Labour shortages one of many factors limiting residential construction in Calgary: experts

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Labour shortages are one of many factors preventing the province’s residential construction industry from keeping up with skyrocketing housing demand in the short term, experts said at a Tuesday industry event, though innovative solutions are on the horizon.

A recent survey asked 502 Canadian construction decision-makers about their confidence in market conditions, finding seven in 10 construction businesses expect an increase in the number or value of projects over the next 12 months.

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A closer look at Alberta, however, revealed lower confidence among builders.

The survey found 55 per cent of residential-sector respondents from Alberta expect to build fewer housing units in 2023 compared to 2022 — lower confidence compared to provinces such as Ontario, where 60 per cent of respondents expect to build and deliver more housing units by the end of 2023.

The survey was conducted by research company Censuswide for Procore, a global construction-management software company.

The data come on the heels of the City of Calgary’s Housing Needs Assessment Report, released in September, which estimated the number of households in need of affordable housing will reach nearly 100,000 by 2026. It also said the median cost of a detached home in Calgary has increased 37 per cent over the past three years.

Meanwhile, the median household income required to purchase a median home in Calgary is $156,000, the report found — much greater than the city’s median income of $98,000.

Persisting affordability issues making labour shortages difficult to fix, experts say

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Despite the number of potential employees coming from record migration to Alberta, rising rent and housing prices are making it difficult for homebuilders to attract much-needed workers, said Bill Black, president and COO of the Calgary Construction Association.

“There’s the potential of more employees, but they can’t find housing . . . and then we’re not going to get our share of these new Calgarians,” he said.

Earlier this year, the CCA said there were 3,000 to 4,000 job vacancies in Calgary across the total industry.

Black’s “big fear” is those employees will flock to the U.S., which he said has between four and seven million vacancies in the construction industry, and where housing is less expensive on average. The average home value is currently C$474,000, according to Zillow, an online real-estate marketplace. The average home price in Canada for September was C$655,507, according to the Canadian Real Estate Association.

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“The irony is at SAIT, we’re talking about bringing in a cohort of international students, train them in residential home buildings, but there’s no housing for international students right now,” said Reva Bond, dean of SAIT’s school of construction.

The downstream effects of labour shortages — such as a lack of people with the skills to make decisions that affect planning processes — clog projects and extend finish dates, said Shawn Gray, founder and CEO of ConstructiQ Advisory, a construction consulting firm.

“It’s kind of this dog-eat-dog circular challenge . . . it’s a poly-crisis and there’s a lot of things to be done.”

‘The smallest element can make the biggest amount of havoc’

While labour shortages are holding back needed progress, new problems are snarling productivity on construction sites.

For example, many players in the industry are attempting to bring their supply chains closer to home, adding pressure to local suppliers dealing with previously unseen levels of demand, Gray said.

“The smallest element can make the biggest amount of havoc,” Black said. “It’s really hard to tell where the next crisis is coming from because it’s moving that fast.”

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Still, Calgary homebuilders will likely be flush with activity over the next year, Bond said.

“If we just focus on housing, I would say the existing residential homebuilders in Calgary will continue to be successful. If the question is affordable housing, now you’ve changed the question . . . and we don’t have a good solution for that.”

Innovation, new players introducing alternative solutions may ‘happen very quickly’

Despite concern over several factors constraining residential construction, Bond said the industry is “ripe for disruption” in a way that benefits both construction companies and hopeful homeowners searching for affordable housing.

Gray said he sees construction companies taking approaches that increase margins, decrease building costs and create homes that can survive several decades — strategies that could upend historically successful builders.

“There’s some well-established residential companies that are teetering, and these new (people) are coming in with different ideas and knowledge or new solutions. They’re going to overtake and topple some of these very big, traditional builders, and it’s going to happen pretty quickly.”

Gray and Black said they predict those players will become more prominent in three to five years.

— With files from Bill Kaufmann

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X: @mattscace67

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