Despite strong and encouraging momentum, Calgary housing construction and renovations have a problem!
Throughout the country, including the booming Calgary area, housing continues to be a hot topic and in demand. The Canada Mortgage and Housing Corporation (CMHC) forecasts a need for 3.5 million more homes by 2030 than the country is currently on track to build.
The CMHC trending shows that, nationally, the number of new homes built has been in decline, from just over 271,000 in 2021 to 260,000 in 2022. By this fall, CMHC trending shows that, year to date Calgary home starts and completions were ahead of 2022 numbers. Total Calgary starts were 11,407, which was up from last year’s Calgary record starts. Total Calgary housing completions were also up or on pace with last year’s record numbers.
The Calgary new home construction story is a positive dynamic. Building new homes is exciting potential for developers and home builders and, in various ways, new home construction is a potent boost for the Calgary economy.
In one specific residential construction sector, stats show that Calgary also achieved a significant milestone last year, by introducing the largest proportion of purpose-built rental housing in more than 30 years. Purpose-built rental housing accounts for 32 per cent of all newly constructed residences in 2023.
Particularly in the Calgary region, there is lots of opportunity. There is lots of work. And there are lots of jobs! On the downside, Calgary’s residential construction sector also has two festering problems: the spiking cost and availability of materials, and particularly not enough workers.
Area developers and builders have concerns about 2024 and beyond housing starts and some urgent speedbumps. Labour shortages. Higher interest rates. And rising building costs.
The business bottom line of developers and home builders has sounded the alarm. The residential construction industry is short tens of thousands of workers! With Canada already millions of homes behind what is needed to reach housing affordability in this decade, experts warn that a coming tsunami of retirements could make the problem even worse.
A recent CIBC report pointed out that the job vacancy rate in construction is at a record high with around 80,000 vacancies.
The demand for housing is creating busy but somewhat challenging times for Calgary area builders and developers.
“There are several issues impacting housing starts and affordability, especially material availability and costs and a tight labour market,” explains Brian Hahn, the knowledgeable and plugged-in CEO of Building Industry and Land Development Association, Calgary Region (BILDCR). “Supply continues to be the key that unlocks affordability in our industry, and we continue to work collaboratively with government entities that have assisted in enabling more cost-effective development.”
BILDCR’s national organization, the Canadian Home Builders’ Association, estimates the total economic impact of 2022 residential construction in the Calgary metropolitan area to be over 63,000 on- and off-site jobs, $5.2 billion in wages and $11.4 billion in investment in Calgary region communities.
While the recent supply chain delays and rising cost of materials are significant but ongoing issues, they also constants and routine parts of the business of home building. Perhaps more challenging is residential construction dealing with the urgent speedbumps of a worrisome labour crunch.
For several reasons, there are thousands of unfilled construction jobs throughout the Calgary region, and it is getting worse. Demographics are a key factor. By no means unique for the home building sector, today’s aging workforce and the shrinking labour supply are causing timely concerns for residential home builders, particularly in Calgary.
The construction industry, in general, is facing a looming wave of retirements that will see roughly 20 per cent of Canada’s construction workers retire within the next 10 years or so. And as skilled trade workers ready for retirement, builders and developers worry about filling the gap.
The open positions in residential and high-rise construction include framers, carpenters, roofers, electricians, plumbers, labourers, cement finishers, trim and tile trades and more.
A recent BuildForce Canada report acknowledged that construction labour shortages vary from province to province and often make for regional differences. Some even suggest that the construction labour crunch is a bit of an east vs. west dilemma, with prairie populations like Alberta skewing younger than Ontario, and being more advantageous – but in no way a cinch – for recruiting construction labour.
“At the moment, the Alberta housing construction labour supply is tight,” says Terry Parker, executive director of the Building Trades of Alberta (BTA), coordinating and promoting the interests of 18 Alberta local trade unions whose 60,000 members work in the residential, commercial and industrial construction, maintenance and fabrication industries. “There are many reasons, including the practical reality that increased activity in the industrial and commercial markets are drawing tradespeople away from the residential sector. In Calgary, as well as Edmonton, more and more contractors are utilizing foreign workers for many of their projects.
“Changing and improving this situation will require a combined effort of contractors, various levels of government and unions working to attract more individuals towards careers in the skilled trades,” he notes. “Our industry must focus on both recruiting and retaining youth and under-represented groups into the trades.”
Residential construction is scrambling to find workers to get the job done and achieve the needed housing starts and completions. Better late than never, after ignoring the situation for more than 10 years, social trends and post secondary education detoured younger generations from traditional “blue collar” skilled trades, and toward the knowledge and the gig economy. It is a positive and encouraging trend for developers, builders and housing starts, that the re-focus and push at institutions like SAIT, Mount Royal University and others is to elevate the opportunity and career potential of skilled trades.
Labour supply continues to be tight for the residential construction industry, and builders and developers are focused and addressing the various issues.
In July, BILDCR held a workshop with the Alberta Minister of Immigration and Multiculturalism, as well as the Minister of Advanced Education, about Alberta’s focus on education, training and careers in the skilled trades in the new Alberta cabinet. Brian Hahn explains, “We have also been engaging with SAIT as well as the Calgary Catholic School Board and the Calgary Board of Education on ways our industries and the school boards can work together to help young Albertan men and women see the great opportunity and value of careers in land development and home construction by pursuing careers with our members.”
BTA’s Terry Parker also emphasizes the housing starts importance of being pro-active. “We’re confident that 2024 will bring increased activity in all sectors of the construction market. If handled correctly, we will have a new generation of tradespeople entering the industry. But it is important to show both tradespeople and the general public that a trade is not just a job, but a career. We hope to see a parity of esteem that exists in many European countries.”
The attractiveness of Calgary and the region is reflected in the 2022 and 2023 record starts and completions. Affordability is the key measure for home buyers, they will look for the best home they can purchase within their means to reasonably afford it, and supply is the key to unlocking affordability.
“Our members are focused on working with policy makers to work through any barriers to timely supply of all forms and types of housing for renters and purchasers to maintain and improve Calgary’s strong national affordability ranking,” Hahn adds with enthusiasm.
