Krista Conrad

Report finds housing development in Calgary mired in red tape

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Sept. 4, 2015 – A new study looking at barriers to housing development ranks Calgary second to last out of nine Alberta cities. But the results have drawn criticism from city administrators and builders alike, who say the study is flawed.

The Fraser Institute last month surveyed 32 developers operating in the Calgary-Edmonton corridor, and asked a series of questions regarding land-use regulations and developments, including the timelines for project and permit approvals and the fees associated with applications.

Nine communities were included: Calgary, Edmonton, Red Deer, Strathmore, Rocky View County, Airdrie, Chestermere, Cochrane and Okotoks.

While Strathmore, Cochrane and Airdrie held the top three slots for being least restrictive, Calgary ranked eighth of nine, followed by Rocky View County.

Several builders felt it was unreasonable to compare such disparate communities, while others suggested the sample size was too low.

“The numbers they used in terms of responses were quite low,” said Garett Wohlberg, director of planning and communications for Qualico Communities in Calgary, which has experience in Calgary, Airdrie, Okotoks and Rocky View County.

“It’s far too small a sample,” he said. “True, Airdrie is one of the easier places to work with respect to timelines, but Calgary naturally ebbs and flows depending on the nature of the applications.

“You can’t compare apples to oranges and complain about the difference.”

Rollin Stanley, general manager of planning development and assessment for the City of Calgary, said the report is based on insufficient data.

“If they had wanted a significant survey, they would have talked to everyone who works on projects – cities, developers, builders,” said Mr. Stanley. “They didn’t get all of the information necessary to draw their conclusions.”

Mr. Stanley said Calgary has land services and lots ready for thousands of single-home developments and a number of multifamily units.

To speed up the process, he said, the city often provides partial permits to allow for building to commence while full permits move through the approval process.

Overall design of subdivisions and specific projects that may affect an established area of the city affect response times, as there is significantly more to consider, said Mr. Stanley.

“We need to look at how projects affect other buildings on the street and make sure they fit in,” he said.

“There is a lot of discussion about new buildings in the Beltline, for example, and the buildings are always a lot better for it. That’s the result of engagement.”

Dennis Inglis, vice-president of the land development division of Melcor Developments, concurred.

“The City of Calgary in the last two years has taken one of the best approaches I’ve seen in ages with their Build Calgary initiative,” said Mr. Inglis.

The city meets with community associations, politicians, planners and residents to ensure that developments serve the needs of individual communities.

In addition, he said, the city has built strong relationships with the building community and the Calgary division of the Canadian Homebuilders’ Association.

“We’re all working collaboratively, and I believe you’ll see a complete turn-around in the next few years,” said Mr. Inglis. “You don’t turn the ship of the City of Calgary around quickly like you can in smaller municipalities; it’s too big and bulky for that, but it’s coming around.”

Mr. Inglis believes the relationships the city has built within the industry will drive success and more streamlined processes.

“When you’re building in Calgary or Edmonton, you must engage people,” said Mr. Stanley.

In 2015, as much as 75 per cent of single-family residence permits have been submitted online, he said, which has already improved the process for home builders and made the approval process more efficient.

It is larger projects and redevelopments that take longer to approve, to ensure the community is positively affected.

“If someone wants to build an 18-storey building in the middle of Strathmore, it’s going to impact the timeline,” said Mr. Stanley.

Dr. Kenneth Green, one of three researchers responsible for the Fraser Institute study, stands by the results. “We surveyed 32 home builders, which is a relatively small number,” said Dr. Green. “But we feel there is a relatively small number of builders who do the majority of building in the corridor.”

The purpose of the study, he said, was to provide Canadians and particularly residents of the Calgary-Edmonton corridor with evidence of the extent to which the government can effect and regulate their lives.

“It shows how municipal governments are effecting access to housing stock and affordable housing with regulation systems,” said Dr. Green.

“Government rules and regulations can definitely impact people’s lives.”

