Homebuilding companies say they are ‘encouraged’ by market activity .
The mortgage stress test introduced by the federal government in late 2017 has impacted Calgary’s single-family home market — but despite this, builders see other factors that might just juice up the voltage from the light at the end of the economic tunnel.“We have seen demand pick up since March and confidence in the market has begun to build since the provincial election,” says Trent Edwards, chief operating officer for Brookfield Residential. “We continue to see solid migration and still have positive job growth.“Permits have slowed, more because of new mortgage rules than underlying demand,” he adds.So, what exactly is the mortgage stress test?This so-called test is, in fact, a list of rules banks have to use to decide whether people qualify for a mortgage, and how much can be borrowed.The government put the rules in place while posted rates were very low to try to make sure borrowers would be able to make mortgage payments if, and when, rates climb.Don Barrineau, Alberta division president for Mattamy Homes, says that from his perspective, the industry and potential buyers are feeling the effects of the federal stress test program.“It (the market) continues to soften and remains stubborn,” he says. “Probably half of the traffic we see cannot qualify under the new guidelines.”Beyond that, he adds, there has been limited job growth and capital expenditures in the province — which he says are key elements in housing demand and overall economic health.“We all know why this is the case; hopefully change is in the wind.”But optimism regarding the future direction of the economy and the level of consumer confidence has builders looking forward to stronger signs of returning health.Peter-John Woolf, vice-president of Broadview Homes, says the company has experienced growth this spring as consumers appear more confident in the provincial and local economy.“We are encouraged by the activity we’re seeing in the market currently and hope it will endure as the economy continues to find stability,” he says.Morrison Homes’ director of marketing, Sam Hudson, says there has been a gradual decline in single-family demand in the past few years, but says the company continues to work at offering more value to their products order to attract consumer business.“I’m hopeful that with a stronger economy and more buyer confidence in 2020 that the new home market will be more robust and active,” he says.Howard Tse, president of Cedarglen Homes, says the market for new single-family homes has declined, noting that the level of buyer interest can be put at the feet of not only the stress test, but increased industry competition, new communities being released and the strength of the resale housing market.As for what lies ahead in the coming year, Tse sees a “continuation of 2019 with increased consumer confidence.”All builders contacted see a strengthening of sales activity in 2020.“Some of this strengthening will rely upon a federal election, but frankly there hasn’t been a better time to buy in Alberta in a long time,” says Brookfield’s Edwards. “We are very optimistic about the future. It is purely a matter of time before things bounce back.”According to Canada Mortgage and Housing Corp. figures, single-family starts for the first five months of this year are down 27 per cent from a year ago — to 1,210 from 1,652.