Detached house construction plunges 37% as Calgary market shifts toward multi-family

Home construction fell in 2015 but building permits for single-family houses and duplexes, in particular, plunged at four times the rate compared to Calgary's residential sector as a whole.

"Last year was a bit of a correction in that the market was down a bit," said Wendy Jabusch, president of the Canadian Home Builders' Association – Calgary Region.

"But the other piece of the story is that there is a much higher propensity for multi-family now."

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Residential building permits totalled $3.67 billion in value last year, down 8.9 per cent from 2014.

During that same time, however, single construction permits — those issued specifically for single-family and two-family dwellings — fell to $1.126 billion, down 37.1 per cent.

In total, the city issued fewer than 3,500 building permits for single-family or two-family homes in 2015, down from the previous five-year average of 5,343.

At the same time, Calgary is seeing a shift toward applications for multi-family and townhouse construction, according to chief building inspector Marco Civitarese.

"To me, that would indicate a trend toward that product right now in this part of the history of Calgary," Civitarese said.

Price, policy and people

Jabusch said there are three big factors driving the move away from single-family homes.

Firstly, she said they've simply become too expensive for many buyers, who are looking for more affordable housing options.

Even with the recent slowdown in real estate, detached houses still carried an average price of $526,758 in January, according to Calgary Real Estate Board data.

Secondly, Jabusch said the city's growth policies are also mandating higher-density developments in all parts of Calgary, old and new.

"The Municipal Development Plan is looking for a higher proportion of multi-family to single-family in new communities and they're also looking for inner-city communities to densify, which, by definition means it has to be a multi-family product replacing a single-family product," she said.

And, finally, she said people aren't looking to buy detached homes in the same way that they used to, even if they can afford it.

"Our buyer demographic is changing," Jabusch said. "There are more singles. There are more families that are couples without children and have no intention of having children."

Outlook for 2016

Civitarese said it's too soon to say if last year's trend is continuing into 2016, as the early data doesn't provide enough of an indicator.

"Traditionally, this is a slow period [for construction] in January and February," he said. "So, the bigger indicators will come in the second quarter, I believe."

The home-building industry is bracing for even further slowdowns, however.

"Our association generally believes 2016 is going to be a little bit slower than 2015," Jabusch said.

"There's still going to be a demand for single-family homes for young families, but it's not the same degree."