Lined up against similar markets, housing affordability in Calgary falls short, say industry members.
City policy related to land availability has been a concern expressed by many in the homebuilding and development businesses in Calgary in recent years. This subject and others related to residential growth in the city were part of a panel discussion at the Calgary Petroleum Club earlier this week.
When comparing markets, Brookfield Residential chief operating officer Trent Edwards says drawing a line between Calgary and Edmonton makes sense. “Edmonton has addressed the affordability side of things through providing supply — supplying competition and certainly leaving things more to the market there,” said Edwards.
“It’s really the same market,” said Edwards. He said the province’s two largest cities have comparable growth, the same number of jobs and similar pay. “It’s a much more fragmented market in Edmonton, but certainly every sector that you go into from a choice perspective, there is supply at all different levels, which makes it easier to buy a home there,” said Edwards.
Joining Edwards on the panel were: CEO of Cardel Group of Companies Ryan Ockey, Calgary Real Estate Board chief economist Ann-Marie Lurie, Urban Development Institute CEO Guy Huntingford, and planner with the City of Calgary Matthew Sheldrake.
“Let’s keep in perspective — (Calgary is) far more affordable than cities like Toronto, like Vancouver,” said Lurie. “First of all, our incomes are a lot higher than what they get in Toronto and Vancouver, and that helps our affordability.” She said a typical resale single-family home in Calgary sells for $478,000.
“That same single-family type home in Greater Vancouver is $957,000.”
Ockey said he thinks the housing industry’s top challenge going forward is affordability. He said five years ago, for every 10 deals written by his sales team, two or three would drop off because the customer couldn’t qualify for a mortgage.
“Today, we’re at 55 per cent of those people that write a contract with us and when they go for financing cannot qualify,” said Ockey.
Along with building in Calgary, Cardel builds in a variety of other centres, including Denver. He calls the two cities “very similar.”
“They’re close to the mountains, very entrepreneurial, white collar, highly educated, lots of income,” said Ockey.
“In Denver, I can put you in a 3,000-square-foot home with a triple garage and a mountain view for $350,000. In Calgary, that gets you a 1,400-square-foot townhouse with a single garage.”
Sheldrake called the city’s approach to growth a financial discussion and used the example that 30 new areas would generally call for the city to run 30 pipes and 30 transit lines. “If you have less than that, you have to run less of those services,” said Sheldrake. “There are issues with going too low, obviously, because you’re limiting choice. You could potentially be influencing prices, and I understand that.”
The city uses a prioritization model developed with criteria approved by city council that is used for sequencing growth. It includes measures such as access to transit, capacity of existing infrastructure, city-funded costs, readiness to proceed, proximity to employment opportunities, community services in place, land supply, innovation and contiguous growth.
“A lot of this discussion on growth management and limiting growth is about trying to find a balance between the amount of growth that is affordable for the city as a government but is also enough that the industry itself is going to compete with itself and innovate and offer choice to citizens,” said Sheldrake.
Ockey said he thinks market demand should drive what home builders offer and where they build.
“Let the consumer decide what kinds of product that we should build, where they want to live and not be dictating to them that they can only live in these particular areas or they must live downtown in a highrise,” Ockey said.
“We believe the market should decide rather than city policies and other political types of issues.”
His company builds single-family homes and multi-family developments mainly in suburban communities.
But it also has an inner-city division that builds in areas such as Altadore and Killarney.
“When we talk about letting the market decide, it’s also balanced against policy direction for the city that was developed in concert with all Calgarians,” said Sheldrake.
“Not just ones that are looking for a home, and it’s enshrined through the citizen satisfaction surveys — people who are looking for better transit service, looking for those rec centres, perks and things like that.”
Sheldrake said these services have a cost and require a critical mass of population. Those services aren’t always available in all areas and are often concentrated in the established areas of the city.
“We’re trying to bring people back to take advantage of those services.”
However, he adds, the city doesn’t have a one-for-one policy between inner-city and suburban development.
“We’re coming from a point where more than 100 per cent of the city’s population growth in a given year was located in new suburban areas,” says Sheldrake. “We’re really just trying to move that around a bit so the whole city is enjoying the benefits of growth.”
A restriction on the number of areas under development — no matter how large they may be — brings up a number of concerns for the local development industry, said Huntingford. One is that fewer communities will result in reduced competition.
“Especially if there is only a single developer that owns that land and is building,” he said, adding reduced competition will turn into a contraction of the industry and a hike in home prices.
“It’s a simple supply and demand issue,” said Huntingford.
CALGARY REAL ESTATE NEWS 