Homeowners turn to renovations in tough real estate market

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Aug. 28, 2015 – The downturn in the real estate market has more homeowners choosing to stay put for the time being, determined on improving their current home rather than moving to a new one.

Calgary renovators say there’s been a noticeable pickup in activity.

“It’s gone up,” said Paul Klassen, owner of Pinnacle Group Ltd., a Calgary renovator. “We hired three new staff members over the last three months to keep up with demand, while other industries were laying off.”

A study last month by Altus Group said renovation spending in Alberta last year totalled $7.6-billion – a 3.7-per-cent increase from the year before. Renovation spending was forecast to rise by 2.6 per cent this year and 3.8 per cent next year.

A poll conducted for the Canadian Imperial Bank of Commerce in May showed Canadians plan to spend $17,142 on average on renovations in 2015. In total, Canadians spent $68-billion on renovations last year compared with $48-billion spent on building new homes.

When the housing market slips, Mr. Klassen said, homeowners put more consideration into renovation.

“It’s the cocooning effect, if you will,” he said. “People focus on their residences when housing markets are uncertain. It’s the answer to the question: Relocate or renovate?”

Karey Reilly, who moved her family to Calgary from Ontario this month, said renovating was the only way she could have a home that suits her family’s needs and lifestyle.

The Reillys purchased a two-year-old home in Cougar Ridge with an unfinished basement, and decided to replace all of the appliances, flooring and lighting, install new hardware and fixtures in bathrooms and finish the basement.

“There were plenty of homes with four bedrooms upstairs in the $950,000 range, but they were too big and too expensive for us,” said Ms. Reilly.

“So we decided to buy a less expensive newer home and make it our own.”

The Reillys have spent $25,000 on renovations to the upper floors, and expect that the basement will cost an additional $50,000.

An unfinished basement was one of the major attractions in their new home, said Ms. Reilly, as they intend to design the space to match what they liked best about their Ontario home, including elements such as a home office and gym.

“Even with everything we’ve invested and everything we plan to invest, I’ll still be ahead of the game financially,” said Ms. Reilly.

“And it will be for me, and not what previous owners liked or wanted.”

The sentiment is shared by many homeowners who are investing in remodels.

Walter Rodriguez, who owns the Calgary-based renovation company Better Home Design, is also currently upgrading his own recently purchased home.

“We bought an apartment outright and set a budget in terms of how much we want to spend on renovations to make it ours,” said Mr. Rodriguez.

Mr. Rodriguez is converting the two-bedroom apartment into an open-concept layout in his spare time.

Most of his time is being spent with clients in an industry he says shows no sign of slowing down.

“A lot of people are buying older homes in their price range that may have been built or designed between 1970 and 2000, and they are outdated and in need of a new look,” said Mr. Rodriguez.

“It’s cheaper for some people in this economy to renovate in the location they want than to buy a new build.”

John McCoy, general manager of Kon-strux Developments Inc., says most of his clients are moved to renovate not by external economic factors but simply out of a desire to improve their living space.

“A lot of the renovations people are deciding to do wouldn’t get immediate revenue returns on resale, but they suit the lifestyle and tastes of the homeowners better,” said Mr. McCoy.

Major renovatiuons can quickly become a costly exercise.

A typical basement renovation, Mr. McCoy said, costs an average of $55,000 in Calgary. Kitchens range between $80,000 and $100,000 and bathrooms average $45,000.

“Complete renovations, like gutting main floors, will be around $150,000 and a two-storey total renovation is $250,000 to $300,000,” said Mr. McCoy.

“Some people might begin with a bathroom and see how that goes, and then move into more projects from there,” said Mr. McCoy.

“It’s common for homeowners to almost become renovation addicts as they move from room to room. A lot of our business comes from repeat customers.”

Condo demand drawing buyers to Calgary’s core

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Aug. 7, 2015 – From developments without parking spaces to large condo towers in the Beltline, densification is transforming the face of downtown Calgary.

Brokers and analysts have witnessed the demand for condo living space accelerate over the past 10 years.

