Home-building industry struggling in tough economy, association says

An association of Alberta home builders says the economic downturn and government policies are crippling its industry.

New mortgage rules, proposed legislation creating uncertainty, says BILD Alberta

BILD Alberta says there are more than 5,000 unsold new homes in Alberta, leading to a significant reduction in housing starts. (Todd Korol/Reuters)

An association of Alberta home builders says the economic downturn and government policies are crippling its industry.

Building Industry and Land Development Alberta Association (BILD Alberta) represents 1,800 land developers, home builders and renovators in the province.

The organization says new mortgage rules and proposed provincial legislation are creating uncertainty and higher housing prices.

It's resulting in layoffs in the industry and new homes sitting empty while Albertans are losing out on home ownership opportunities, the association says.

Industry leaders from across Alberta gathered in Edmonton Wednesday to discuss the issues. 

"If consumers are not confident in job security, they don't buy houses. They don't go into a long-term mortgage," said Carmen Wyton, BILD Alberta's chief executive officer.

"If we can keep the price down and give confidence that … things are turning around, Albertan will buy homes, and that's what we're trying to do."

New mortgage rules implemented this year had made stress-test rules for home buyers more stringent.

The Alberta government has also proposed Bill 32, which would extend what cities can charge housing developers in off-site levies used to cover costs of drainage, sewer, water and roads in new neighbourhoods.

BILD Alberta says the legislation could add tens of thousands of dollars to the costs of a new home.

Wyton said the government needs to be held to account and better consult with the housing industry before proposing legislation. 

"I don't think the government of Alberta is an expert in home building or community development and we would encourage them to rely on this industry to get that formula right," she said.

BILD Alberta CEO Carmen Wyton says builders are hoping for more stability in the industry in 2019. (David Bajer/CBC)

BILD Alberta says there are more than 5,000 completed but unsold new homes in Alberta, leading to a significant reduction in housing starts.

The Realtors Association of Edmonton reported this week that residential housing sales in the Edmonton area were down more than 10 per cent in November compared to the same month last year. 

The average price of a single-family home in Edmonton in November was $421,715, down 4.55 per cent year over year. The average days on market for single-family homes increased to 66 days, seven days more than in November 2017.

New listings and inventory were both up nearly 10 per cent year-over-year.

Wyton said some builders have been forced to reduce their staff by up to 20 per cent to survive the slowdown. Companies that have traditionally built new homes are now focusing on renovations instead, she said.

Wyton says there isn't one "cookie cutter" solution to the issue. She said alternative funding models are needed.

Home ownership remains a goal for Albertans and more should be done to make that "rite of passage" a reality, she said.

Builders are hoping to see more stability in the housing market in the next year, Wyton added.

"They don't want to see any further decline," she said. 

"I think if we can really bolster the residential construction industry, make sure that policies don't get in the way, we can continue to make housing affordable to Albertans and they will buy, because the market will be in their favour."