Housing 'red hot'

Increasing cost of building new homes rates second highest in the country

Jeff Belkwell of Stargate Homes works on building the roof of a new home on Seawind Trail in north Waterloo.

WATERLOO REGION -- The price of new homes in most of Waterloo Region increased by 2.2 per cent in May over the previous month in what a local realtor says is still a "red hot" market.

Statistics Canada reported yesterday that the monthly increase was the second highest of 21 urban communities in the country, just behind Victoria, B.C., with an increase of 3.4 per cent.

The increase in this area is attributable to a combination of higher material costs, a skilled labour shortage and "good market conditions," according to StatsCan.

Tim Ingold, treasurer of the Waterloo Region Homebuilders' Association, said: "Builders are having trouble keeping up with the demand . . . it's red hot and that's fuelled by a shortage in the supply of resale homes and low interest rates."

COMPETITIVE MARKET

Ingold, who is manager of Coldwell Banker's new homes division in Kitchener, also said there's not so much a shortage of skilled labour as increased costs because of the competition and busy market.

"A builder has to pay more to get their trades in."

There is no exact estimate of the average cost of new houses in this area.

However, Ingold estimated it would be at least $208,000, based on information from the cities of Kitchener, Waterloo and Cambridge.

Combined, they reported residential building permits taken out in May of slightly more than $51 million -- representing the cost of construction close to the asking price.

Divided by the number of 394 new residential units, that works out to $128,000. And adding the average lot price of $80,000 brings the figure to approximately $208,000.

COSTS VARY WITH UPGRADES

Among other variables, Ingold added that the average price is likely somewhat higher because "extras" like high-grade flooring and fixtures or finished basements are not reflected in the value of building permits.

And, for high-priced homes in the $300,000 to $400,000 range, "it's not uncommon to spend $40,000 on upgrades."

The 2.2 per cent increase in the price of new homes pertains to what is called the Kitchener census metropolitan area, which includes the cities of Kitchener, Waterloo and Cambridge, and the townships of Woolwich and North Dumfries.

Nationally, the average increase in the price of new homes from April to May was 0.6 per cent. In the largest metropolitan area of Toronto, the increase was pegged at 0.5 per cent.

Meanwhile, the year-over-year increase from May 2001 to May of this year was 4.2 per cent for all of Canada, a boost StatsCan says is due to high demand and increased building costs.

In the Kitchener metropolitan area, the 12-month increase was 4.7 per cent, the sixth highest in the country.

Ottawa-Gatineau leads the way with a year-over-year increase of 8.0 per cent, followed by Edmonton at 7.4, Calgary at 5.9, Montreal at 5.6 and St. John's at 4.8.

pjalsevac@therecord.com