Don Campbell, senior analyst with the Real Estate Investment Network, attributes increased interest in condo living to many factors, including relative affordability and access to public transit. But perhaps the greatest motivator is a change in mind-set provided by an influx of new residents.

“The largest factor [is] in-migration from other regions of the country where condo lifestyle has become more acceptable,” said Mr. Campbell.

“As Calgary continues to grow, the demand for higher density and condo lifestyle will increase further.”

Christina Hagerty, a specialist in downtown loft properties and agent with Re/Max Realty Professionals, has noticed a strong thirst for downtown living among her new clients. Some are investing in rental property with the intent to make it their own home when they are ready to downsize.

“More and more people are tired of the traffic and the commute, and they are looking ahead and realizing that downtown is the right place for them to be,” said Ms. Hagerty.

Some 2,000 new downtown condo units will be ready for occupancy within the next few months, she said.

But Ms. Hagerty notes that the city has a lot of work to do to accommodate Calgary’s expanding downtown urbanization.

“Calgary is on its way to growing more services for downtown residents, but we still have a way to go.”

She would like to see an increased number of grocery markets and other essentials within walking distance for those who choose to live in the city’s centre, particularly near the East Village area.

“It’s all happening, and it’s very exciting,” Ms. Hagerty said.

“When we build infrastructure and services in the inner city, that’s when we’ll really see urbanization take off.”

One of her current clients, Dr. Elaine Bland, owns a unit in the Chocolate Condos by Battistella Developments, located at 1 St. and 15 Ave. S.W.

Looking to upgrade, Dr. Bland purchased another condo in Victoria Place, just three blocks from her Chocolate home.

“I really like this area,” said Dr. Bland. “It’s right in the middle of everything, and I can feel the vibrancy of downtown.”

A Beltline resident of nine years, Dr. Bland is pleased to see the increased interest in Calgary’s downtown and the influx of condo developments.

When she first moved to Calgary’s city centre, hers was the only high-rise condo unit in the immediate area.

“Now there are three other towers on my street alone,” said Dr. Bland. “It’s created a nice atmosphere. Downtown used to be dead on evenings and weekends, and now with so many people living there it’s alive.”

The influx of people who have decided to live, work, and play in Calgary’s downtown has led to one of the city’s most recent – and most innovative – condo developments.

N3 Condos, by Knightsbridge Architecture and Construction, is a 167-unit, 15-storey condominium at 8 Ave. and 4 St. S.E. with one major defining characteristic – no parking spaces.

Each unit is furnished and includes a lifetime membership to Car2Go, $500 in Car2Go mileage credits, a Biria bicycle, and underground storage and bike parking.

“I think Knightsbridge is very forward-thinking,” said Ms. Hagerty.

“The price-point is particularly appealing to people interested in the East Village – $200,000 to $400,000 for a condo within walking distance to downtown is unheard of.”

The condo development reflects a movement toward a new urban lifestyle that Calgary is beginning to embrace, she said.

Mr. Campbell believes that the general trend toward densification of the city’s downtown district is a necessary part of Calgary’s evolution.

“It’s holding back sprawl and providing city planners and developers the opportunity to build for the next large cohort of renters and buyers entering the market while creating walkable lifestyle,” he said.

With more condo developments and interest in apartment-style living, Calgary is sure to witness a city-wide increase in density, he said.

“Absolutely the citizens of Calgary are ready to embrace this new lifestyle, and not just in the downtown core,” said Mr. Campbell.

“We can look at the lifestyle it provides out in the Garrison area of the city, and the growing density down in the southeast, as proof of the walkable lifestyle being embraced with vigour.”

The urbanization movement promises to create a more sustainable lifestyle and culture in Calgary’s core by drawing more residents and increasing demand for amenities.

Ms. Hagerty anticipates significant changes in the Calgary condo market as the number of residents interested in Beltline and downtown living continues to increase.

“Acceptance of the condo market is proof that the city is changing,” said Ms. Hagerty.

