Home Month and Year November 2020 New Home Construction Continues During the COVID-19 Pandemic

New Home Construction Continues During the COVID-19 Pandemic

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The year 2020 has been a historical year, with the outbreak of COVID-19 affecting the lives of everybody in the world. Certain industries ground to a halt for weeks, or even months, while others continued onward, although changed due to sanitation precautions, including social distancing.

Construction in the Edmonton region pushed through the effects of the pandemic ensuring that new housing construction already underway would continue, albeit at a slower rate, while also continuing to break ground on new projects. At the onset of the pandemic outbreak, new home buyers started to worry about job security and their financial futures, but as the months went on the industry showed gains more rapidly than expected.

Adil Kodian, vice president of Rohit Communities, an industry leading builder for 30 years in the Edmonton region, has had an unexpectedly exciting summer for their business. “Earlier in the year, like most of our competitors, we had predicted a softer market for new homes due to the double whammy of COVID-19 and low oil prices. It was a pleasant surprise to see strong continued interest in new home sales and leasing through spring and summer of 2020.”

Kodian describes some of their latest projects, saying, “One of our newest and most exciting projects this summer is our Stadium Yards project in downtown Edmonton. It’s located in Cromdale, just east of downtown and next to the upgraded Stadium LRT station and Commonwealth Community Recreation Centre. It is a thoughtfully designed transit-oriented, mixed-use project that provides an elevated experience to residents thanks to incredible amenity spaces and designer finishes.”

“Our Arbours of Keswick community has also been a busy area for us this summer,” he continues.
“We’re building such a diverse range of home styles there that have really resonated with new home buyers. The neighbourhood is just over two years old but we’ve prioritized building the amenities – the new playground is now open and we’re so proud to have the Gordon King Pond at the centre of our community. We also have two new schools breaking ground in the area this September. Families have really loved the area.”

Meanwhile at Rococo Homes Inc., Rick Lystang, president, whose company for 13 years has built custom semi-estate homes in the Edmonton and surrounding regions in the $550K to $1.5M price ranges, is focusing on move-up buyers looking for more of a one-on-one custom home building experience.

Lystang says, “Initially we were not overly affected by the shutdown since construction was still considered to be an essential service. We did make changes to how the job site protocols were being laid out. We stepped up our efforts on disinfecting sites, as well as our offices, and went to one trade person in a home at one time to ensure social distancing.”

Lystang continues, “Our show home was closed to the public as it also acts as our office and headquarters. Staff were consulted and we decided to continue our office operations as all of our desks and workstations are socially distanced. This was all done to ensure the safety of our internal and admin staff as well as give people continued employment as work was still going on. All company personnel as well as our trucks were equipped with hand sanitizer, disinfectant wipes, spray and disposable towels.” 

At Rohit Communities, they also implemented similar social distancing and sanitization practices. Kodian further detailed technology advancements in helping cope with changes, and allowing them to continue with new home sales and adapt to changes better than some businesses. “Due to COVID-19, technology transformation has been accelerated in the home building business. Gone are the days when the customer had to visit show homes during prescriptive hours to sign stacks of paper. Home builders now offer virtual tours, self-guided show home visits and fully online sales with digital signatures.”

He adds, “Builders are also working extra hard to digitize all the back office systems to allow their teams to be more effective in the field. Rohit has been an early investor in technology with our investment in Tech2.Build – an in-house real estate tech startup. We have been using a completely paperless sales and construction process for almost two years now. With the introduction of online chat and curbside home visits, we have also adapted our business to this new reality.”

In terms of sales, Kodian has not seen the drop in interest in new home construction that was expected. “This is where it gets really interesting. When the shutdown was announced in March we planned for a sharp decline in sales and started preparing to weather the storm ahead. We were pleasantly surprised to see that demand for homes did not actually drop off. There are many reasons that we can speculate – it could be due to consumers not wanting to tour resale homes with existing occupants during a pandemic. It could be because many people found themselves suddenly in circumstances where their existing homes could not serve their work-from-home needs. In any case we have seen strong demand throughout the year. As a business we are on pace to finish our year with more sales in 2020 than 2019. We also see a lot more interest in our home designs, which include smart use of space – bonus room options, built-in desks and den or flex areas that allow people to work from home.”

While Lystang does expect a drop in revenues to appear in the third and fourth quarter, he is assured that Rococo is still in a good position compared to many other companies. “Because of the cycle of our business being eight months to build a new home, many builders (including ourselves) most likely did not see much of a revenue drop for the first half of the year. However, the next two quarters will show the sales revenue gap we experienced this spring due to COVID-19. Our company through fiscal restraint, diversification of our business revenue, and lower overhead expense, can weather this unprecedented gap in our usual business plan. I know Rococo is poised to be ready to continue its 13 years of offering the very best in service and products to our customers.”

Consulting the Edmonton Housing Report, August 2020 by BILD Alberta, total housing starts did see a decline resulting in lower than average build starts in May through August. However, it only ended up being 20 per cent lower than the 10-year average in July, much better than initial forecasted. Canada Mortgage and Housing Corporation (CMHC) expects the forecast for housing starts in Edmonton for 2020 to be at the low end of 4,020 new builds, up to a possible 6,400. The 2021 forecast is expected to be 6,115 to 9,075 builds, so the CMHC expects a good recovery in the next year.

While the COVID-19 pandemic did slow down sales in some markets and price ranges, and extended construction times for new home builds in 2020, it is expected for the new home construction market to recover next year. With new technology and procedure advances in place to assist consumers and builders, the industry is going to come out of the pandemic stronger than ever.

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