Building permit decline slows

Building permit values in Red Deer continued to spiral downward in 2010, but the rate of decline slowed appreciably.

Building permit values in Red Deer continued to spiral downward in 2010, but the rate of decline slowed appreciably.

The city reported on Wednesday that it authorized $118.9 million worth of construction last year, down 15.6 per cent from the $141 million in permits issued in 2009. The 2009 tally represented a 45 per cent drop from 2008, which in turn marked a 39 per cent fall from 2007 — when a record $421 million in building permits were issued by Red Deer’s Inspections and Licensing Department.

Public projects accounted for much of the difference between 2009 and 2010, with $12.1 million worth of building permits in this category issued in 2010, as compared with $31.3 million the preceding year.

The Extendicare Michener Hill and Bethany CollegeSide projects helped inflate the 2009 total.

The cumulative value of permits in both the commercial and industrial categories were up in 2010, rising 19 per cent to $28.4 million in the case of commercial projects and doubling to $9.9 million for industrial work. However, residential permit values slid 16 per cent, to $68.5 million from $81.2 million.

Steve Bontje, president of the Central Alberta branch of the Canadian Home Builders’ Association and marketing manager with Laebon Developments Ltd., said the drop-off in residential permits from 2009 to 2010 probably reflected the lag between when construction approvals are issued and the structures actually go up.

The economic downturn resulted in a “pent-up demand” for housing, said Bontje, which translated into sales in late 2009.

“There was a burst of activity at the end of 2009 that I think did reflect that pent-up demand, and lots of that construction carried over as inventory through 2010.”

A news release issued by the city predicted that residential construction starts in 2011 would be comparable to 2010, with low interest rates and economic growth holding permit values steady.

Bontje agreed that economic conditions should be favourable for the residential construction sector this year.

“You can still secure a five-year fixed mortgage for under four per cent, which is pretty amazing,” he said, adding that construction costs remain low and the economy appears to be strengthening.

“It remains a great time to purchase a home, if you’re in the market.”

Bontje added that there should be ample lots available for residential development in Red Deer and elsewhere in Central Alberta.

For the month of December alone, the value of building permits issued by the city in 2010 totalled $4.8 million, down from $6.9 million a year earlier.

Residential permits accounted for $4 million of the December 2010 total, with commercial projects adding $485,000, public work $205,000 and industrial construction $110,000. Last December, residential permits totalled $3 million, commercial projects were $3.6 million, public work reached $160,000 and industrial permits added $37,000.

hrichards@bprda.wpengine.com

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