Essential service status ‘critical’ to area industry
The housing industry in Alberta had just shown two-and-a-half months of solid improvements when the pandemic put a pause on life in March.
In the intervening months, the housing industry — from construction to sales — has built new ways of doing business.
The saving grace for Alberta’s homes industry was being deemed an essential service — allowed to continue selling and building homes when many other businesses were shuttered. It required collaboration from companies, industry organizations and the local and provincial governments.
“That was a critical moment for us — if that hadn’t happened, I suspect we would be having a very different conversation right now,” says Brian Hahn, executive director of Building Industry Land Development Calgary Region.
With the efforts around safety protocols, Hahn says he knows of no workplace outbreaks of COVID -19 in the BILD CR membership, unlike what was experienced at some other essential services workplaces.
“There was fear that all economic momentum was going to stop — and it didn’t,” Hahn said of the industry worth $17.7 billion in built investment value to Alberta.
Even so, within the BILD CR membership, some companies have had to lay off staff, while others have not, he said.
Safety rules — including having only one trade working inside a unit at a time — have slowed home construction timelines by about two weeks.
“We are at about 80-per-cent efficiency and the decline is not necessarily a shortage of product, but in terms of safety protocol,” says Charron Ungar, CEO of Homes by Avi Group of Companies, which builds in Calgary, Edmonton and Austin, Texas.
The average price of resale homes, while lower, is a reflection of more activity in home sales of $500,000 and less. Resales are picking up in Calgary — in April there were 572 sales, while in May there were almost double, at 1,080 sales.
While sales have dropped, so have listings, keeping prices from plummeting. Ann-marie Lurie, chief economist for the Calgary Real Estate Board, expects sales volume to return by the fourth quarter this year to similar levels as a year ago.
“We do expect that price decline will increase a little bit. We estimate that to the end of the year it will be about a three-per-cent adjustment compared to last year, which, for our market — which has already faced a 10-per-cent decline in price over the past five years — is not insignificant,” Lurie says.
Although pandemic rules closed open houses, which realtors were able to resume last weekend, realtors were still able to tour individuals through resale properties.
In the new home market, meanwhile, demand is all over the place, say some builders.
It’s hard to predict if there will be a particular price band that will be the most active this fall, says Shane Wenzel, president of Shane Homes, which builds and develops in the Calgary area, noting his company has seen activity from multi-family to single-family in a wide range of prices in recent months.
In the past few years, the housing industry has faced challenges due to job losses in the energy industry, tighter rules to qualify for mortgages and even the rail strike causing materials and suppliers to become scarce for a time.
“For us, January and February were looking really good,” says Trent Edwards, COO of Alberta for Brookfield Residential, a new home builder and developer in Alberta, Ontario and the United States. “Now, we’ve struggled in delineating what in our market is COVID and what is the impact of the lower oil price. We know that the market will continue to be challenged, even once things normalize on the COVID side.”
Brookfield is expecting about half the volume of sales in coming months, even into 2021. April saw the company sell only two homes in Alberta, but May was up to 30. “And already a good start to June, and we’ll expect to do a lot more than 30 in June.”
Ungar notes that buyers have a lot going for them in the current market. “Interest rates are at an alltime low, there are houses available to buy. It’s quite a positive buyers’ market right now.” While sales have been half of what the company projected for these months, they are returning, he says.
During the shutdown, builders responded in different ways to handle sales. Some closed show homes, while others limited the number of people going through at a time or offered tours by appointment. Others ramped up virtual tours so home buyers could still experience the homes.
Brookfield widened the availability of self-service show home and spec homes available to be toured 24/7 — buyers can book a time online, receive a key code, tour when they want, and sales staff follow up with them later.
Key to keeping the industry going was ramping up on the technical side — creating video tours for would-be buyers, using video chat to connect salespeople and buyers, even video inspections of construction by the City of Calgary.
“Seeing the demand for technology for customers to be able to shop and build and price a home online, and ultimately pay for one online one day, we’re trying to accelerate the plans we had in place,” Edwards said. “That was going to be a threeto five-year process, but now we’re trying to get it done in 18 months.”
We’re seeing Calgarians, Edmontonians, people from Red Deer. People are saying they’ve wanted to come in summer, but there are always too many people. So locals are finally getting to see the place in its summer glory.
Scott Hergott, executive chef, Banff Properties Pursuit
Brian Hahn, of Building Industry Land Development Calgary Region, says safety rules may have slowed home construction by about two weeks, but he knows of no COVID-19 outbreaks among his membership.