July 13, 2007

Analyst predicts “precarious” future for Alberta's residential construction industry

EDMONTON

A senior real estate analyst says Alberta’s residential construction industry faces a “precarious” future due to high labour costs and ballooning prices.

Richard Goatcher, with the Canada Mortgage and Housing Corp., says high prices result in over-building, which results in prices going down.

Goatcher, whose agency insures mortgage lenders against default and tracks trends in the market, said competition from the commercial construction industry is keeping labour prices high even as the market for resale homes starts to level out.

But Goatcher says it’s not good for those seeking affordable housing because builders are flooding the market with condominiums, not rental units.

He says builders get large, short-term returns while rental units take longer to turn a profit. He noted high home prices have contributed to slowed migration to Alberta this year.

Yvonne Fritz, Alberta’s associate minister of affordable housing, says she’s heard nothing from the federal government about CMHC warning of pressures on the construction industry that might worsen problems.

Canadian Press

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