale homes right now, it makes “money” sense for some buyers.
“The cost comparison is quite close,” she added. “There’s not a huge variation between new and resale right now and the benefit you have with buying a new home is the efficiencies that go into operating a new home today vs. an older home.”
Rising costs of new homes and other challenges
The cost of a new home build has been going up however.
BILD Calgary Region, which represents the building and land development industries, said there are many challenges with keeping costs under control.
“The key challenge is really three-fold,” CEO Brian Hahn said.
Lumber prices have increased substantially, along with the cost of many other materials including steel and engineered products. Add to that supply chain issues and labour shortages and he said it’s a perfect storm.
“The prices of commodities — some of them — have settled at 100 per cent greater than they were pre-COVID,” Hahn said. “Builders have to be able to cover their costs and their margins, that’s just a reality. So eventually (prices) have to work their way into the cost of a home.”
That’s something Jayman has seen firsthand.
“We have been seeing increases of $25,000, $30,000, $40,000 month over month for the last little bit,” Myers said.
Both Myers and Hahn said a lot of work has been going on behind the scenes to source materials in Canada, even locally. They add the industry also continues to innovate to try and keep prices affordable, but it’s not easy.
“What it comes down to is forecasting,” Myers said. “We’re working with our trades and suppliers constantly to ensure everything has been secured in advance. Most of the builders here in Calgary, ourselves included, have put sales caps in place so we’re not overselling capacity.”
Hahn said Calgarians can take solace in the fact that buying a home in our city is still doable.
“Our house prices here are the most affordable, or amongst the most affordable in the nation,” he pointed out. “And Calgary is a real value place and that too is fueling a portion of the demand here.”
He said going forward it will be a real balancing act with home buyers ultimately dictating what will happen with the market.
The Marinescu’s are just happy it’s not their problem — not anymore.
“We’re so excited,” they said. “Both of us are so excited. I mean if it can be built overnight I’d move in tomorrow — we can’t wait.”