This magazine is making fresh beginnings, too. New Home Source has become New Home Living, with a new look and a wider appeal. We’ll still be the place to turn when you’re looking for a new home, but we’re adding features that will be helpful after you’ve moved in – things like decorating, maintenance and landscaping. (Yes, it is a bit early for landscaping, but it’s never too early to make plans for outdoor living in your new home). New homes in Calgary are still more affordable than they are in major centres like Toronto and Vancouver, but this year has seen substantial price increases. Calgarians are hungry for houses, and the demand has spilled over into the re-sale home market as well, where prices are also rising.

Bad weather and a shortage of skilled tradespeople hampered Calgary’s home-building industry in 2005. Some buyers had to wait an extra four to six weeks for the keys to their new home. A few builders even put a cap on the number of houses they’d sell in a month, so they wouldn’t have to disappoint customers with unexpected construction delays.

“There’s no question there has been tremendous demand for housing this year, and we’ve been working very hard to cope with that demand,” says Donna Moore, executive director of the Calgary Regional Home Builders Association.

“The weather this year has created a burden for us to cope with, but I think in most cases the industry is now working on all fronts and has most of those issues dealt with,” she says.

As for the new year, “I would think we would have another year like this year,” Moore says. “We hear from all the industry economists that we can expect perhaps a number of good years ahead. There’s no indication that things are going to change dramatically.”

Despite the difficulties with weather and trades shortages, 2005 is “on track for third-best year on record,” says Richard Corriveau, senior economist at the Calgary office of Canada Mortgage and Housing Corporation.

The year 2002 was the hottest on record, with 9,400 new houses started in Calgary. Corriveau believes that 2005 could have broken this record if builders had been able to go all-out.

The number of building permits issued in 2005 grew sharply from 2004, but not all of those extra permits turned into houses. If they had, “we’d actually reach a new record for 2005, if we had the capacity in the system,” Corriveau says. “All the builders are still operating at full throttle to meet the overall demand.”

The supply of new houses couldn’t keep up with the demand in 2005, Corriveau says. “People are rushing to get into the market because mortgage rates have bottomed out and prices have escalated at quite a rapid rate. Next year our average price should be upwards of $350,000 – twice what it was tena years ago.”

Who’s buying all these houses? The answer used to be that newcomers from other parts of the country were flocking to Calgary looking for jobs. Nowadays, though, British Columbia and Saskatchewan, our main source of newcomers, are doing pretty well themselves. Fewer people are making the trek to Calgary.

However, Calgary is still a relatively young city, with lots of young people leaving the family nest and looking for houses of their own. Even if they start out in rented apartments, they eventually get around to buying a house. As Corriveau points out, Calgary has the highest rate of home ownership in the country.

Low mortgage rates in recent years have given many renters the chance to buy a home. Now that rates are creeping up again, some may see a now-or-never opportunity to buy.

Similarly, rising prices give prospective buyers a strong incentive to act sooner rather than later, whether they’re first-time buyers or home owners looking to move up to a larger house.

Local growth over the next five years is expected to be steady but not spectacular, according to City of Calgary forecasts. Population in April, 2005 was just over 956,000; it’s expected to reach 1.04 million in 2010. That’s an increase of 84,000: in effect, Calgary will be adding another small city to itself over the next five years.

Housing starts this year, including multi-family units, are expected to reach 12,900, according to the city forecast. After that, activity is expected to slow down just a bit, with 12,000 units started in 2010 due to slower population growth and higher interest rates.

The wild card in all these forecasts, of course, is the oil industry. Fluctuating world oil prices have given Calgary many of its best years, and a few of its worst. Currently, prices seem likely to stay high for some time.
Mortgage rates are on the rise again, though they’re still low by historic standards. Still, “There’s no question that with every change in mortgage rates there is a percentage of new home buyers that will not be able to qualify. That is a very real concern as rates increase,” Moore says.

Especially for first-time buyers, it’s a good idea to talk to a banker or a mortgage broker and find out what’s possible. For many buyers, the logical first step into home ownership is a condo apartment or townhouse.

“Affordability is always an issue in the home building industry, and being able to produce a product in the face of rising costs is a challenge,” Moore says. A condo is the starter home for many people today, “and as land costs and cost of construction increase, you see that trend in most of the major cities of North America,” Moore says.

Still, raising a family in a house with a yard is “still the North American dream,” Moore says, and “as we look at the cost of new homes in Calgary compared to some of the other major cities in the country, we’re still not out of reach.”

Remarkably, a handful of houses built in Calgary in 2005 were priced at less than $149,000. Since there were only seven of them, they’ve probably been snapped up, and it’s questionable whether there will be any more.
However, 20 per cent of single-family houses started in 2005 were priced between $175,000 and $225,000, and another 30 per cent between $225,000 and $275,000.

Even so, Calgary housing is still very affordable by national standards. A recent RBC report ranked us second after Ottawa. Part of the reason is lower municipal government charges. Levies on a new house in Toronto add up to more than $30,000 here, compared to about $3,500 in Calgary.

The typical new home in Calgary has been gradually getting bigger: an average of 1,882 square feet in 2005, compared to 1,673 square feet in 1997. On the other hand, the average house lot in 1997 was 38.2 feet wide; by 2005 it had shrunk to 35.5 feet.