In this week’s EconMinute, we’re talking about residential building permits in Alberta.
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New building permits are a “forward-looking” indicator in that they give us a sense of what construction activity will be like in the coming months. So far, indications suggest that 2021 will be an excellent year for residential construction across Canada, including here in Alberta.
- Through the first four months of 2021, the total value of residential building permits issued is up 51% in Canada and 40% in Alberta compared with 2020.
- In April, the total value of residential building permits issued in the province reached $909 million—their highest level since November 2016. Specifically, single-family homes accounted for about 83% of the increase.
- The bulk of the increase in housing construction is taking place in Southern Alberta. In Calgary, residential permits through April are up 61% compared with 2020. In Lethbridge, they are up nearly 96%. In Edmonton, however, residential permits are up just 5% so far this year.
- A few factors are driving the increase in the total value of residential building permits this year:
- Housing construction was delayed in the early months of the pandemic. This means the market is seeing both normal demand for this year and pent-up demand from last year.
- Low interest rates have made mortgages more affordable. This not only attracts more families to the market; it also likely encourages some to choose a more expensive home than they otherwise would have chosen.
- Soaring commodity prices such as lumber, along with other supply chain disruptions as the result of the pandemic, increased the cost to build, which in turn increases the value of permits.