The most recent report by the Canada Mortgage and Housing Corp. shows new home starts in Winnipeg and the surrounding region are running slightly behind last year in one category and slightly ahead in another.
The multi-family (apartments, condominiums, townhouses) starts are down approximately 15 per cent from last year.
However, 2015 was an extremely ambitious year in terms of multi-family starts resulting from a pressing need to compensate for significant shortages that had been historically evident.
The encouraging news is single-family detached starts are running six per cent ahead of last year.
However, before anyone starts celebrating too loudly or proposing to increase the cost of new housing, let’s remember these numbers are still well behind the numbers from 2011, 2012 and 2013.
It’s a cautious growth and one that can’t bear more new costs.
Many costs over which the builder has had little or no control have increased considerably in recent years.
Every year under the previous Manitoba government, minimum wage increased. Although intended to assist those earning wages at that level, many residential construction wages are based on multipliers of the minimum wage. Therefore, when minimum wage went up $0.50 per hour, their wages may have increased exponentially, thereby increasing the cost of a new home.
Similarly, many materials have also increased in price.
When the American housing market collapsed in 2009, the Canadian market was an attractive option for manufacturers and prices were favourable.
Now that the U.S. market has rebounded considerably, certain materials are being sent south of the border as a first priority, making it more expensive to purchase those materials in Canada.
Finally, the cost of land suitable for building has increased steadily.
More than 25 per cent (or more than $100,000) of the cost of the average new home in Winnipeg goes to the three (federal, provincial, municipal) levels of government. Much of it associated with the cost of developing land.
(The City of Winnipeg is eying a new fee on development projects.)
Whether it is due to fees, taxes or regulations, every time one level of government decides to change one aspect of housing it oversees, you can bet the price of a new home is going to increase.
I’m not saying many of these increases aren’t justified or necessary, it’s just all of these costs are passed on to the consumer — and a breaking point definitely exists.
We certainly don’t need any new, arbitrarily imposed costs that could jeopardize the new-home market, one of the principal drivers of Manitoba’s economy.
Mike Moore is president of the Manitoba Home Builders’ Association.
