St. Albert's growth in the regional housing market has been modest at best, if not underperforming.
Over the past 10 years, the city has experienced the slowest growth in the region compared to other comparable cities.
But St. Albert's director of economic development is positive that new starts in the single and multi-family sector will have St. Albert catching up soon.
"This is St. Albert's decade," said Guy Boston. "We are striving to increase our market share."
A report on the city's housing mix shows St. Albert's housing market experienced growth rates of about 6.4 per cent between 2006 and 2011.
In comparison, Spruce Grove, Leduc, and Fort Saskatchewan experienced growth rates between 27 per cent and 40 per cent.
Strathcona County and Edmonton were in the range of 12 per cent over the same period, while Alberta's average growth rate was about 10 per cent.
Boston said the city's growth rates had long suffered from a number of challenges, including transportation issues and high taxation rates.
Transportation has now improved with the addition of the Anthony Henday highway, while the city's taxes will likely always be higher, he said.
"For some people, the thousand dollar difference for a comparable house in Edmonton in taxes is enough to motivate them to say they'd rather be in another community than St. Albert," he said. "Others are willing to pay that."
But now, St. Albert is seeing more growth in housing, he said.
Thanks to the annexation of lands in its north, developers such as Landrex and Melcor are now starting to build new multi- and single-family homes, he said.
The city is also seeing more plans for high-density construction, he said.
"We are going to see more and more of a broader housing option than we have seen in the last decade."
Housing starts in the city indicate that St. Albert experienced a spurt of growth in 2013. That year, the city approved 825 building permits (599 of them were multi-family homes).
That was a 161 per cent increase in permits since 2012, when the city approved only 316 buildings permits (only 118 of them were multi-family).
While the percentage of single family housing starts appear to be significantly lower in 2013, the housing report said the city may be "catching up" to growth trends in other communities.
Building permits over the last three years have also shown a shift from single-family dwellings to a wider range of multi-family housing options across the region, the report said.
Boston said that the capital region board stipulates that the city reduce the amount of its single-family, and create more room for multi-family homes.
The intent is to provide for more variety in housing choices to meet the city's changing demographics, he said. Higher-density housing also allows for lower housing costs, he said.
Nonetheless, St. Albert will likely remain more expensive than other communities (on average above $450,000 for singles), based on the cost of living, land prices and available amenities, he said.
"Developers and homebuilders price their product differently because it's in St. Albert than they might price the same product in another community," he said.
Provincial market outlook
Todd Hirsch, chief economist with ATB Financial, says Alberta and the Edmonton region will continue to experience economic growth in the coming year.
As a result, migration to Edmonton will persist, adding pressure on housing markets in the region, he said.
But after 2015, the provincial economy – and subsequently the housing market – will depend on energy prices and how petroleum can be transported out of the province, he said.
"If that doesn't fall into place we could see Alberta's economy cool and that could also cool the population growth and the demand for housing," he said.
He added that Edmonton is experiencing a high demand for condominiums for people who do not want to commute. Areas outside the city will likely continue to be attractive markets for single-detached homes, he said.
Based on information from the Canada Mortgage and Housing Corporation, demand for new homes in the Edmonton region will remain strong.
Christina Butchart, senior market analyst with the Edmonton CMHC, said development of single-family homes in the region was expected to grow around seven per cent this year and will likely continue to grow but at a lower rate.
She said that inventory levels on the resale market have caused many buyers to look at buying new homes instead. This has supported growth in the single-family market.
The market for multi-family home construction is expected to slow down, however, following a strong construction year in 2013, she said.
"It's not that demand isn't there. It's just that we had a lot of starts last year," she said. "It was actually the second highest number (of starts) on record."
Butchart added that one reason the multi-family market has grown is because of high rental activity in the market over the last couple of years. At the same time, there had not been a lot of rental construction in previous years, she said.
She expects that the Alberta economy will continue to support slow and steady growth in the coming years.
"We have good employment, we have rising wages, mortgage rates are quite low," she said. "So I think that in that market we will continue to see just a slow and steady growth."
