An excavator digs the basement for a new home on 11th Street of the Southeast Hill in Medicine Hat on March 28.--News File Photo
cgallant@medicinehatnews.com@CollinGallant
New home construction in Medicine Hat could set a record low this year, despite high and rising real estate values.
That, according to construction sector analysis, is the result of uncertainty among prospective new home buyers who face a double whammy of rising interest rates and inflation on homebuilding materials.
“There’s a lot of interest from people who are considering building a new house, but a bit of reluctance to pull the trigger,” said Jackie Taylor, the head of BILD Medicine Hat, formerly known as the Canadian Homebuilders Association.
“Interest rates and cost of goods still are a bit unsteady. We are seeing decent numbers in Cypress County – still a little slower than what we’d typically expect at this time of year, but it makes up for the lack of growth in the city itself.”
Within the City of Medicine Hat, only eight new home permits had been processed by the city’s planning department at the six-month mark.
That is only about one-third of the number at this point last year, while the pace predicts that 2023 will be one of the slowest years for new home construction in decades.
As well, only two permits for new duplexes were let and no applications were received for tri-plexes or apartments.
The 2022 whole-year total was 38 new homes, 14 duplexes, five tri-plexes and 12 apartment projects. That was a boom for apartment and condo construction, but average in other property classes compared to the previous five years.
Much of the work approved last year was launched this year, as permits and starts are recorded separately. But the current figures may not rise about the modern low for single-family construction, 20, in the 2019 construction season, which clouds the outlook for 2024.
Numbers in the second half of the year typically give a better indication of activity going forward.
In the meantime, said Taylor, her members are keeping busy with larger renovations and replacing low-priced homes in established neighbourhoods – projects that are often classified as alterations, rather than new construction.
“The renovation market is still quite strong, so what’s lacking in new home construction, our builders and trades are still busy, so it’s not as slow,” she said.
Currently, some alteration work has progressed on apartment renovations, and home renovations numbers remained strong (up about 20 per cent to $2.8 million this year), but those don’t add units to housing supply.
That’s as real estate observers bemoan a lack of resale inventory, which has dropped by as much as one one-quarter for apartments and row housing compared to tight supply in 2022. The shortage increased slightly when only the city is considered.
Single-family homes on the market were three per cent lower in the entire Medicine Hat region, while home prices rose two per cent and semi-detached valued rose by 5 per cent year-over-year.
The average resale price to date in 2023 for detached homes in the region was $360,750, including Cypress County and Redcliff.
