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The Positive Momentum of Edmonton Housing

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While most Edmonton construction experts and insiders wouldn’t exactly call it a “boom,” they are optimistic about a resurgence, growth and positive momentum in housing construction.  Just as Edmonton’s capital and infrastructure construction has bounced back from the pandemic and funding slump of a couple of years ago – due to various reasons and with some hiccups and speedbumps – Edmonton’s housing construction is now also on the rebound.

“Residential and mixed-use development has been accelerating slowly with increased funding for affordable housing as well as a need for rental housing,” explains Derek Ciezki, partner at SMP Engineering and chair of the Edmonton Construction Association (ECA).

“In the works are projects like The Parks downtown with a new 40 storey tower, the Garneau towers at the U of A and multiple low-rise housing projects for the city of Edmonton. Commercial development has been steady with private development in new areas of the city, but with interest rates increasing there has been more pressure on owners requiring more capital and quicker ROIs for private investors.

“There was a stall in development and construction over the last couple of years during the pandemic. This has resulted in spurred development and increased private investment and government funding on new schools, rec centres and healthcare projects.”

There is an enthusiastic focus on the positive trends in Edmonton’s residential housing sector. This is mostly, but not exclusively, due to a definite boom in migration and a demand for housing. Province-wide, migration records are being shattered.

According to Statistics Canada, Edmonton’s total net migration spiked from 17,746 in 2020 and 6.692 in 2021 to an impressive 36,560 in 2022; a 446 per cent increase, year over year. It is partially migration from outside Canada. We can also look to the trend of more and more people, aged 25-44 (prime demographics for housing and home builders) fleeing areas like Vancouver and Toronto due to a combination of unaffordable, unsuitable or insufficient housing reasons, and opting for Alberta.

“Edmonton is the most affordable place to live in Canada,” he adds. “So, it makes sense that Edmonton is attracting many new people moving to the city and province.”

Edmonton’s five-year (2016-2021) growth spurt boosted the region’s population from around 78,000 to 1,010,900. Edmonton’s ambitious City Plan, which maps out growth, projects about 1 million more people, and homeowners, in the next 10 or so years.

The dynamic of more people moving to Alberta also translates into encouraging news for Edmonton’s housing sector.

“Edmonton’s business-friendly environment is a strength and our land market is competitive compared to cities like Toronto and Vancouver,” says Kalen Anderson, executive director at UDI-Edmonton Metro. “There is a great quality of life here in Edmonton and the region. There are good paying jobs and affordable housing.”

She credits Edmonton’s migration/people stats as positive housing trend factors.

“Edmonton’s large urban economy of $105B per year in GDP is the second fastest growing in terms of population, just behind Ottawa. We have the second youngest media age, at 36.8 years, after Saskatoon. Edmonton has 130,000 full-time students in eight post secondaries, graduating between 22,000 and 30,000 students each year. Not to mention, 84 per cent of Edmonton’s new immigrants stay in Edmonton once they arrive.

Anderson also notes that we have the best household income-to-home ownership costs of all major centres in Canada. For context, the share of income a household would need to cover home ownership costs is 29 per cent in Edmonton, versus the Canadian average of 60 per cent. Toronto is 83 per cent and Vancouver is 90 per cent.

“These social and economic strengths are the premise of the province’s latest marketing campaign, Alberta is Calling, which invites people to move to Alberta for its affordability, livability and rich job opportunities. The campaign also boasts about the province’s low rents and disposable incomes.

“From a business perspective, Edmonton yields big returns and premiums for investors and is a low-tax environment. We need to continue to push for permissive, flexible regulations that make it easy to develop land and open businesses,” she urges.

It was a boost when the Canadian Home Builders Association (CHBA) recently ranked Edmonton as a national leader on the contentious topics of housing affordability and supply. The CHBA Municipal Benchmarking Report highlighted three categories for Edmonton’s excellent rating: approval timelines, government charges, and planning features.

When it comes to housing construction issues, delays and cost hikes, industry insiders blame the frequent curse of city red tape. It is an Edmonton priority to continually improve the situation and minimize the red tape of home-building rules by automating development permits, removing minimum parking requirements, abolishing single-family-home-only zones and more.

Edmonton was one of the first major Canadian cities to remove parking minimums, which are notorious barriers to affordable housing and business development, and it continues to amend zoning by-laws to encourage a range of land uses, buildings, developments and investments.

It’s a boost for housing because streamlining the development process and making it more efficient works out to millions of dollars and days of work savings for developers and home builders.

However most builders, contractors and construction professionals mention the other “elephant in the site trailer,” which is the ongoing labour shortage.

“It is a significant issue in our current market, specifically for field labour,” says Ryan Christensen, senior project manager, principal with Edmonton’s Delnor Construction and a director of the ECA. “General contractors and subcontractors are deficient in overall crews by up to 25 per cent, which means a potential loss in productivity. It also means project schedules suffer in terms of duration, leading to a further increase in the cost of projects. The low supply of workers means that the qualified and skilled workers that do work in the construction industry are asking for increased wages, which further increases the costs of construction.”

Anderson also mentions another important housing factor. Spiked mortgage rates are impacting home buyer confidence.

“Rising mortgage rates are eroding affordability. Currently, we are in a volatile landscape of changing policies, processes, supply chain pressures, inflation issues and more. Higher mortgage rates impact both new homebuyers and existing homeowners. Consumers looking to purchase a new home will feel the pinch even more, due to higher mortgage rates.

“The impact of this is erosion of affordability, putting downward pressure on the housing spectrum to more affordable housing,” she says. “It may include more of a shift towards rental as people are priced out of home ownership.”

With much experience, she cautions that the Edmonton housing bubble may not, and usually doesn’t, last forever.

“We can’t take for granted that Edmonton will continue to be an attractive place for people to migrate to and from across Canada and around the world, nor for capital investors and job creators to place their big bets here. Talent and capital are both extremely mobile, so we need to support the business community to keep investing in Edmonton and provide individual families and businesses of all sizes with confidence and clarity. Cities are in a competitive game, and Edmonton is no exception.”

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