Home Month and Year November 2020 Positivity in the face of a pandemic

Positivity in the face of a pandemic

Calgary’s homebuilding and renovation community say they’re already seeing early signs of recovery

Timber Wolff Designs Inc. specializes in custom-build residential home construction and renovations.

While no industry has been spared from the effects of COVID-19, Calgary’s residential housing market has still managed to see a few bright spots in 2020, say experts.

With a few months left before year’s end, many of those experts expect a rebound to continue through into 2021.

Over this past summer, Canada Mortgage and Housing Corp. (CMHC) noted early signs of positivity in housing construction after consecutive months of year-over-year decreases. In July, the national housing agency reported that total starts increased in the Calgary CMA by seven per cent to 737 units from 691 reported at the same time the year prior – the first such increase reported since March and only the second positive month in 2020.

Apartments, condos and other types on multiple-unit housing projects paced the uptick in local activity, increasing by 22 per cent from 408 to 496 units.

“Some of this is because there were fewer starts the previous month – particularly lower-than-normal condo/apartment starts,” says Michael Mak, senior analyst, economics with CMHC.

He added that a lot of last year’s numbers were driven by condo and apartment buildings being constructed, with many of those large projects started in the second half of 2019.

“Therefore, I’d expect in the second half of this year, we could see the same thing – especially considering many of these large multi-family projects are usually planned years in advance,” said Mak.

That said, he notes there is still plenty of work to be done before Calgary’s new home construction market returns to the “normal” levels that have been recorded in recent years. According to the most-recent CMHC data, year-to-date starts up to the end of August was down 16 per cent from 6,442 to 5,426 units.

Overall, single detached starts have remained relatively stable, down just two per cent (or approximately 34 units) from 2019. Despite July’s uptick, multi-family starts, however, are down 23 per cent, from 4,302 to 3,320 units.

Mak credits overall stability in the single-detached market to gains realized in the first three months of the year. Total starts from January to March were up 25.2 per cent to 29,770 units.

“This is likely due to that single-detached homes are easier to build, as well as they are generally less capital intensive, require less planning and continue to have high demand,” he says, noting, however, there are starting to be early indicators of moderate overbuilding in Calgary.

He also noted the COVID-19 pandemic has tended to more significantly impact younger members of the workforce, who are also traditionally first-time homebuyers looking at smaller units such as condominiums or apartments.

“Recent employment data shows that a large percentage of the job losses that have occurred during this pandemic have been focused on the younger population, who are typically less likely to be buying homes or, if they are buying, are not likely buying single-detached homes,” says Mak.

From the perspective of the local homebuilding and development community, the theme of 2020 continues to be one of perseverance, says Brian Hahn, chief executive officer of BILD Calgary Region, which represents developers, builders, trades and suppliers in the home-building industry.

“The development and building industry is made up of people who are both personally and emotionally invested in Calgary. They are committed to this community. The resourceful that has been required during COVID has been really impressive,” he says.

Hahn notes that one of the keys to keeping the lights on during the pandemic has been working with similar organizations to create a safe environment for their workers.

“When this pandemic started, it wasn’t clear when home construction would be allowed to continue,” he says. “So in collaboration with other associations such as the Calgary Construction Association, we banded together to share best work practices. That way, everyone across the industry could remain as safe as possible and remain open for business.”

Hahn says the feedback he’s received from BILD members was that both January and February were year-over-year strong months, while March to May were a challenge as pandemic protocols forced many back into their homes.

“Yet June through to August have been really strong months,” he says. “And not just strong relative to COVID. We’re hearing members reporting better year-over-year numbers. For some, even better than their original business plans.”

Hahn credits part of those stronger-than-expected numbers to how builders have been able to quickly pivot in how they are marketing their product to consumers.

“A lot of builders have become much more sophisticated in how they present their product online, such as virtual tours. What that allows buyers to do is zero in what they are looking for in a home, and then be laser-focused when it does come time to touching bricks and mortar,” he says.

The local renovation market, meanwhile, has seen a significant uptick in activity so far in 2020. From January to the end of August, the number of residential permits issued by the City of Calgary has increased by 7.6 per cent to 9,603.

Provincially, the number of residential permits issued has followed a similar pattern, jumping by 11.6 per cent (21,621 versus 19,373 units) year over year through to the end of July, according to Statistics Canada.

Nick Wolff, co-owner of Timber Wolff Designs, says his company has continued to remain active during the pandemic – in fact, more active than he expected. The general contracting company, which specializes in both new home construction and custom renovations, says while activity dipped slightly in early spring, it came back in full force over the summer with plenty of steam heading through fall and into 2021.

“It’s really surprising how busy we are right now. And not just us, but almost every supplier we work with,” says Wolff, whose company recently won a 2019 BILD Calgary Region Award for Best Kitchen Renovation $120,000 & Over.

“When this pandemic started, no one had ever been anything like this before. No one knew how long it was going to go on for. But once the first couple months went by, people became a bit more comfortable and started to move forward on a lot of their projects.”

Wolff says the only slowdown he’s seen has been in the number of smaller projects Timber Wolff is working on, such as new garage builds or decks. He attributes that primarily to the rising cost of materials that is making certain renovation projects cost prohibitive.

“Certain lumber, such as pressure-treated wood, has doubled in price. And for smaller renovations like a deck, it’s making them unpractical,” he says.

Moving forward, Wolff expects that as pandemic-related uncertainty continues to loom and that’s combined with us spending an unprecedented amount of time in our homes – whether working, living or even entertaining – homeowners will naturally turn to improving their spaces. And that spells good news for companies like his.

“As we’ve seen over the years, when people are buying new houses, renovations tend to be low. And when housebuilding slows, renovations go up,” he says. “And that’s what we’re seeing a lot of now. People are weighing their options and choosing what’s going to work out better for them financially.”