New home builders report rising cost of lots, more onerous approvals as growing concerns

MONT TREMBLANT, QC, March 16, 2012 /CNW/ - About one third of new home builders across Canada say that rising costs due to the price of serviced lots is a critical problem. In Manitoba, the problem is reported by 50 per cent and in Ontario by 44 per cent of builders.

This is one of the key findings of the Winter 2012 Pulse Survey of new home builder and renovator members of the Canadian Home Builders' Association (CHBA). The survey was conducted in December 2011 and January 2012 with the assistance of Canada Mortgage and Housing Corporation (CMHC) and Natural Resources Canada.

The survey finds that the level of concern about rising costs due to lot prices has increased from 27 per cent a year ago to 32 per cent today. The number of new home builders concerned about shortages of serviced lots has crept up from 16 per cent a year ago to 21 per cent nationally, 40 per cent in Ontario, today.

Regulatory issues are a growing problem for many new home builders.  The survey finds that nearly a quarter of new home builders report more onerous municipal approvals and standards are a critical problem, up from 19 per cent a year ago.  Concerns about more onerous building code requirements and environmental regulations have also increased over the last year.

New home builders expect the price of a new single-detached home will go up over the next year in all regions, according to the survey. Nationally, 63 per cent of builders expect prices to increase, 89 per cent in Atlantic Canada, 76 per cent in Ontario, and 41 per cent in British Columbia.

The underground economy remains a critical problem for CHBA renovator members. Work in the underground economy is believed to be most prevalent in Ontario and British Columbia.

New home builders across Canada expect housing starts this year will moderate somewhat, moving closer to household demographic requirements. The survey reports that new home builders forecast 186,000 units will be started in 2012, compared to the 193,950 units started in 2011. Renovators expect stable or increasing activity in 2012.

While the employment pattern varies from region to region, 24 per cent of all respondents to the survey report higher employment compared to a year ago. Most builders are optimistic for the future: two-thirds see no change in the employment pattern, while the balance expect to hire more workers.

A total of 373 new home builders and renovators responded to the 45th Pulse Survey. Results were tabulated and analyzed for the CHBA by Altus Group Economic Consulting.

The Canadian Home Builders' Association (CHBA) is the national voice of the residential construction industry, representing more than 8,000 member firms across the country. Membership comprises new home builders, renovators, developers, trade contractors, building material manufacturers and suppliers, lenders and other professionals in the housing sector.

Don Johnston
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For a copy of the Pulse 2012 Winter Survey, including regional breakdowns, please contact David Humphreys at [phone] or email, [email protected]