HOME BUILDING IN 2023
It was so easy as a kid. You want to build a shelter, then just head outside, pick up some sticks, maybe add some bigger sticks, and create the shelter of your dreams. True, our standards were lower back then. If it even half-way resembled a lean-to structure, then we were doing great! And if it rained, well, there was always the back-up plan with a blanket fort in the basement.
In contrast, it is mind-boggling how much modern home building has changed in just a few short years. I would say especially in and around Calgary, but we haven’t tried to build in other provinces or even other cities.
Back in June, Benjamin Tal came out with an excellent article about home building with a specific focus on the current Canadian labour shortages.
Canada needs millions more housing units, and fast! But we’re short of just about all of the people we need to make this happen. From the city planners and inspectors at the permit offices, all the way to the delivery drivers, we need ‘em all. And this is before an astonishing number of construction professionals retire in the next 5-10 years.
Every aspect of this article is already happening. We see it daily in our roles as both general contractor and custom home builder.
How does this affect real estate investors?
Projects simply take longer these days. For all you investors who firmly believe in strong project management software, we wish you good luck. It helps, for sure, but flexibility and chaos management are required on every job site. That is the “new norm.” Remember 2014 in Calgary, when trades would start a job, then just disappear because they could get double the pay somewhere else? It’s happening again, although not quite to that extreme, … yet. These days it’s more important to have a problem solver at the helm, than a spreadsheet/scheduling genius.
We’re seeing new builds delayed for months in permit mayhem. But the more permits we apply for, and the more city officials we speak with, the more we learn that most of them are doing the best they can with the resources they have, AND the current rules/regulations that THEY have to follow. May we simply say that Edmonton’s parking regulations allow for MUCH more building than Calgary’s?! And exactly how many tenants can afford 1.4 vehicles these days? Ah, but I digress.
Next: If your investor brain “knows building prices” from 2018, or 2020, or even 2022—it’s just not possible. Construction labour expenses are growing rapidly. Construction materials have faced huge inflationary increases as well, but today’s focus is on the tradespeople. Overall, there is no conspiracy, there is no gouging, prices really are going up that quickly in this “neck of the woods.”
Every builder is competing for critical trades. Need a foundation expert – you need to book well in advance, then hope like crazy that your permits come in when that professional is ready for your project. Miss the exact day he/she is ready, and prepare to wait, or start your search all over again. Framers are also in huge demand in our areas!
We’re trying to treat every tradesperson with respect these days! We simply cannot allow a homeowner or an investor to vent their timeline frustrations on our good people. Most of them are working 10-12 hour days this summer, doing the best they can. We know, there is always room for improvement. We agree. But a tile job that takes 6 days instead of 4 is no problem on our daily list – because it’s waaay better than losing 14 days waiting for another person/tiler. Just like parenting, we pick our battles.
We’re committed to making a little dent in the housing shortage in our corner of the world. And luckily we have a high tolerance for chaos, and a commitment to problem solving that comes from our previous careers. Cops and nurses will know exactly what we’re talking about! But for all our colleagues who want to get into the new development game because they think it will be easy, may we suggest you pack some patience? And a buffer in your budget? And a significant buffer in your timeline? Most builders have waiting lists these days, so they want to finish your project as quickly as you do!
