“Home is where my habits have a habitat.”
Homebuilding may have been one of the earliest activities humans have done, going back even farther than writing. This quote by American singer-songwriter Fiona Apple is one of an easy hundred thousand about the power, value, and importance of ‘a place to hang your hat.’
As the Canadian population continues to grow, the number of roofs over our heads grows as well. But the last two years have presented a new series of challenges for home builders and developers, and the adaptation is likely not done yet: the next few years may present even greater challenges for the housing market.
COVID-19 and the Alberta Housing Market
The start of the pandemic marked the lowest gains in five years for housing starts; only $11.7 billion went through in April 2020. The subsequent return rally was quick, however, with May 2020’s total investment topping $14 billion. Since then, a steady rise above $19.6 billion has been enjoyed as late as April of 2021, but the moves are beginning to cool once again.
A major reason for the increased prices through the second quarter comes back to increased costs for materials, including lumber. But increased demand played a role as well; demand climbed for more living space in the wake of lockdowns across Canada. In fact, communities like Ottawa reported the largest annual growth of new housing prices in February, at an incredible 9.5% in just one year.
This is not so in Alberta, though. Calgary saw the new housing price index drop by 1.1% from February to August 2020, and among 27 census metropolitan areas it was hit hardest of all, while others experienced growth. Other resource-driven communities saw the same trend, like Edmonton (-0.31%) and Regina (-0.96%). Saskatoon saw a modest rise of .10% and Vancouver jumped by 2.35% in the same period.
Even as prices fell, construction costs for residential buildings rose at an unheard-of pace in Calgary of 31.4%. This combination doesn’t bode well for the housing market – but even so, the foundation for growth is there, compared to last year. The year-over-year increase of single-detached units is 40% for urban housing starts as of July 2021. Business is available, but tenuous.
Further, the number of rentals available hasn’t been this high in nearly 25 years, adding another layer of competition to a saturated market.
Fundamentals of the Canadian Housing Market
From the chart here on alberta.ca, we see a significant return to housing starts action since the start of the COVID pandemic:
Further, the Canada Mortgage and Housing Corporation foresees steady growth in housing prices to close 2021, before rising interest rates slow housing activity for 2022-23. The Calgary Real Estate Board even tracked July numbers as the “best on record”.
However, the industry is largely fueled by a high quantity of smaller-scale establishments, which service their specific geographic markets – which means it’s challenging to capture significant market share (IBISWorld, 2018). In a competitive market, it’s important for potential clients to see your company as a preferred choice. That, in turn, takes a compelling brand and a clear value proposition.
Right now presents a great opportunity for brand awareness campaigns to elevate your image, especially given the present state of the market. If the CMHC is right and housing starts dip in the coming years, it’s simply good business to position your company for maximum returns.
Reaching your Ceiling
So, the industry is packed with competition: what can you do to rise above it? The first step will involve meeting with your team to establish and refine what you’re most proud to offer potential customers. Next, it’s time to upgrade your marketing activities to tell that story at every opportunity.
Build the framework of your brand
The first step is to establish the brand from which the rest of your marketing material will bloom. For more on the importance of brand, see Rebrand Wins & Fails: The Right Way to Evolve a Brand.
Shout it from the rooftops
In today’s world, there are many ways to get the message across. Social media platforms and traditional advertising methods present their own strengths, weaknesses, and demographics, and making sure you’re marketing to the right people is critical for defining your success. You and your team have a story; it might seem boring to the person living it, but someone else is always interested.
Infuse the brand in everything you do
Having your information out there isn’t enough – a strong digital presence makes a world of difference. If you’re participating in social media, a constant and significant presence that aligns with pre-determined brand messaging is going to be critical to your success.
Is a new build finished? Are you proud of it? Did a teammate achieve a new certification or ticket? It all adds to your story, builds familiarity and social proof, and strengthens your image.
Marketing is by no means a catch-all solution, but as we head into potentially uncertain times, it’s an important component to future success. For a customized solution that identifies the best way to tell your story at the world, remember that the team at William Joseph is here to help!