New Home Prices Up 40%

EDMONTON – Soaring land values pushed Edmonton’s new-housing prices up 40.5 per cent from April 2006 to April 2007 — the biggest bump in Canada. Calgary was a distant second place, with prices up 27.4 per cent. Nationally, the rise was 8.9 per cent.

Edmonton land prices rose 54.5 per cent over the 12 months, while residential construction costs rose 34.3 per cent, Statistics Canada reported Monday. Today’s price for a 33-foot-wide lot in Mill Creek, a trendy older area, can be as high as $350,000 said Jamie Thompson, a partner in The House Company.

Prices in new subdivisions also have escalated, partly because of speculation in raw land, said Michael Mooney, executive director of the Urban Development Institute. Beyond just the land, “every component that goes into the ground has had inflation,” he said. “There have been tremendous price increases in concrete pipe, plastic water pipe, asphalt, even hydrants and
manhole covers.”

The City of Edmonton now requires developers to pay for four traffic lanes connecting each new subdivision to an arterial road. Until recently, they paid only for two lanes. “Further increases have been suggested for fire halls and libraries,” Mooney said. “The province’s sustainability report suggested more levies, as well as land transfer taxes. We have been decrying this as pushing new housing costs up.”

Richard Goatcher, senior market analyst with Canada Mortgage and Housing Corp., said the city has become more insistent on “ensuring that new developments are not causing environmental or traffic problems.” In Edmonton’s housing industry, “the volumes have increased so rapidly that the whole system is under stress,” Goatcher said. “The city hires planners and the private sector poaches them away. They’re always understaffed and overworked.” Mooney praised city staff for working with industry to streamline the processing of development applications.

“The best way to limit price increases is to increase the supply on the market,” he said. “We have been getting tremendously good co-operation from all city departments.” City council’s executive committee will receive a planning department report on Wednesday on strategies to process development applications more quickly with clearer requirements for area plans,
reviews by several departments proceeding simultaneously, fast-tracking of simple applications, improved web-based handling of applications, and holding public meetings while applications still are being reviewed.

The construction share of new housing prices is largely driven by builders’ labour and subcontractor prices, Thompson said. “Our carpenters’ wages are up 50 per cent in the last two or three years, from $18 per hour to $27.” Subcontractors also are charging more.
“I suspect they are paying more to employees to keep them and, in times like these, why would they take minimum profits?” he asked.

Vince Laberge, president of the Canadian Home Builders Association, Edmonton region, said the costs of capital and materials also are up. “It takes longer to build homes because of trades shortages, so there are more financing costs.” High prices for oil and natural gas have driven up the costs of vinyl flooring and siding, and asphalt shingles, he explained. Concrete prices have been pushed up by competing demand from commercial builders.

Because housing starts have slowed in the United States, “lumber is one of the few commodities that has stayed level or gone down over the last couple of years,” Laberge said.
Source: Edmonton Journal.

For more information about Real Estate in Lethbridge and Alberta, please visit: www.TeamMiller.ca

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Published in: on August 13, 2007 at 7:46 pm  Leave a Comment