Calgary’s red-hot resale real estate market has prompted many prospective home buyers to consider new homes as an alternative.
Local homebuilders like Jayman BUILT expected a pause once the pandemic struck, but instead they faced the opposite.
“(The demand) has been shocking,” Stephanie Myers, Jayman’s vice president, told Global News. “Right now there is very little available home inventory on the market from any developer. We’re seeing a record number of visitors through our show homes: over 200 groups, week in and week out.
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“The selling speed is at record levels,” she added.
Figures from Canada Mortgage and Housing Corp. (CMHC) show buoyant housing starts in Calgary compared to the rest of the province.
A total of 2,249 homes opened in Alberta in February, up from 1,854 in the same month last year. About half – 1,159 – were in Calgary. CMHC reported that 642 were launched in the city during the same period in 2021.
The City of Calgary is also reporting an increase in the number of housing permits. From January to the end of March, 1,441 permit applications were received compared to 1,230 in the same period last year – an increase of 17.2 percent.
Calgary couple Florin and Karen Marinescu purchased their dream home in the fall of 2021 and are taking possession of it this August. They signed on the dotted line after looking at older homes that had already been built.
“It was pretty clear to me that I didn’t want an old house,” Karen said. “I wanted to build a new house.”
When Global News asked the couple, “Why buy new?” They responded that they would like to be able to choose what features go into the home, including upgrades and energy-efficient features offered with Jayman.
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“I bought the house of the future – today,” said Florin.
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The Marinescus also liked the “cost savings” of buying new and are glad they didn’t wait for Calgary’s red-hot resale housing market to heat up even more than it already has.
“We did the right thing. We made the right decision at the right time.”
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Myers agreed that with so many bidding wars for resale homes right now, “money” makes sense for some buyers.
“The cost comparison is pretty tight,” she added. “Right now there isn’t much of a difference between new and resale, and the advantage you have when buying a new home is the efficiency that goes into running a new home today compared to an older home.”
Rising cost of new homes and other challenges
However, the cost of building a new home has increased.
BILD Calgary Region, which represents the construction and property development industry, said there are many challenges to keeping costs under control.
“The biggest challenge is really a triple one,” said CEO Brian Hahn.
Wood prices have increased significantly, along with the cost of many other materials, including steel and engineered products. Add to that supply chain problems and labor shortages, and he said it’s a perfect storm.
“Commodity prices — some of them — have settled 100 percent higher than pre-COVID,” Hahn said. “Builders have to be able to cover their costs and margins, that’s just reality. So (prices) eventually have to work their way into the cost of a home.”
Jayman saw that first hand.
“We’ve seen month-over-month increases of $25,000, $30,000, $40,000 for the last bit,” Myers said.
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Both Myers and Hahn said a lot of work was being done behind the scenes to source materials in Canada, even locally. They add that the industry continues to innovate to try and keep prices affordable, but it’s not easy.
“It’s all about making forecasts,” Myers said. “We are constantly working with our trades and suppliers to ensure everything is secured beforehand. Most contractors here in Calgary, including ourselves, have put in place sales caps so we don’t oversell capacity.”
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Hahn said Calgar residents take comfort in knowing that buying a home in our city is still a viable option.
“Our house prices here are the cheapest or among the cheapest in the country,” he said. “And Calgary is a real value place, and that’s also fueling some of the demand here.”
He said it’s going to be a real balancing act going forward, with home buyers ultimately determining what will happen to the market.
The Marinescu are just glad it’s not their problem – not anymore.
“We’re so excited,” they said. “We’re both so excited. I mean if it can be built overnight I would move in tomorrow – we can’t wait.”
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