“Calgary is growing up, becoming a big city, and people are adjusting to that feel.”

Calgary hunts for signs of a real estate revival

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Aug. 14, 2015 – Calgary’s real estate watchers are turning their backs on a miserable first half for 2015 and looking to September for a sign of recovery.

In its midyear forecast, the Calgary Real Estate Board surveyed the bleak landscape and concluded that, “rising unemployment levels and limited job opportunities far outweigh the benefits of a lower lending rate and will continue to keep housing demand weak in the months ahead.” It forecast that, by the end of the year, overall sales activity in the city would fall by 22 per cent.

The Teranet-National Bank house price index, released this week, showed prices had dropped 1.9 per cent in Calgary in July and 2.3 per cent year-over-year.

On Friday, the Canadian Real Estate Association reported that, year-over-year, prices were up a mere 0.14 per cent in July, the smallest gain in almost four years. But it also pointed out that “activity was nonetheless running roughly in line with five– and 10-year averages for sales during the month of July.”

Individual real estate agents looking for positive signs of a market revival have managed to find a few.

“For median sales prices, the only quadrant we’ve seen impacted negatively is the southwest, where we find more expensive homes,” Jim Sparrow, Royal LePage Solutions realtor, says.

“Lower-priced homes are still moving,” he says. “I expect a bounce in sales in September.”

Peter Norman, chief economist for Altus Group, a real estate advisory firm, said in an interview this week that positive sings are emerging “now that the dust is settling on the energy sector.”

“A lot of people might be surprised by why it hasn’t come down more,” he said in an interview this week on BNN. “And also why the supply and demand remain so much in balance that we haven’t seen much of a change in pricing.”

Altus Group’s second quarter review zeroing in on the Calgary new condo market concluded that the sector had, “found its footing over the second quarter of the year following the initial shock of the energy sector downturn.” It found new condominium sales volumes “up significantly” in the second quarter” but still 29 per cent lower than the average over the past three years. “That said, the current market remains substantially stronger than the depressed levels seen during the financial crisis [2008-10].”

Ben Myers, senior vice-president of market research and analytics for Fortress Real Developments, says that the market is likely to remain flat leading into 2016, with continued job loss and unemployment expected in the coming months.

“I don’t see any huge rebound in the market necessarily, but also no major pull-back,” Mr. Myers says.

A stagnant economy in the coming year will undoubtedly impact the real estate market further, he says.

With fewer people migrating to the city in light of the oil decline, Mr. Myers foresees an impact on consumer confidence, but believes that any decrease in spending will be short-lived.

“I see the sales and prices improving as confidence returns to the market and people see that it’s not all doom and gloom, ” Mr. Myers says.

“In reality, if you look at other businesses and industries and how they are operating, it’s just not as bad as it looks.”

A veteran of the oil and gas industry, Mr. Sparrow agrees, saying that oil prices have had a detrimental, but temporary, effect on the market but that the outlook remains positive.

“Oil has a huge impact on the city, and even though it’s a larger downturn than we first expected, it’s nowhere near where it was 20 to 30 years ago,” he said.

“The oil prices always come back, we just can’t predict whether that might be one week from now, or one year, or three.”

Mr. Sparrow has noted an influx of first-time buyers in downtown condos, as the prices in that market have taken the greatest hit city-wide.

With more inventory available in apartment-style condos than the detached market, and more developments under way, a number of buyers are taking advantage of the lower prices and entering the real estate market for the first time.

“For a first-time buyer – people who couldn’t necessarily afford a half-million dollar house – a $300,000 condo is a viable option,” Mr. Sparrow said.

The signs pointing to a rebound are there already, he says.

“Month-to-date, 60 per cent of homes in Calgary have gone for list price or more,” he says. “That doesn’t indicate a market that’s weak.”

Tax-hike reversal unlikely to affect Alberta housing market

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July 24, 2015 – Closing costs for Alberta homebuyers will not be increasing, thanks to the NDP government, but overall the impact on Albertans in the market for a home is minimal.

One platform promise of Alberta’s newly appointed government was a pledge to reverse hikes to land title and mortgage taxes that had been implemented by the previous Progressive Conservative government of Jim Prentice.

On June 18, Joe Ceci, president of the Treasury Board and Minister of Finance for the government of Alberta, announced that among many changes associated with Bill 2, An Act to Restore Fairness in Public Revenue, the nearly 600-per-cent increase to mortgage fees and land title searches will be overturned.

“We are cutting a number of fees imposed on Albertans by the last government,” said Mr. Ceci during a news conference on June 18.

“Land title searches and mortgages will not go up.”

It was the suddenness and size of fee increases that primarily concerned some prospective buyers, and the NDP was determined to repeal the fee hike in order to make home-buying less daunting for Albertans in a tumultuous economy.

“The hikes could have cost families an additional $860 when purchasing a $450,000 home,” said Shannon Greer, minister of municipal affairs and Service Alberta.

“Our government’s decision to cancel the land title and mortgage fees will put $160-million back in the pockets of hard-working Albertans.”

The PC government’s fee increases, slated to be implemented beginning July 1, may have left some potential buyers shy to enter the market with a titanic boost to closing fees looming.

“Initially, some buyers may have been keeping an eye on the July 1 deadline, but then no longer needed to beat the clock when the NDP announced in April that they were cancelling the hikes,” said Mike Fotiou, associate broker with First Place Realty.

“The reversal will be welcome to buyers who will still be able to pocket that money or put it towards other expenses related to purchasing a home, such as an inspection or appraisal.”

That decision, in addition to further changes to tax brackets and corporate tax rates that will be effective Oct. 1, 2015, aims to financially stabilize working families, which will place many in a position to enter the real-estate market to either upgrade their current residences or purchase first homes.

Supporters of the NDP initiative are hopeful that Bill 2 will bring more solidity to a precarious economy and revive a stagnant real-estate market in the province, but others are not convinced that the reversal will have a significant effect.

“Reducing closing costs is a positive adjustment, but it won’t have a noticeable impact on the market since the changes weren’t yet implemented,” said Mr. Fotiou.

Matthew Boukall, director of residential research for Altus Group in Calgary, does not believe that the initially proposed increase would have deterred potential buyers, as the rise in closing costs would have been minimal.

According to Mr. Boukall, the fees associated with closing a real-estate sale are rarely considered by buyers as part of the overall cost of investment.

“The NDP government made a big deal about the percentage increase, but really on an overall house price it’s still marginal,” said Mr. Boukall.

“Typical closing costs amount to about 3 per cent of the total value, and the increase would have made it about 3.5 per cent, which on an average house may have been a difference of a few hundred dollars. It’s minimal.”

While the government is adamant that the rollback of the PC fees will give Alberta families a financial break and help them regain economic stability by making housing more affordable and accessible, Mr. Boukall believes that the changes will likely go unnoticed.

“It will keep money in the homebuyer’s pocket, but I don’t think it will stimulate the home-buying market,” he said.

Mike Boyle, owner of the Mortgage Group Inc., saw no immediate reaction from homebuyers regarding the PC plan to increase fees, but was prepared to deal with backlash from the proposal.

“The proposed increases went away before they were supposed to come in, but you still prepare for it,” said Mr. Boyle.

By his estimation, average-priced homes would have seen the least significant impact, whereas sales on homes of $1-million or more would have had considerable increases to closing fees.

Mr. Boyle said that while some buyers caught wind of the July 1 fee hike and rushed into the market to get ahead of inflated costs, most homebuyers were either unaware or indifferent to the increase.

Regardless, Mr. Boyle’s office was prepared to handle the repercussions of the spike in closing costs.

“It’s always interesting that someone can spend $1-million on a home but nitpick over a couple of hundred dollars to close the deal,” said Mr. Boyle.

“For us, I was relieved to see that the increases didn’t come in as planned. I know we would have heard about it.”

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